|Gulf carriers distorting competition||Fair competition brochure|
|Unfair competition in Europe||Media & news|
|What can be done?||Downloads|
Safe, comfortable and affordable air travel is a common desire of passengers and crews alike. This is why having airlines to compete freely with each other, based on the best product, quality service and price is a welcome and necessary precondition for aviation. But to grow, connect people and create jobs, Europe’s airlines should compete on a level playing field with a common set of rules.
However, this competition is on the point of turning into a ‘race to the bottom’. Airlines are increasingly seeking unfair advantage through market-distorting business practices,such as social dumping and “forum shopping” to benefit from light regulation and favorable taxation in countries that serve them as ‘flag of convenience’. This, in turn, puts pressure on other companies to use similar practices to safeguard their market share.
Gulf carriers distorting competition
This situation is exacerbated by ‘booming’ airlines from the Gulf region – such as Emirates, Qatar Airways and Etihad – expanding their capacity on many of the routes previously serviced by European carriers. The problem is that many of these airlines are (partly) state-owned, supported by state aid, benefitting from access to cheap (airport) infrastructure, fuel and capital. In addition, they are not subject to night-curfews at airports (noise restrictions), ticket taxes and environmental charges as their European competitors. This distorts the ‘level playing field’ even further.
Unfair competition in Europe
In Europe, a new industry trend to distort competition is emerging: complex, in-transparent “innovative” business models and contractual set-ups. This includes:
- airlines arbitrarily relocating their business (i.e. their operating license and Air Operator Certificate) to ‘flags of convenience’ countries. The aim is to avoid tax and social security contributions for their employees, and/or to benefit from lax safety oversight by the authorities that offer their ‘flag’;
- airlines using flexible contractual set-ups that are often at the edge of what is legal and what is necessary to guarantee flight safety. These set-ups force employees into temporary contract relationships, fake self-employment (e.g. requiring air crew to set up their own limited liability company that offers its services though agencies to the airline), and/or making use of fake work bases in non-European countries, and ‘pay to fly’ (P2F) schemes (whereby newly graduated pilots have to pay their airline for gaining flying experience on an aircraft).
- At the same time, certain airlines are seeking direct or indirect subsidies from airports (e.g. lower airport changes), from local authorities (e.g. a fixed euro amount per passenger transported to their region) and/or from national government bodies (e.g. Gulf country governments helping their carriers to gain international market share). This allows them to unfairly cross-subsidise their operations and ticket prices – to the detriment of their non-subsidised competitors.
Europe must safeguard the principles of fair competition, before ‘honest players’ are pushed out of the market and governments lose control.
What can be done!
Promote fair competition by stopping abusive business models, social dumping, subsidy-hunting, and regulatory ‘forum shopping’;
Eradicate fake self-employment by certain airline operators;
Ensure a competitive level playing field with 3rd country airlines.
Fair Competition Brochure
Media & News
- OPINION: Why Norway is challenging pilot employment rules - Flight Global, Apr 2015
- Norway prepares report on new airline business practices - Flight Global, Apr 2015
- Feeling the heat - The Economist, Mar 2015
- U.S. airlines contend Gulf rivals are subsidized unfairly - USA Today, Mar 2015
- Open-Skies Agreements Challenged - New York Times, Feb 2015
- U.S. and European Transport Unions Meet in Washington, Continue Push to Deny NAI - PRnewswire, Nov 2014
- ALPA Welcomes 'Fair Competition' From Dreamjet - Aero News, May 2014
- Pilots confronting Norwegian Air International’s rights’ avoidance scheme - ECA Press Release, Feb 2014
- EESC opinion on social dumping in aviation - September, 2015
- ECA submission to US consultation on Gulf carriers - August 2015
- Report on Social Dumping & Rule shopping in aviation - Danish Transport Authority, March 2015
- Restoring Open Skies: the need to address subsidized competition from state-owned airlines - Whitepaper Partnership for Open & Fair Skies, January 2015
- Atypical Employment in Aviation - University of Ghent study report, February 2015
- The case for fair competition in Europe's aviation - ECA booklet, November 2014
- Flags of INconvenience - ECA Press Kit, July 2014
- Report on Social Dumping - Danish Transport Authority, April 2014
- "The Gulf Giants" - IATA factsheet
- Social dumping in aviation: a view from the cockpit - ppt
- Norwegian Air International Scheme - ALPA flyer