On the eve of the European Transport Ministers’ Council meeting in Brussels (3 Dec), pilots from across Europe raise a red flag about practices which distort competition in aviation and threaten to diminish the industry in Europe. If not addressed urgently, the aviation industry in Europe – as we know it today – could disappear.
Harmful business practices and employment models are among the many market distorting elements spelled out in a new publication, issued by ECA today. More and more airlines are seeking competitive advantage through reducing their labour costs, taxes and social charges: fake self-employment of crews, social dumping and regulatory shopping are spreading quickly, with some companies seeking to benefit from light regulation and favourable taxation regimes in countries that serve them as a ‘flag of convenience’.
“It is worrying to see how some airlines are redefining the landscape,” says ECA President Dirk Polloczek. “It might be tempting to cut costs by basing your air crews on a different continent, registering your aircraft in a “tax haven” or asking young pilots to pay for flying your company’s aircraft. But this destroys jobs in Europe, carves out tax and social security payments in EU Member States, and forces other airlines to follow the example if they don’t want to be wiped out of the market.”
Distorted competition is equally acute when it comes to airlines from outside Europe. Economically booming air carriers from Asia and the Middle East are often state-sponsored or state-owned, with access to cheap infrastructure, capital and fuel – and are mostly a tool in their governments’ wider economic strategy. At the same time, they are subject to non-transparent accounting standards and sometimes less stringent regulations than their European counterparts.
“Our carriers can neither match the Gulf carriers’ resources, nor can they – or should they – rely on state aid or subsidies,” says ECA Secretary General Philip von Schöppenthau. “Our airlines can only be profitable if their competitive environment is not distorted. This is why pilots from across Europe call upon Ministers, the new Commission and the newly elected Members of the European Parliament to put fair competition at the centre of the European aviation policy.”
To stop the trend towards unfair competition, concrete actions are required: better coordinating and strengthening of the social regulations, eradicating abusive business models and social dumping, and ensuring a competitive level playing field vis-a-vis state-sponsored foreign carriers.