In Theory: Gulf airlines treated unfairly

Just as expected, it seems that global trade rivalries are escalating on a daily basis. Despite the delay in the Doha round that revolves around the liberalisation of services, many countries have taken steps towards the gradual liberalisation of the markets.

Europe, which led and earlier called for the liberalisation of trade and market openness, is now trying to curb this approach by imposing tough restrictions on its relations with some countries, particularly those belonging to the Gulf Cooperation Council (GCC).

After imposing unfair fees on petrochemical imports from GCC countries, Europe has been carrying out an offensive campaign for more than a year to limit the growth of Gulf airlines and restricting the process of liberalising the air transport sector, or the so-called "open skies".

Justification

The European and Canadian airlines' justifications for this approach are that these Gulf carriers are exempted from tax and receive fuel at a lower price than global prices, which therefore led to these companies calling on their governments to impose additional fees on GCC airlines.

However, such reasons are not supported by facts. It is well-known that there is no tax in GCC countries on airlines or any other companies. If there were taxes in the GCC, then it would also be imposed on European airlines operating in the Gulf nations.

Regarding fuel prices, these are provided to all airlines operating in Gulf airports, irrespective of their origin. This is a truth that cannot be concealed, since most of the fuel for aircraft is provided by foreign companies, the most prominent of which is British Petroleum (BP), which knows better than most the fuel prices provided to airlines. This is with knowledge that the price of car fuel is also cheaper in GCC nations than in European countries, which is due to the high tax imposed by European countries on fuel, which ranges between 80-100 per cent.

This tax provides the European Union (EU) countries with higher revenue than members of the Organisation of the Petroleum Exporting Countries (Opec).

The truth does not lie within the justification made by European and Canadian airlines, but in the massive development witnessed by GCC airlines, particularly Emirates, and Etihad and Qatar Airways, which began to compete with European airlines for long haul connections (to North America, Australia and South America) which were previously monopolised by European carriers over the past 50 years.

Quality of service

Gulf airlines have also surpassed their European counterparts in terms of quality of services, and by operating the latest aircraft. It has been noticed that European airlines are driven by short-sightedness and self-interest, and not for the interest of the European economy as a whole.

The aircraft orders placed by Gulf airlines have generated billions of dollars and further offered thousands of job opportunities in Europe.

If it wasn't for Emirates' order of 120 Airbus A380 aircraft, this project that faced massive challenges would have halted.

Obviously, the United States is well aware of this fact. The Executive Director of Los Angeles Airport said that American airports in general, and the Los Angeles airport in particular, were looking forward to welcoming more carriers from the Gulf region, adding that the US was an open market that was subjected to standards of competition between companies, unlike the European and Canadian markets.

In this regard, Gulf airlines are key customers of Boeing, which also helped in offering many job opportunities in the American markets that are still suffering from the repercussions of the global financial crisis.

If such facts are behind the strict European measures against Gulf airlines, perhaps the solution would be to relocate the headquarters of British, French and German airlines to Abu Dhabi, Dubai, Manama and Doha. This would help these companies take advantage of the relatively cheaper fuel prices and avoid taxes.

Maybe this move would prompt these companies to adopt a new approach rather than fabricating this justification of their approach.

Dr Mohammad Al Asoomi is a UAE economic expert.