9 JUNE 2014

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Article from BTNews 9 JUNE 2014

COMMENT: Qatar problems

Doha last week hosted the IATA AGM, one of the most controversial in recent times.  Whilst those whose native tongue is English muttered in the bars about the World Cup, bribery, and the strange moving of the goalposts (why does Qatar need 12 years to build a few stadiums whilst London put the vastly more complicated Olympics together in just eight years?) a wider band of airlines spoke out about the Gulf based carriers growth model.

Senior representatives of over 200 airlines attended the IATA meeting in Doha, making Qatar the first Gulf country to host the summit, which was attended by its fiercest critics.  Qatar Airways showcased its new Hamad International Airport.

"I hope people understand that although we are a small country, we are a very relevant country in this region," said Qatar Airways' Chief Executive, Akbar Al Baker.

Western airlines rekindled complaints about a lack of transparency among Gulf carriers at the event, on the back of recent reports that fast-growing Etihad Airways, which has bought stakes in Air Berlin and Aer Lingus among other carriers, had access to an interest free US$3bn loan from Abu Dhabi's ruling family.

Etihad's Chief Executive, James Hogan, and the heads of its local competitors, Dubai-based Emirates and Qatar Airways, declined to comment.

But European rivals who feel threatened by the new competition were openly critical on the sidelines of the meeting (1-3 June).

"We all read in the papers where the money came from, so I would consider Etihad to be in the ownership of the state, and therefore it's state money we see flowing here," Lufthansa's Chief Executive, Carsten Spohr, said when asked about the reports.

"There are clear laws on state aid from European states to European airlines. These rules must also be applied to state aid from outside Europe," he said.

Meanwhile Etihad is in advanced talks to acquire up to 49% of Italian national airline Alitalia, which would further expand its reach into Europe.

But Gulf carriers have already transformed the aviation industry over the last decade. Through new expansion strategies and state-backed infrastructure spending, they have reorganised the world's route network and created new connections.  Will this continue?  Some think that for the future long range aircraft will bypass the Gulf region, except perhaps for Africa where its strategic position will make it a hub.

And while other IATA members are fighting to repel incursions by Gulf carriers into their markets Emirates' President, Tim Clark, rejected allegations of unfair competition.

"My response has always been "put up or shut up" and as far as Emirates is concerned... (we say) you must have evidence and support what you are saying," Clark told reporters.

"Do not make statements if you can't support them," he said of carriers that have accused the airline of getting unfair aid.

Nothing has really altered at IATA.  It has always been a case of airlines trying to outmanoeuvre each other.  All that has happened is that the protagonists have changed.

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