AEA's Schulte-Strathaus says rise of Gulf carriers threatens global aviation order

Emirates Airline, Qatar Airways and Etihad represent a new kind of competitive threat that is incompatible with the existing world aviation order and that probably needs to be dealt with through ICAO, Assn. of European Airlines Secretary General Ulrich Schulte-Strathaus said last week in Washington.

Schulte-Strathaus told the International Aviation Club that the trio of Persian Gulf-based carriers "are owned by their respective governments and operated as an instrument of national strategy—if  'national' is the right word within this regional rivalry—and they are integrated vertically across commerce, tourism and foreign policy." For their state owners, Schulte-Strathaus said, "The airlines are just a part—a tool—of this vertically integrated economic chain," and they are "being driven by a policy which is not compatible with that of the US and Europe, or I suspect, Australia, China, Japan, Canada, Mexico, Brazil, Chile, Korea and so on."

He stated that the three "have more widebody seats on order than the entire US industry has in its current fleet … 425 brand new long-haul aircraft in the next five years." And they will fly "everywhere," he said, before asking: "Does it make sense for airlines and travelers worldwide if three carriers—two of which have never made a profit—collectively commit $100 billion to transforming the aviation map of the world?"

After stating that limiting market access is the wrong approach, he proposed that ICAO could become a WTO of the air, negotiating "a mechanism to deal with capacity dumping in the field of aviation." Schulte-Strathaus acknowledged "it has been quite a while since anyone in the airline industry mentioned capacity dumping as an issue ... But, the specter of an airline as part of a government vertically integrated design operating to all corners of the world forces us to reconsider the issue."

In a wide-ranging speech, he also expressed skepticism that the EU Emissions Trading Scheme will actually benefit the environment and provided examples of how it may distort competition among airlines, arguing instead for an "open" global solution. He also criticized the "regulatory monster called the Denied Boarding Compensation Regulation." Noting that airlines were held financially responsible for accommodating passengers owing to the volcanic-ash related airspace closures last April, he said that if "airlines are to be held accountable for unpredictable events like volcanic ash—which they should not be—then airports should be held accountable for predictable events like snow and ice."