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Etihad responds to state aid critics

ABU DHABI: Etihad Airways CEO James Hogan has issued a statement strongly defending his company’s investments in European carriers saying: “Gulf carriers are not the cause of Europe’s aviation challenges.”

Responding to recent comments by Lufthansa’s CEO Carsten Spohr that Etihad and its Gulf peers continue to benefit from state support, Hogan acknowledged that while the airline was established, and remains owned, by the Abu Dhabi government, “we receive no state subsidies, no free fuel and no reduced airport charges in the United Arab Emirates”.

James-HoganA 40-year veteran of the aviation and travel business, including stints with British Midland, Ansett and Qantas, Hogan claimed Europe’s airline industry had been built on decades of government ownership and even after privatisation, “bailouts, waivers and subsidies” continued.

He cited examples of direct state aid in Europe totalling €14.2 billion including an €800 million payment by the German government to support a Lufthansa pension fund shortfall; €1.1 billion for SWISS following the collapse of its predecessor Swissair; and the Austrian government’s €500 million debt write-off for Austrian Airlines.

With no apparent irony, he noted both airlines are now subsidiaries of the Lufthansa Group.

He said the biggest problem facing European airlines is not a threat from Gulf carriers but under-investment in Europe’s airports and airspace management – the latest example being last month’s strike by French air traffic controllers condemned by IATA CEO Tony Tyler as “malicious” – high operating costs at hub airports, high labour costs and inequitable taxes levied on airlines and passengers.

Hogan said his company’s minority stakes in three European airlines - airberlin (29.2 percent), Aer Lingus (4.99 percent) and Air Serbia (49 percent) – should be viewed not as a threat but an opportunity to support employment and economic growth: “We understand and respect the fact that European airlines have their own business models, and we understand and work within the rules of Europe.”

Acknowledging Etihad can’t match the size of some legacy airline groups, he explained the carrier had developed a growth strategy through partnerships: “Our strategy is pro-competitive. We work with all partners for mutual gain, and within competition and ownership rules. Etihad wants to engage with Europe,” he declared.

The carrier is finalising the acquisition of a 33.3 percent stake in Swiss regional carrier Darwin Airline and has also announced plans to acquire a 49 percent stake in Alitalia.

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