Europe poised to relax restrictions on foreign ownership of airlines

Europe poised to relax restrictions on foreign ownership of airlines

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The European Commission is prepared to dilute its rules on foreign investment for European airlines - which cap non-European ownership of EU airlines at 49% - through deals with individual countries.

But the regulations will only be loosened for states that agree to abide by stricter regulations on state subsidies, which have become a bone of contention between some EU legacy airlines and Gulf carriers.

The changes come as the EU attempts to boost the competitiveness of the European aviation industry, which has been hit by the rise of lower-cost rivals such as Middle East airlines and the emergence of rival airport hubs in Asia and Dubai.

Violeta Bulc, the commissioner responsible for the EU’s transport policy, called the shift “economic diplomacy”, but she refused to say whether Gulf carriers benefited from “unfair” subsidies from their home states, the Financial Times reported.

“There has been lots of hype about that, but strong fair negotiation is a good answer to that,” she said.

The Commission will abandon its current rules on state subsidies within the airline industry, arguing that they are “not considered effective”.

Although foreign investors are banned from owning a majority of an EU airline, critics in Brussels and in the industry suggest that this rule is widely flouted. Bulc admitted that enforcing such rules was “hard”.

The commission will propose that it leads EU-wide negotiations with countries such as China and the UAE.

“Part of the negotiation - a strong component - will be an equal playing field and reciprocity,” said Bulc. “If someone wants to play a role in the EU markets, they have to play by European rules.”

Etihad Airways, which owns stakes in the European airlines such as Alitalia and Air Berlin, said it looked forward to a “pro-aviation” EU strategy that would enhance the competitiveness of European carriers.


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