European airlines plan new trade alliance

European airlines are drawing up plans for a new trade body after a row over the growing strength of the Gulf carriers fractured their previous alliance and prompted members, including International Airlines Group, to pull out.

The new group could include the airlines that walked out of the Association of European Airlines as well as low-cost carriers such as easyJet.

"We have to sit together to define the common denominator and our differences," said Lufthansa, which remained in the AEA. "It is a good starting point for restructuring the whole airline association landscape in Europe."

At the moment there are several European trade bodies, including those for regional or low-fare airlines.

John Strickland, an aviation consultant, said that the lack of strong united representation would hamper airlines.

The rift in the AEA goes to the heart of disagreement in the aviation industry about the increasing dominance of the Middle Eastern airlines and the resulting threat felt by some established carriers.

The dispute spurred the parent of British Airways and Spain's Iberia to defect last month to the European association for low-fares airlines. German airline Air Berlin, which cited concerns about "protectionist policies" and Italian flag carrier Alitalia have also left and have not joined any trade body.

All three count Gulf airlines as significant shareholders - Qatar Airways holds 10 per cent of IAG and Etihad Airways holds 29.2 per cent of Air Berlin and 49 per cent of Alitalia.

Remaining members were upset by the sudden exits, but publicly the AEA has played down the departures, saying it had not taken a public position on the debate over the Gulf carriers.

"We strongly deny we are a protectionist association," said Geert Sciot, head of communications at the AEA. "The chairman of AEA would not be the head of Turkish Airlines if so."

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But privately, members accept the episode raises questions about the future of the trade body which now has just 24 members. "I'm not sure what the purpose in life is for the AEA now," said one insider.

The crisis at the AEA will be compounded by a diminished budget - a smaller airline might pay between €50,000 and €80,000 each year to join, rising to about €220,000 for large airlines.

Insiders suggested that the split over the Gulf airlines pointed to a lack of leadership in the association which allowed differences to fester.

Since it was founded in the 1950s, the AEA has compiled industry data and lobbied for its members. But the group saw a loss of influence from the 1990s as the low-cost carriers such as Ryanair, who were not members, became dominant.

Attendance at meetings by Willie Walsh, the head of IAG, and other chief executives had begun to tail off and airlines with more clout had their own Brussels offices from which to lobby politicians.

The tensions over Middle Eastern airlines had been brewing for some time, one insider said.

At a recent meeting the secretary-general of the Arab trade body of airlines, who had been invited to speak, concluded his talk to hostile questions from Air France and Lufthansa about whether his members benefited from hidden state subsidies.

"It was hugely transparent and quite embarrassing," the observer said.

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