The chief executive of Etihad Airways, the state-backed national airline of the United Arab Emirates, has launched a scathing attack on rival Lufthansa and the German government following a court ruling on its German operations.
In the latest development in an ongoing competition battle, James Hogan accused Germany of protectionism when it came to its flag carrier and said it was risking its investment-friendly reputation.
The escalating dispute centers on some 30 code-share flights that the Abu Dhabi-based carrier had operated with Air Berlin, its partner and Germany's second-largest airline after Lufthansa. Code-shares allow one airline to operate a flight on another's behalf and are a common practice in the industry. As the largest shareholder of the heavily indebted Air Berlin, Etihad had sought to jointly sell tickets with Air Berlin and gain access to important European routes and customers.
If the German government does not guarantee its commitment to all German companies and jobs, then it is jeopardizing its reputation as a secure country for investments. James Hogan, CEO, Etihad Airways
But last week a German court ruled that the code-share flights were not allowed under the current air traffic agreement between Germany and the United Arab Emirates.
“In other markets, such as Australia, India, Italy, Serbia or the Seychelles, our investments have been well received and supported,” Mr. Hogan said. “But in Germany, our efforts are stymied by the lobbying and protectionism of Lufthansa, the country’s national airline.”
“If the German government does not guarantee its commitment to all German companies and jobs, then it is jeopardizing its reputation as a secure country for investments,” Mr. Hogan continued. “Investors must be sure that the security of their assets is respected and protected in Germany.”
Germany’s transport ministry expressed reservations about 29 of the code-share flights in the summer of 2014 after lobbying by Lufthansa. Then, last fall, the ministry approved the flights only through to January 15, 2016.
Germany’s transport minister, Alexander Dobrindt, declined to address Mr. Hogan’s criticism and instead referred to the court’s decision.
“With its verdict, the administrative court of Braunschweig confirmed the legal interpretation of the ministry of transport and digital infrastructure,” said a spokesperson.
Lufthansa would not comment on the ruling. However, in the past it has made clear its unhappiness over the state-backing that UAE-based airlines such as Etihad receive, which it claims distorts competition and breaks E.U. rules.
The controversial code-share agreement enabled both Air Berlin and Etihad to sell tickets on routes under their own flight numbers. This had benefits for both airlines; struggling Air Berlin was able to increase its passenger numbers while the rapidly expanding Etihad could offer a more extensive and attractive network of routes.
According to both carriers, hundreds of millions of euros are at stake with the code-share flights — and that income is crucial for the money-losing German airline.
But there is doubt in political circles about the actual amount of money that code-share flights bring in, and whether it is vital to the survival of Air Berlin, which is 29 percent owned by Etihad.
Up to now, there has been no success in resolving the conflict by negotiating a new air traffic agreement with the United Arab Emirates.
Mr. Hogan targeted Lufthansa, which is under fierce competition from low-cost and Gulf carriers, as lobbying for protection. But some industry sources say the first complaints about code-share flights might have come from the European Union, as the agreements may violate bilateral treaties.
Etihad is appealing the decision and on Monday Mr. Hogan submitted a complaint against the ban on the code-share flights to a higher court.
In the meantime, the head of Air Berlin, Stefan Pichler, is riding shotgun for Mr. Hogan.
“We are appealing this decision because it is not in the interest of travelers and favors Lufthansa above all,” Mr. Pichler said. “Air Berlin is the sole competitor of Lufthansa in the German market.”