Concerning, the first variable; since 2004 the Air community saw the incredible global expansion of the Gulf airlines: Emirates, Etihad and Qatar Airways. In particular, Emirates focused its business, not only on primary European airports, but also “secondary-hub-secondary” strategy on connecting European secondary airports with cities in Asia and Australia with only one transfer. Thus, permitting it to enjoy a competitive advantage in travel time on a number of city pairs because legacy carriers offered itineraries with two transfers; “secondary-hub-hub-secondary” (Grimme, 2011, p.333). Additionally, up until then, for many states-owned airlines, it was more important achieving indirect state benefits, like tourism stimulation and associated
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In particular, Etihad Airways came under attack in some media reports that claimed it was receiving large subsidies from the Abu Dhabi government. This consequently led to calls for regulators to investigate Gulf airlines strategy. However, not all airlines in Europe sustained this view, IAG, Finnair and Ryanair, supporters of the liberalization process, had a different opinion and took no issue with the Gulf carriers (Buyck, 2015, p.4). It must be noted, that according to the rational choice theory when we speak about collective interests and individual interests, odds are that self-interest will conflict with the obtaining of shared goals. Usually an unorganised group cannot optimally satisfy its shared or collective interest. Obviously, the difference in choice between the two groups is the result of the underlying payoffs. The first groups enjoy higher payoffs in keeping their traditional business model protected (Oppenheimer, 2012, p. 27). On the other hand, the low cost carriers with newly adapted business models, prefer a more liberal approach as a way to increase their business. The different players having no incentive to cooperate, no coordination of actions is made possible and consequently, no community industry …show more content…
A first advantage is geographical. Their central hubs between Europe and the eastern routes, result in an important saving on the average operational costs. As opposed to European hubs composed of a combination of long and short-medium haul flights, implying the obligation to maintain mixed fleets. Additionally, they benefit from advantageous fiscal regime and from being based at low-cost airports. They also profit from inexpensive carburant and the absence of labour unions (Ulrichsen, 2016, p.161). As a result of these intricate factors, a clear identification of unfair contribution sources is difficult to achieve. However, an economic analysis has demonstrated that such low charges have the potential to confer an advantage to the Gulf carriers (Doganis, 2002, pp.102-108). Moreover, several investments made by Etihad into Air Berlin, Alitalia and other European carriers blurs the concept of “EU airlines”. Consequently, the EU Commission must examine whether these air carriers can still be qualified as such in order to protect the values of the internal EU market, which values are reserved for EU air carriers
In particular, Etihad Airways came under attack in some media reports that claimed it was receiving large subsidies from the Abu Dhabi government. This consequently led to calls for regulators to investigate Gulf airlines strategy. However, not all airlines in Europe sustained this view, IAG, Finnair and Ryanair, supporters of the liberalization process, had a different opinion and took no issue with the Gulf carriers (Buyck, 2015, p.4). It must be noted, that according to the rational choice theory when we speak about collective interests and individual interests, odds are that self-interest will conflict with the obtaining of shared goals. Usually an unorganised group cannot optimally satisfy its shared or collective interest. Obviously, the difference in choice between the two groups is the result of the underlying payoffs. The first groups enjoy higher payoffs in keeping their traditional business model protected (Oppenheimer, 2012, p. 27). On the other hand, the low cost carriers with newly adapted business models, prefer a more liberal approach as a way to increase their business. The different players having no incentive to cooperate, no coordination of actions is made possible and consequently, no community industry …show more content…
A first advantage is geographical. Their central hubs between Europe and the eastern routes, result in an important saving on the average operational costs. As opposed to European hubs composed of a combination of long and short-medium haul flights, implying the obligation to maintain mixed fleets. Additionally, they benefit from advantageous fiscal regime and from being based at low-cost airports. They also profit from inexpensive carburant and the absence of labour unions (Ulrichsen, 2016, p.161). As a result of these intricate factors, a clear identification of unfair contribution sources is difficult to achieve. However, an economic analysis has demonstrated that such low charges have the potential to confer an advantage to the Gulf carriers (Doganis, 2002, pp.102-108). Moreover, several investments made by Etihad into Air Berlin, Alitalia and other European carriers blurs the concept of “EU airlines”. Consequently, the EU Commission must examine whether these air carriers can still be qualified as such in order to protect the values of the internal EU market, which values are reserved for EU air carriers