Array

Etihad's Hogan hits back in airline financing row

CEO says subsidy row is a smokescreen for European airlines' failings.
Hogan says business models are European carriers' main problem.
Hogan says business models are European carriers' main problem.

Share

European airlines are trying to distract attention from their failings by furthering a row over the funding advantages of Middle Eastern carriers, the CEO of Etihad Airways has told the FT.

James Hogan, CEO of the Abu Dhabi carrier, hit back at remarks by Western carriers that claim carriers such as Etihad and Emirates use unfair subsidies from European export credit agencies to finance aircraft deals and to take market share from existing airlines.

A number of US and European airlines are impacted by a 'home market rule,' which states that countries where Boeing and Airbus build aircraft cannot use export credit agencies to help their carriers buy passenger airliners.

The rule, which impacts carriers in the US, UK and France, among others, is seen as offering an unfair advantage to Gulf carriers unaffected by the law.

A number of western airlines have lobbied their governments to scrap the rule in favour of a 20 percent cap on export financing for aircraft and increasing the cost of the funding.

“What European legacy carriers are doing here is muddying the water,” Hogan told the Financial Times.

“Why do people such as ourselves have a competitive advantage? We are seven years old; we are not a legacy carrier. I am not bound by union agreements that may be 25 or 30 years old. I am not bound by infrastructure that may have been right for 30 years ago.

“There’s an economic shift,” Hogan said. “Whereas the European hubs were at the centre of the aviation world, today they are at the end of it. Their networks rely on feeding into London, Frankfurt or Paris. That’s a competitive issue, a structural address. So address it. It is not to do with us getting a form of credit.”

Some 15 percent of Etihad’s funding is sourced from export credit, Hogan told the paper.

The airline has joined with carriers including Emirates and Ryanair to lobby against the proposed cap on export financing.

By Joanne Bladd, arabianbusiness.com

Most Popular