Etihad launches legal action on airberlin codesharing

Etihad Airways said on Monday it would “fight all the way” to protect its investment in airberlin, as it launched legal action to reverse a German ruling to revoke approval for 29 codeshares it operates with the German carrier.

Last week, the Administrative Court of Braunschweig ruled that the country’s ministry of transport was entitled to stop Etihad from selling tickets on some routes operated by Germany’s second-largest airline.

The court ruled that Etihad would not be able to operate codeshares on some flights from January 16 to the end of its winter schedule in March, because they were not supported by the aviation services agreement between the UAE and Germany.

Etihad said in a statement that the German transport ministry had previously approved the codeshare agreement between it and airberlin covering 63 routes. However, in the summer of 2014, the ministry of transport first raised concerns about 29 of the codeshares, based on “lobbying by Lufthansa”, Germany’s flagship airline, Etihad said.

In November, the ministry approved the 29 codeshares to continue only until January 15 this year. The ministry left the remaining codeshare agreements intact.

Yesterday, a notice of appeal was filed in the higher administrative court in Lüneburg, Etihad said.

James Hogan, the president and chief executive of Etihad, said that despite supporting airberlin jobs, creating new employment and making a four-year investment in the country it now finds that “the rules have changed”.

He said: “We will fight all the way to protect our investment, to protect our partnership with airberlin and to protect competitive choice in German air travel.”

Mr Hogan said that the company’s experience would “serve as a warning to others” seeking to make investments in Germany.

Since Etihad took a 29.2 per cent stake in airberlin in 2011, the German carrier has benefited from several hundred million euros of financing, investment and credit lines.

Etihad said on Monday that it took the stake “following encouragement from German regional and national government representatives”.

During the past 12 months, Etihad and its Arabian Gulf neighbours Emirates and Qatar Airways have been under increasing regulatory scrutiny amid allegations from US and European rivals of unfair practices in breach of open skies agreements.

The Gulf airlines say that they are being targeted for providing a superior service and greater choice for passengers that the legacy carriers are simply unable to compete with.

On Monday, Mr Hogan said the codeshares with airberlin “have created new competitive choice for German travellers” and clearly meet the terms of the air services agreement between the UAE and Germany.

Last month, the European Commission raised concerns about the way Arabian Gulf carriers operate in Europe and called for comprehensive agreements between the European Union and GCC states based on common rules and more transparency.

“In Germany, our commitment continues to be undermined by the lobbying efforts and protectionist tactics of Lufthansa, the national airline,” Mr Hogan said. “Make no mistake. Protectionism will undoubtedly harm the investment landscape in Germany.”

Airberlin is striving to complete a turnaround after financial losses in almost every year from 2008 to 2014, except for 2012, amid Europe’s harsh economic landscape and fierce competition from low-cost carriers such as Ryanair, easyJet and Lufthansa’s own budget airlines.

“As a global business, we focus our investments in markets which will deliver long-term returns. We were encouraged to invest in airberlin. However, since that initial investment, we have faced a series of significant challenges, including the introduction of airport taxes, which have directly eroded airberlin’s profitability,” Mr Hogan said.

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Shereen El Gazzar

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