07/05/08, 09:42:39 UTC

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Berlin divided over airline landing rights

msnbc.msn.com

Under Angela Merkel's chancellorship, Germany has sought to deploy a more robust industry policy. But a battle over the domination of German airways has landed Berlin with a dilemma that could become a case study in the contradictions of economic patriotism.

The problem arose in November last year, when Emirates Airlines, the Dubai-owned operator, asked the German government for permission to operate long-haul flights out of Berlin's BBI airport, now under construction and scheduled to open in 2011.

Emirates is one of the fastest-expanding airlines in Germany, operating 49 flights a week to and from Frankfurt, Munich, Düsseldorf and, since last year, Hamburg. Until then, all its requests for additional rights had been granted without hesitation.

But when Henry Hasselbarth, head of Emirates for central Europe, filed his latest demand, he faced an abrupt change of tone: "Germany was always very liberal. But all of a sudden, the answer was No."

Landing rights are political decisions, negotiated by governments and set in bilateral agreements. In Berlin, the decision on Emirates' request falls to the transport minister, Wolfgang Tiefensee.

So alarmed was the United Arab Emirates that it sent Sheik Mohammed bin Rashid Al Maktoum, vice-president, to Berlin late last year, where he met Ms Merkel and urged her to reconsider. She was reported to be friendly but non-committal.

Further research by Emirates revealed that Lufthansa, the German carrier, had been lobbying hard to stop the airline's expansion.

Wolfgang Weber, spokesman for Lufthansa in Berlin, is candid about his company's objections: "Emirates is not really interested in flying to Germany. Their plan is to turn Dubai into a mega-hub and fly European travellers all the way to Asia. We see great danger for European hubs. . . and we hope the government will weigh carefully the interests of the German and European economies in this."

The transport ministry declined to comment on the issue, saying only that a formal review of Emirates' request had not yet taken place and would begin shortly. Yet a government official conceded that Berlin's attitude had hardened.

"I would not call it protectionism, but we have of course questions. We want fair competition. We have to take German interests into account."

The Berlin state government swung into action to back Emirates' request. Berlin's relationship with Luft-hansa is tense, since the airline has refused to make the capital into a national hub – most of its international flights are routed through Munich and Frankfurt.

"The economic future of BBI hinges on the presence of long-haul flights. The lack of transit possibilities is its greatest weakness," wrote Berlin's municipal development agency in a report. "It is in our interest to support Emirates' request to the transport ministry."

In a private letter to the Berlin state government last week, Mr Tiefensee pledged to consider the city's interest in the forthcoming negotiations with the UAE.

He also underlined the risks facing German airlines and airports, "given the gradual decline of traditional direct flights between Germany and destinations in India, Asia and Africa to the benefit of the emerging hub in the Gulf".

How he eventually solves this contradiction could be the biggest test to date of the German government's ability to implement a more hands-on industry policy.

 Printable Version  | published Aug 30, 2007