* IATA members gather in Miami
* Row over subsidies increasingly bitter
* Response to Germanwings crash also eyed
* IATA due to give update on airlines' profitability
By Victoria Bryan
BERLIN, June 4 A row between U.S. and Gulf
carriers over alleged subsidies will be in the spotlight along
with aviation safety in the wake of the Germanwings crash when
the airline industry gathers for its annual meeting next week.
The International Air Transport Association (IATA) meeting
will kick off on Sunday in Miami amid an increasingly bitter row
as three U.S. airlines allege Gulf carriers have received more
than $40 billion in unfair subsidies. They have called on the
U.S. government to review the Open Skies policy that authorised
commercial flights between the United States and Qatar and the
United Arab Emirates over a decade ago.
The allegations by Delta Air Lines Inc, United
and American Airlines, rejected by Etihad,
Emirates and Qatar Airways, have also found backing
among some European carriers, notably Lufthansa and
The Dutch government said last month it would temporarily
stop granting new slots at Amsterdam's Schiphol airport to Gulf
airlines, promising a tougher line against possible "unfair
competition" from the Middle East.
However, planemaker Boeing, FedEx and
airlines such as JetBlue and British Airways owner IAG
have backed the U.S. Open Skies policies.
"This is a debate that goes beyond subsidies. It's to do
with how airlines are run and how markets around the world are
changing," independent aviation consultant John Strickland said.
IATA represents the interests of around 260 airlines from
across the globe, accounting for 83 percent of global traffic,
and this year's meeting is set to be the biggest yet.
IATA is unlikely to step directly into the row between some
of its most high-profile members, but delegates say some
airlines could use the formal part of the agenda to try to win
support from global members for a declaration backing their
"It's not for IATA to act as a ringmaster, but it could help
to take some of the heat out of the discussion and bring a more
factual look at the debate," Strickland said.
IATA Director General Tony Tyler said it was up to
governments to decide and that it was more an argument over what
constituted fair competition.
"The last time this happened it was with the Europeans and
the Middle East and since then you've seen the integration
through alliances or commercial agreements or in the case of
Etihad, investments," Tyler told Reuters on Thursday.
Air traffic rights or airline services do not fall under
World Trade Organization rules, meaning there is no global basis
for dealing with subsidy claims and presenting challenges for
the U.S. government as it reviews the matter.
The chief executives of Lufthansa and Turkish Airlines
have suggested WTO-style tools could be used in the
Others says airlines should focus on improving their own
"It strikes me that the kind of mindset that focuses on
complaining about competition is probably the wrong mindset.
Airlines should focus on putting their own house in order,"
Jonathan Wober, an analyst at CAPA-Centre for Aviation, said.
PROFITS AND SAFETY
The industry is also under pressure to respond to the
Germanwings crash in March. Evidence indicates co-pilot Andreas
Lubitz locked the pilot out of the cockpit and deliberately
steered the plane into a French mountainside, killing all 150
Airlines across the world swiftly moved to implement a rule
to ensure two members of crew are in the cockpit at all times.
Authorities in the United States and Europe are examining
cockpit door technology and pilot screening measures after it
was revealed Lubitz had suffered depression in the past and had
hidden details of an illness from his employers.
Lufthansa, which owns Germanwings, has suggested random
psychological checks for pilots could be an option.
IATA's Tyler will also on Monday give updated forecasts for
airline profitability this year. IATA currently expects net
profits of $25 billion in 2015 for a profit margin of 3.2
percent, the strongest in more than five years.
Lower oil prices are helping airlines, meaning many have
reported improved results in the traditionally weak first
quarter of the year.
However, analysts say some airlines could use cheap oil to
offer more seats to gain market share, thus driving prices down
further, which would hurt profits.
(Additional reporting by Tim Hepher in Paris and Zachary
Fagenson in Miami; Editing by Susan Fenton)