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Unique: Stricter EU airport slot guidelines set off threats of retaliation in Asia and danger industrial commerce conflict

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© Reuters. FILE PHOTO: A view of an empty departure lounge at Changi Airport in Singapore, January 18, 2021. REUTERS / Edgar Su / File photo

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By Jamie Freed

(Reuters) – Regulators in Asian hubs like Singapore and Hong Kong have threatened retaliatory measures against European Union plans to force airlines to use frozen take-off and landing sites during the coronavirus pandemic, a move that could force Europe's airlines to empty seats fly for thousands of miles at a loss.

The authorities controlling slots at major Asian airports are ready to impose conditions similar to "use or loss" on European airlines flying to Asian cities – raising the prospect of an industry trade war over the uneven impact of COVID- 19 increased.

After the rare consensus during the pandemic when airlines were rescued or tried to stay afloat, industry leaders say the dispute has rekindled profound differences in a fragmented sector as the world rebounds at multiple speeds.

"Is it a trade war? Certainly the germ of one," said former Australian aviation negotiator Peter Harbison, retired chairman of the consulting firm CAPA Center for Aviation in Sydney.

"And it is accentuated when more airlines collapse and international markets are closed or at best remain uncertain."

Tensions have grown since July when the EU announced plans to force airlines to use 50% of their rights or to lose them to competitors starting next month. This move partially reintroduced the competition rules that had been waived when airlines struggled to survive the pandemic.

But while the EU decision reflects a traffic recovery on Europe's mainly short haul market, Asian airlines are protesting that they are being unfairly penalized because their long haul networks take much longer to recover.

Some Asian regulators have already warned European airlines that they must fly at least 50% of the time, industry sources said, risking political battles over the future of the world's trade links.

& # 39; MUTUALITY & # 39;

Singapore, one of several Asian jurisdictions that have established unreported "reciprocity rules," has incorporated the provisions to ensure fair treatment, said Daniel Ng, director of aviation for the Singapore Civil Aviation Authority.

In Asia, long quarantines remain the norm for travelers and airlines that operated just 14% of their international capacity in July in 2019, well below the 46% of 2019 levels in Europe and 48% in North America, data from International Air Transport Association (IATA). shows.

Cathay Pacific publicly warned last month that Hong Kong's slower recovery means the loss of valuable overseas airfields and threatens the status of the city's hub.

Taiwan's China Airlines and Korean Air Lines expressed concern about EU rules in statements to Reuters, while Singapore Airlines (OTC 🙂 declined to comment.

In Europe, Lufthansa – the EU airline with the most flights to Asia – said the strict EU rules could ultimately harm the climate as well as airlines if they are forced to fly empty planes to keep slots. Air France and KLM said their flight decision was not based on airport slots.

& # 39; SHOCK PHASE & # 39; Over

The EU broke with a global industry recommendation and tightened rules for the winter scheduling season, which runs from October to March, after heavy lobbying by low-cost airlines like Ryanair with large short haul networks and European airports, many of which are being privatized and trying to generate returns.

"We are no longer in an immediate shock phase," said Aidan Flanagan, Security and Capacity Manager at Airports Council International Europe. "We are now in a situation where the market is stable at levels much lower than 2019, but it is stable."

The European Commission said in July that the 50% usage rate – versus 80% in normal times – was chosen to ensure good use of airport capacity and help consumers. Exemptions have also been granted so airlines don't have to hit 50% while strict measures such as quarantine that make travel difficult remain in place.

The Commission did not immediately respond to a request for comment.

SIX WEEKS TO REACT

Once travel restrictions are lifted, Asian airlines will have to step up flights to the European Union within six weeks or risk losing slots even if demand is slow to return.

"When the demand isn't there, it's unreasonable to expect people to operate," said Lara Maughan, director of IATA's global airport slots. "It's a really short window of time once the restrictions are lifted to recalibrate the entire operation."

René Maysokolua, managing director of German airport slot manager FLUKO, said his organization had been informed that some Asian countries were telling European airlines that they would have to fly or risk losing their slots in retaliation for the EU 50% of the time. Losing Regulations.

Singapore, Hong Kong and South Korea are among those taking a tougher stance on European airlines, said an industry source that was not empowered to speak publicly on the matter.

The Singapore and Hong Kong authorities confirmed the existence of reciprocity but declined to comment on specific cases.

Korea Airport Schedules Office did not respond to a request for comment, but Korean Air, a member of the country's slot working group, upheld the rules.

As the potential for conflict between Asia and Europe looms, the United States announced on Thursday milder winter season rules for international airlines than the European Union.

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