European airlines demand 'level playing field' with Chinese rivals

By Julia Payne and Joanna Plucinska

BRUSSELS (Reuters) -European airlines urged Brussels on Wednesday to do more to secure a level playing field in the industry, complaining that Chinese rivals enjoy a huge cost advantage because they can fly over Russia and do not face extra environmental costs.

A number of carriers, including IAG-owned British Airways and Lufthansa have recently cancelled their routes to Beijing as they struggle with competition from Chinese airlines on Europe-Asia routes.

Action is all the more important because many carriers are also facing delivery delays as planemakers Airbus and Boeing struggle with supply chain problems and, in Boeing's case, industrial action, the airlines said.

At an industry press conference in Brussels, Lufthansa CEO Carsten Spohr said all flights into Europe should be required to avoid Russian airspace to ensure fair competition.

"We are not allowed to cross Russia but Chinese carriers are. If you want a level playing field, we need to ensure any airline landing in Europe avoids Russian airspace. Until that happens there will be enormous advantages to Chinese carriers," he said.

He also said that Chinese airlines did not have costs related to Europe's emissions trading system, describing that as another "financial advantage".

COMPETITIVENESS

The press conference, which brought together some of Europe's leading airline CEOs, was focused on improving the European sector's competitiveness.

IAG Chief Executive Luis Gallego also pointed to difficulties with getting acquisitions approved by regulators in the sector.

"We cannot have bigger airlines or groups of airlines, because consolidation is difficult ... we are going to kill European aviation if we don't change this," Gallego told journalists.

IAG withdrew its bid to take over Spanish carrier Air Europa earlier this year after prolonged negotiations with the European Commission.

Airlines also lamented the uncertainty caused by aircraft delivery delays, although budget carrier Ryanair noted the capacity constraints would be good for ticket pricing, while adding they would likely impact the sector for years to come.

Ryanair group CEO Michael O'Leary said the company would be doing well if it got 10 or 15 aircraft from Boeing after March next year, instead of the expected 30.

He earlier told Reuters that Ryanair would have to cut its passenger traffic estimates for next year because of expected delivery delays.

Air France-KLM said it was impacted by Pratt & Whitney engine issues with its Airbus A220 orders, while Lufthansa said it had never seen delays like those for the Boeing 777X, adding they had reached around five years.

Airbus has also struggled with delivery delays, with its targets in question across the sector.

(Reporting by Joanna Plucinska and Julia Payne; Editing by Mark Potter)