The European Commission is reportedly pushing for new regulations to protect EU carriers from the expansion of the three major Gulf airlines, as it wades into a dispute about allegedly unfair state-backed subsidies enjoyed by carriers operating out of the UAE and Qatar.

The commission is set to propose amendments to existing regulation, allowing it to punish foreign carriers that benefit from illegal government subsidies or other favourable treatment to the detriment of European carriers, according to Reuters.

If enacted, the draft proposal would allow the commission to impose duties on non-EU carriers or suspend their flying rights where unfair commercial practices are found to have injured EU airlines, Reuters said in a report on 10 February. Such practices could include favourable treatment that affect airport charges, ground-handling services, refuelling and the allocation of airport slots.

A spokesperson for DG Move declined to comment when contacted by GTDT Aviation Law News, because the report was based on a leaked document.

As part of its wider aviation strategy, the commission said at the end of 2015 that it planned to protect fair and sustainable competition in the international aviation market by introducing new measures to buttress existing laws on subsidisation and unfair pricing practices, which it said are currently ineffective.

The new rules would allow the commission to initiate an investigation following a complaint by a member state, airline or industry association if there is clear evidence that unfair business practices have injured European carriers.

It is thought that the proposed regulation intends to tackle unfair practices in countries that are not party to an EU open skies agreement, although the commission will have the power to investigate behaviour in countries where a bilateral air services agreement does exist.

The strength of these investigative powers remains unclear, as the new regulation would only allow the Commission to conduct a probe in a non-EU country if granted consent by that country’s government and the relevant foreign carrier, Reuters said.

Under the new regulation, the commission would not adopt measures against foreign carriers if doing so would negatively affect EU citizens, or if the penalties were disproportionate to other advantages conferred by the airlines.

If approved, the draft proposal would revamp existing laws that were introduced in 2004 to counter unfair pricing practices adopted by US airlines under regulation 868/2004, although that regulation has never been relied on in any case, investigation or infringement decision.

The latest draft proposal, which would require approval by the European Parliament and the European Council, is expected to be published in April.

The move will heighten tensions with Emirates, Etihad Airways and Qatar Airways, which are engaged in hostilities with US and European carriers on either side of the Atlantic.

Several EU carriers, including Air France and Lufthansa, have accused the Gulf carriers of relying on illegal state-subsidies and favourable government treatment. The three Middle Eastern airlines have consistently denied the accusations.

Those complaints mirror similar claims by Delta Air Lines, American Airlines and United Airlines, which are actively challenging the expansion of the three Gulf airlines in the US under the umbrella of the Partnership for Open & Fair Skies lobbying group.

The US airlines complained about the expansion of Emirates in January and continue to lobby the Trump administration to reconsider the terms of US open skies agreements with Qatar and the UAE.