EC clears Air Serbia after investigation

The European Commission (EC) has completed its investigation into Air Serbia's ownership structure, determining that Etihad Airways’ investment in the Serbian carrier is in line with European Union rules on ownership and effective control of airlines. The ruling comes just a month after the United States Federal Aviation Administration also found that effective control at Air Serbia lies with the government and not its part-owner Etihad. The EC launched an investigation into Etihad’s investments in European airlines in April 2014 as part of a wider examination into whether foreign ownership of European carriers complies with EU airline licensing rules. While Serbia is not an EU member state, as a candidate country it must adhere to the Union’s pre-accession policies and guidelines. Following Etihad’s takeover of Jat Airways, the EC requested for Serbia to clarify the airline’s new ownership structure. While a carrier from outside Europe can hold a minority stake in an EU airline or a country aspiring to join the block, it must prove that the effective control is still in the hands of the majority shareholder.

The EC had previously issued suggestions to the Serbian government in order to deal with the matter, which have since been approved and implemented. In 2014, Siniša Mali, the President of the Air Serbia Supervisory Board, said. “The European Commission, in a way, did us a favour, by reducing Etihad’s participation. Etihad now doesn’t have the right to decide but only gives suggestions for preparation of the business plan”. He added, “None of the agreements signed between the Serbian government and Etihad Airways are contrary to the European Common Aviation Area Agreement, including those concerning corporative control. The most distinguished lawyers from London drafted these agreements and they wouldn’t make an oversight”. Etihad Airways has maintained that the effective control in each of its investments lies with the majority shareholder “I can’t sit in Abu Dhabi and manage a Swiss, German or Serbian business but I can be a strong and responsible shareholder. There is a strong local team running each airline”, Etihad Aviation Group's CEO, James Hogan, previously said.

Other airlines can influence the Commission to open formal investigations into cases concerning fair competition. Low cost airline Rynair made it no secret it played a major role in the EC’s decision to investigate Adria Airways over state aid and went as far as publicly criticising the Commission for being too slow to rule on the case. It is believed Lufthansa played an instrumental role in the EC's decision to investigate Etihad’s investments in Europe, irked by the carrier’s plans to increase its capital in Germany’s second largest airline Air Berlin and its investment in Alitalia. As a result, Air Serbia found itself in the crossfire of Lufthansa’s dispute with Etihad. Lufthansa CEO, Carsten Spohr, recently said, “Etihad should respect European laws and engage in more due diligence in order to avoid clashing with the EU in relation to its purchase of equity stakes in European airlines. In Germany and Europe we believe in the law and whatever the law allows to be done shall be done, like it or not … if it’s illegal it shall not be done”.