European and North American airlines are falling behind due to agreements with unions, poorly-located hubs and outdated infrastructure, according to James Hogan, the chief executive of Etihad Airways.

Mr Hogan made the remarks in response to British Airways, Chief Executive, Willie Walsh who said European export credit agencies are unfairly subsiding the growth of Middle Eastern carriers such as Emirates and Etihad.

He said European carriers were failing to building fleets to fill the demand for Asia’s rapidly emerging economies.

He told the Financial Times: “There’s an economic shift. Whereas the European hubs were at the centre of the aviation world, today they are at the end of it. Their networks rely on feeding into London, Frankfurt or Paris. That’s a competitive issue, a structural address. So address it. It is not to do with us getting a form of credit.”

Speaking at the launch of Etihad’s new service to Seoul, he said western legacy carriers are trying to shift the attention from their structural failings to the funding advantages of fast-growing Middle Eastern carriers.

He said: “What European legacy carriers are doing here is muddying the water.”
“Why do people such as ourselves have a competitive advantage? We are seven years old; we are not a legacy carrier. I am not bound by union agreements that may be 25 or 30 years old. I am not bound by infrastructure that may have been right for 30 years ago.”

Some 24 US and European airlines complain they are held back by a rule set in the 1980s that states that countries where Boeing and Airbus build aircraft (the US, UK, France, Germany and Spain) cannot use export credit agencies to help their airlines buy passenger aircraft. The western airlines want their governments to drop this “home-market rule”, then put a 20 percent cap on export financing for aircraft purchases and increase the costs of such funding.

Mr Hogan said he was happy for western countries to drop the home market rule, levelling the field on export finance, but that he opposed the further restrictions proposed by western airlines.

Etihad, which was voted “World’s Leading Airline” at 2010 World Travel Awards in November, has joined nine other airlines including Ryanair, Emirates and Korean Air in forming the Aviation Alliance. This group is lobby against moves to impose a limit on export financing and charge more for it. He said 15 per cent of his funding came from export credit. He said these agencies made the same “gruelling, strong” demands on his business plans as would normal banks.