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German court rejects extending Etihad’s Air Berlin code-sharing

A German court rejected an effort by Etihad Airways to prolong a seat-sales sharing accord with Air Berlin Plc on 31 routes during the winter schedule, a potential setback to the German carrier’s struggle to return to profit.

Etihad, the biggest shareholder in Air Berlin with a 29 percent stake, is examining the ruling by the administrative court of the state of Lower Saxony and expects to file an appeal next week, the Abu Dhabi-based carrier said Wednesday in a statement. The company stands by its German partner, it said.

German regulators provided a temporary extension until mid-January to the airlines’ code-sharing pact on the routes in October, when clearance was set to expire. Judges at the court in Braunschweig ruled on Wednesday that Etihad and Air Berlin must halt the practice from Jan. 16 through the end of the seasonal schedule in March because the services aren’t covered by air traffic accords between the United Arab Emirates (UAE) and Germany. Another 50 routes that the carriers offer on a code-sharing basis are unaffected by the ruling, the court said.

“Etihad Airways is deeply disappointed by the German court’s decision handed down today,” the airline said. “The social and economic damage to Germany by this decision is significant.”

German and UAE officials disagree over whether the sales partnership, which allows the carriers to book seats on each other’s flights and share some revenue, is covered by current flight-rights treaties on those services. Etihad chief executive officer James Hogan, who has bought stakes in other airlines including Air Berlin, said in October the key reason his company invested in the German carrier was for the code sharing routes and that failure to approve them would severely damage the partner.

The court decision “materially reduces competition and consumer choice within and beyond Germany and causes inconvenience to passengers,” Etihad said on Wednesday. The company and Air Berlin said separately that all booked itineraries will be honored.

The ruling confirms the German government’s legal assessment, while Etihad and Air Berlin have had time since receiving initial temporary clearance in August, 2014 to adjust their schedules to the rules, the Transport Ministry said in a statement. Germany has repeatedly offered the UAE talks on aviation rights, it said.

The UAE General Civil Aviation Authority will meet “very soon” with Etihad Airways to discuss the issue and whether the government should intervene, Laila Al-Muhairi, executive director of strategy and international affairs at the regulator, said by phone.