The European Commission (EC) has called for European Union member states to end emergency airline insurance cover by 31 October, which could drive airlines' operating costs up as they seek commercial cover.
A meeting on 3 October is likely to end the programme, set up after 11 September last year when many commercial insurers withdrew cover.
The EC has long been eager for member states to leave the insurance business, but has extended coverage twice to allow an alternative scheme to be created. The EC recommends the Eurotime and Global Time schemes, both mutual funds maintained by the airlines. Mutual funds have also been suggested in Asia-Pacific and North America.
Analyst Nigel Wicking of CGE&Y, however, doubts there will be time to set up the scheme. "The mutual fund will need an extensive consultative process. I would be surprised if it could go ahead in that time." He says creating Eurotime could take two years. Until then, airlines will have to enter the commercial market.
Wicking adds: "It is a falsehood to suggest the [insurance] industry has recovered to the same position it was in before 11 September." Airlines are perceived as a far higher risk and insurance companies are struggling financially, he says.
The Association of European Airlines (AEA) says: "We are very saddened and disappointed at the proposal." It doubts airlines would get similar coverage commercially. AEA says its mutual fund scheme is "ready to go", as long as governments can be persuaded to participate.
Airports Council International Europe director-general Phillippe Hamon says: "It is unthinkable that European airports are being left to operate...with insufficient insurance cover" and is calling for governments to continue underwriting airports.
Source: Flight International
