JUSTIN WASTNAGE / LONDON
Commission asked to tighten up proposed action against airlines receiving additional assistance from Washington
The European Commission could impose punitive fees on US carriers following US moves to increase assistance to the country's airlines. The House of Representatives aviation subcommittee has passed a proposal to extend federal war risk insurance coverage, brought in after commercial insurers withdrew from the market. The proposal, soon to go before the full House, would also give airlines $3 billion in federally underwritten loans to offset any increase in fuel prices as a result of a war with Iraq.
In response, the European Parliament will ask the European Commission this week to tighten up proposed actions against "unfair competition from subsidised third country airlines", drawn up by the Commission in March. Representatives from the Parliament's economic and trade committees have asked the Commission to clarify the penalties against carriers receiving subsidies. The Commission is thought to favour fees on ticket prices, but is also considering restricting slots at EU airports.
The Commission says that Europeans have to "play it by the book", and cannot give airlines state aid "whether or not they are undergoing a crisis such as the one bolstered by the events of 11 September", whereas foreign competitors are not always subject to similar rules.
The newly amended proposal will be put before European transport ministers on 6 November and would then be returned to the Parliament in December. It could take effect by April next year.
US authorities and carriers reject suggestions of unfair state assistance. Delta Air Lines chief executive Leo Mullin says that airlines are not requesting special treatment or "what has been sometimes termed as a bail-out", but for an end to special treatment for relief from the government-imposed security fees.
Airlines claim the industry will incur $4 billion in security costs this year, comprising 35-40% of US majors' pre-tax operating losses.
Additional reporting by Aaron Karp in Washington DC
Source: Flight International
