Austrian agrees cost-reduction package with Vienna Airport

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Austrian Airlines has negotiated a new agreement with Flughafen Wien, the operator of its Vienna Airport base, which aims to reduce the airline's costs and make the airport a more competitive location.

Under the deal Flughafen Wien intends to extend its current Government-administered tariff formula, due to expire this year, to 2012.

It will also raise its "transfer incentive" for all airlines by €2, to €10.21, for a year from 1 July - a decision for which it will incur €6 million ($7.8 million) in costs. An amendment to Austrian legislation will also halve the security charge for all transfer passengers.

Austrian Airlines, in return, has agreed to extend its ground-handling contract with Flughafen Wien by three years to 2012.

The agreement will "create more competitive framework conditions" for the airline, says Austrian, adding that the cost structure at the airport will be "internationally comparable".

"This will enable Austrian to reduce its costs in the medium term," it adds. Austrian is under pressure to reduce costs as it prepares to be taken over by German flag-carrier Lufthansa.