Finnair is opposing the payment of compensation to airlines hit by the volcanic ash chaos, arguing that carriers approved to operate in Europe should be strong enough to absorb the impact.

The Oneworld carrier estimates that it has suffered some €20 million ($26 million) in losses as a result of the crisis.

But Finnair believes the offer of state aid, approved by the European Commission, would lead to a "subsidy stampede" and distortion of competition.

Chief executive Mika Vehvilainen says European regulations require airlines to be capable of meeting actual and potential financial obligations.

"Cessation of operations for a week should not destabilise the solvency of a company that meets the EU requirements," he says, arguing that compensation would unfairly shore up weak airlines.

"The risk of airlines using the system for wider support would be great. We are already seeing support that contravenes the EU's state-aid rules."

Vehvilainen accuses the European authorities of being "sympathetic" to the possibility of subsidising "potentially non-compliant" carriers, adding: "We presume that the authorities will check immediately if the companies demanding support fulfil the conditions of their operating licences."

Source: Air Transport Intelligence news