SIMON WARBURTON / PARIS
Transport commissioner announces measures including government subsidies, slot protection and ATC harmonisation
Europe's major airlines have emerged as the prime beneficiaries of a wide ranging series of aviation industry initiatives unveiled by the European Commission's transport commissioner Loyola de Palacio on 10 October in the wake of the US terror attacks.
Announcing the measures covering governmental subsidies, aviation security, slot allocation, harmonised European air traffic control and aircraft insurance, de Palacio approved aid for airline losses directly affected by the closure of US airspace immediately following the attacks.
British Airways, one of the airlines most exposed to transatlantic business, estimates its losses during the four day period run to about £48 million ($70 million). By contrast, airlines at the European Regions Airline Association meeting in Athens last week complained it would be almost impossible to claim for losses resulting from items such as lost interline traffic.
Lufthansa says that the EC proposals "are in the right direction and send the right signal", although the German flag carrier declares itself "against subsidies in general". Lufthansa lost €40 million ($36 million) in the week following the US attacks and adds that it lost a total of €80 million up until the end of September.
Overall the 28-strong Association of European Airlines (AEA),which represents major airlines, estimates a revenue loss of some €3.7 billion directly associated to the attacks. It also also believes that 108 aircraft will be grounded and 20,000 jobs lost.
The European Commissioner noted however, that with airlines in the 15 European Union states already moving towards consolidation, alliances and even merger before the 11 September, financial help would be limited so as not to distort the long term trends. Nevertheless, de Palacio concedes that the "exceptional circumstances in which the industry finds itself", make direct compensation permissible. Her move comes after US airlines secured access to "federal credit instruments" of $10 billion and loss compensation of $5 billion. EU airlines subsequently lobbied the Commission intensely to be allowed similar generosity.
The most immediate aid problem for the EC to resolve is likely to be an application from the Belgian Government for approval to supply a €125 million bridging loan to rescue state carrier Sabena. Under rescue aid guidelines agreed by the EC in 1999 approval is likely, giving the airline a six month lifeline to reorganise. A decision is due on 17 October.
The major airlines have also benefited from the EC's decision on slot allocation in the wake of the widespread route and capacity cuts following the terrorist attacks. Despite vociferous lobbying from low-cost carriers such as the UK's EasyJet and Ireland's Ryanair, the EC is for the time being permitting carriers to retain so-called "grandfather" rights with relation to slots.
The low-cost airlines, which continue to see passenger growth, albeit with lower yields, had argued that the 80% "use it or lose" principle on slots should now be vigorously applied, freeing up access to hitherto highly slot-constrained airports such as London Heathrow or Gatwick. The EC has turned down their request for immediate access to the unused slots ruling that the situation demands that the status quo be retained until at least the 2002 summer season.
Should the present difficulties persist, de Palacio says that she will examine whether further measures "should be introduced for the corresponding winter 2002/3 season", a move that should go some way to placating the AEA, which has called for grandfather slot retention at the same time as its members pro-gressively introduce capacity cuts.
EU states are also to be permitted to pursue their policy of providing emergency insurance for airlines with the "temporary continuation" lasting until year-end should the need still persist. The EC is also to examine the possibility of setting up a "mutual fund" to assist with security costs incurred on a national basis and will look at "harmonising the amounts and conditions of insurance required for the issue of operating licences".
In among the moves to address the immediate crisis, the EC has also made it clear that it will continue to pursue one of its favourite hobby-horses - the issue of Brussels gaining control of negotiating transatlantic aviation agreements with the USA at a regional level rather than the current bilateral level.
De Palacio, who is pursuing a number of EU countries through the courts over the individual Open Skies deals with the USA, says that the Commission will discuss ways to ensure a level playing field between the USA and the EU, while at the same time asking for a "mandate to negotiate an agreement with the USA to create safe and reliable operating conditions".
As a sweetener to airlines or governments who may feel uncomfortable on the issue, the EC holds out the prospect of "adapting the regulatory framework and in particular, ownership rules". At present, airlines on both sides of the Atlantic are heavily constrained by stakeholding regulations.
Source: Flight International
