States expected to block anti-predatory pricing proposal in bid to curb EC's future aviation negotiating powers

Proposals to impose trade sanctions against state-subsidised non-European airlines are to be delayed as several European Union member states seek to limit the European Commission's power to negotiate aviation policy.

Germany and the UK are expected to stall the final approval stage of the bill as a bargaining chip as the EC seeks a mandate to negotiate open skies with the USA.

An EC proposal to fine non-EU carriers who receive market-distorting state aid was passed by the European Parliament last week and could be in force by April if transport ministers approve it. Several member states are indicating that they could stall the progress of the measure, which was passed almost unanimously.

Nicholas Clegg, the legislation's draftsman, says: "Legally there is no link between predatory pricing and the European Court of Justice ruling [establishing the EC's right to negotiate aviation bilaterals]; politically there is a will in several member states not to give this proposal the green light."

The proposal is scheduled to be voted on by ministers in the first week of March, but the measure will only become possible when full powers in the aviation sector are given to the EC. Member states will be requested to assign the EC these powers at the same session of the Transport Council.

The governments of Germany and the UK are understood to be reluctant to give the EC power over enforcing the sanctions. Both countries are keen to retain some negotiating powers over bilaterals.

The European Parliament says distortions to fair competition have increased since 11 September 2001 because of the "substantial" emergency support granted by governments to third-country airlines. The EC argues European airlines cannot compete fairly with airlines receiving large sums of state aid such as the US government's $15 billion bailout of US carriers and Switzerland's SFr2.6 billion ($1.9 billion) bankrolling of Swissair.

The new legislation proposes levying duties and restricting take- off and landing slots in cases only where "subsidies or unfair pricing practices" can be proved to be "injurious" to EU airlines.

The EC agreed last week to fund Galileo's development phase without the European Space Agency.

Source: Flight International