Herman De Wulf/BRUSSELS
LUXEMBOURG'S LUXAIR . has rejected a pioneering proposal by Belgian national airline Sabena to form a joint pool of aircraft and pilots across the border in lower-cost Luxembourg.
Luxair says that the proposed co-operation, possibly involving an equity stake, would "...involve operational and social risks" and could "jeopardise" its existing alliance with Lufthansa. The German airline, which owns a 13% share in Luxair, is understood to have opposed the deal.
A key element of the plan was to form a joint pool of pilots in Luxembourg. Sabena stood to make substantial savings by removing 450 pilots from Belgium's burdensome employment laws. Social costs in Luxembourg are only one-third of those paid by employers across the border in Belgium.
Sabena would also have registered Belgian aircraft in Luxembourg, making them available to Luxair to help expand its charter business. In return, Sabena could have used Luxair's charter Boeing 737s during weekdays.
Registering under a flag of convenience is already common practice in the shipping world, with most of the Belgian merchant fleet on the Luxembourg register, but the plan would have marked a new departure in Europe's liberalised airline market.
The prospect was mooted in 1994 during the deliberations of the Comite des Sages, a group set up by the European Commission to study the problems facing the region's airline industry. Sabena president Pierre Godfroid pointed out during the hearings that his airline could have saved around BFr1 ($316 million) billion a year if, for example, it were operating under the UK's less onerous employment laws.
Sabena's proposal had already received the blessing of Belgian transport minister Elio di Ruppo and the ABPNL pilots union. Pilots could have received a boost in their take-home pay because Luxembourg tax rates are also lower than in Belgium.
ABPNL says that it had earlier proposed a similar plan. Pilots already move freely between the two countries and licensing of Luxembourg pilots is carried out by the Belgium authorities.
Source: Flight International