Government Could Help EU Airlines

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Brussels, Belgium Oct. 9, 2001 (AP by Paul Geitner)--European airlines could get longer government insurance guarantees covering terrorism and war risk and compensation for losses resulting from the attacks in the United States as part of an emergency package drafted by the European Union's head office.

The European Commission report, to be presented Wednesday, also recommends public authorities assume the costs of stepped-up aviation security, according to a summary obtained by The Associated Press.

Recognizing the ``serious difficulties'' facing the industry, the Commission, which enforces EU competition rules, promised relaxed scrutiny of efforts by airlines to coordinate schedules or maintain service on less-traveled routes.

It also said airlines would not have to worry about losing rights to airport slots next summer because of last month's groundings, and promised to consider similar breaks for the winter season if the downturn in air travel lasts.

Under EU rules, airlines can lose an allocated slot if it is not used at least 80 percent of the time.

At the urging of European airlines, the Commission also will try to work out a ``code of conduct'' with U.S. authorities to avoid any ``distortions of competition'' on trans-Atlantic routes resulting from the $15 billion aid package Congress granted to U.S. airlines.

``The range of possibilities ... will allow a concerted response from all the European states, preventing any discrimination among companies,'' Transport Commissioner Loyola de Palacio says in the summary.

Among the main proposals is an extension of the one-month government guarantee for war insurance agreed to after private insurers canceled all such policies one week after the Sept. 11 attacks.

While the Association of European Airlines had been pushing for six more months of coverage, the European Commission proposal would allow governments to extend the coverage until the end of the year.

The proposal also states the Commission would ``benevolently examine'' moves by EU governments to compensate their national airlines for ``direct losses'' during the four days U.S. airspace was closed after the attacks.

The AEA estimates the attacks will cost European airlines $3.4 billion in lost revenues for the period to December, resulting in 108 aircraft being grounded and the loss of 20,000 airline jobs.

The Commission proposal stresses, however, that any aid to companies must not distort competition or be used to ease pre-existing financial problems.

Many of Europe's airlines have been flying in the red for years, as evidenced by the filing last week for protection from creditors by Swissair and Belgium's Sabena.

AEA spokesman David Henderson said the Commission's proposal was ``fairly well in line'' with that submitted by his organization, which represents 28 companies.

``Broadly speaking we're going in the same direction,'' he said.

Copyright (c) 2000 The Associated Press