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EU Proposes Steps to Aid Its Airlines

28 April 2010 02:01 (UTC +04:00)

Baku-APA. The European Commission outlined a series of measures to help support airlines and improve coordination following the chaos from a cloud of volcanic ash that grounded more than 100,000 flights, stranded millions of passengers and caused airlines to lose billions of euros in revenue, APA reports quoting online.wsj.com website.

Representatives of European airlines and airports, who criticized how the crisis was handled as it unfolded, welcomed the commission’s proposals.

EU Transport Commissioner Siim Kallas estimated that the crisis, which shut airspace across much of Northern and Central Europe for six days starting April 15, had cost airlines world-wide between â‚¬1.5 billion and â‚¬2.5 billion ($2 billion and $2.7 billion). Airline schedules in Europe have since returned to normal.

The exceptional circumstances may justify some government support to airlines to help them cope with losses they incurred as a direct result of the crisis, Mr. Kallas said. Any aid would be granted by EU member states, not the EU itself. The 27-country bloc generally prohibits state aid to companies.

Mr. Kallas cautioned that support could be granted only based on "uniform criteria established at the European level" and set out by the commission, the EU’s executive arm. The commission will soon issue a clear set of guidelines on this matter, he said.

"But state aid is not a miracle," Mr. Kallas said. "There is not a sack of money waiting for a crisis."

The commission is proposing to allow governments to make loans and guarantees to airlines at market conditions to alleviate cash-flow problems following the disruption, Mr. Kallas said.

Other short-term measures that airlines have requested, and which the EU is likely to endorse, include waiving restrictions on night operations at airports so carriers can bring stranded passengers home; a relaxation of scheduling rules on takeoffs and landings to give airlines more operational flexibility; and temporary deferral of air-traffic charges to help ease cash-flow pressures on airlines.

For the longer term, European officials will develop new systems to handle future volcanic eruptions or other disruptions, Mr. Kallas said.

The commission is also proposing to accelerate its work on integrating European air-traffic control through a long-running project known as the Single European Sky. Mr. Kallas said that the Single Sky "would not have solved the problem, but would have enabled a more nimble approach."

The EU will separately propose new global rules for airlines and air-traffic controllers to deal with volcanic eruptions. The proposal will be presented in September to a general meeting of the International Civil Aviation Organization, an arm of the United Nations.

ICAO’s current rules, developed after eruptions in the 1980s, tell carriers to completely avoid clouds of volcanic dust or ash. They were the main reason European governments completely closed their airspace.

Ulrich Schulte-Strathaus, secretary-general of the Association of European Airlines, said the task force led by Mr. Kallas and two other EU commissioners had in "a remarkably short time frame" come up with sound analysis of how the grounding’s impact should be handled and a similar crisis could be avoided in the future.

Mr. Schulte-Strathaus said EU airlines wouldn’t seek state aid, but shouldn’t be left completely responsible for the financial consequences of government decisions to close airspace.

Olivier Jankovec, director-general of the Airports Council International Europe, another trade group, said the commission’s proposal "could constitute a feasible European aviation-relief plan" and praised its swift preparation.

The commission’s proposals will be discussed and potentially approved by EU transport ministers at a special meeting on Tuesday.

Mr. Kallas worked with EU competition commissioner Joaquin Almunia and with Olli Rehn, commissioner for economic and financial affairs, to ensure that the response fit within EU rules on state aid and economic policies.

Airlines had argued that flight restrictions imposed after the eruption of the volcano under Iceland’s Eyjafjallajokull glacier were too severe for the risk posed by the ash cloud it created.

Carriers also criticized the lack of coordination on the crisis. Air authorities in individual countries took differing decisions on closing and opening national airspace, often based on identical data.

Passengers, meanwhile, have criticized airlines for not moving faster to repatriate them, and for sending mixed messages on what compensation they will be entitled to. Mr. Kallas said EU passenger-rights rulesâ€”which say airlines must pay for meals, drinks and hotels for stranded passengersâ€”must be enforced across the region.

"No airline should benefit by avoiding its legal obligations," he said.

U.S., Asian and Middle Eastern airlines that lost money will have to deal with the losses on their own, unless their governments decide to help out. But European airlines were by far the hardest hit, as many of their home bases were closed. And any aid offered within the EU is likely to be a fraction of the total losses EU carriers have faced.