EU to allow state aid to help airlines

THE European Commission has given airlines the green light to seek state aid to help meet the cost of the estimated €2.5 billion compensation bill incurred during the recent volcanic ash cloud crisis.

However, Transport Minister Noel Dempsey last night poured cold water on any suggestion his Government will be providing compensation.

Mr Dempsey said Ireland did not have the money in the current economic climate and the recommendation by the EU was just that – a recommendation.

According to a preliminary assessment by the European Commission, the cancellation of more than 100,000 flights involving around 10 million passengers cost the industry between €1.5bn and €2.5bn over the six day shutdown.

This takes into account the losses incurred by the airlines and the airports, and does not include losses incurred by business and other services because of lost and delayed flights.

Elsewhere, the Dublin Airport Authority has said the disruption cost the company up to €8 million.

Around 3,200 flights at Dublin, Cork and Shannon airports were cancelled, affecting 400,000 passengers.

Chief executive Declan Collier said the company was still counting the cost as the effect of delays and cancellations was still working its way through the system.

Reacting last night, Ryanair said it was strongly opposed to any state aid for airlines but expected the government at least to defer the 40% price increase at Dublin airport for at least a year, the scrapping of the €10 tourist tax and a strong campaign to scrap passenger compensation other than a simple fare refund.

European Transport Commissioner Siim Kallas said the size of the losses throughout Europe and the exceptional circumstances could justify governments giving some aid.

Compensating passengers for food and accommodation would be taken into account – something Ryanair at first refused to do but eventually conceded. He also said they will explore the possibility of setting up a common fund or insurance to help a specific sector hit by such crisis in future.

However, the commission has warned that any state aid would be rigorously examined to ensure that an individual country was not simply giving a boost to its own airline and giving it an unfair advantage.

Lufthansa has already warned against this, amid fears that France could take the opportunity to give state funds to Air France and increase its capacity to take over other airlines.

“The commission will make sure that such (funds) are only granted for net losses directly linked to the exceptional occurrence, are non-discriminatory and neither result in over-compensation for the damage suffered nor they are used as a pretext for rescue and restructuring aid,” he said.

Mr Kallas also promised that they will consider new approaches to the evaluation of risks, in particular in the case of natural disasters like the Icelandic volcano eruption.

European governments have been harshly criticised for failing to put in place a comprehensive plan to deal with events such as cloud cover caused by volcano, fires and other causes.

Mr Kallas said the commission will make proposals to adapt and develop a better and more integrated approach to safety risk assessment and management.

Work on having a coordinated management of the sky over the EU member states and four other European countries will be pushed through as quickly as possible, and the commission will also try to extend this to cover the whole of Europe, he said.

The European airport trade body, ACI, called on member states to aid the airports that they say lost €250m during the shutdown that came on top of the losses they have suffered from the global economic crisis.

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