EC rules out subsidies to Alitalia, EU airlines

EC rules out subsidies to Alitalia, EU airlines    Loyola De Palacio, vice president of the European Commission in charge of transport and energy, told an industry forum Wednesday the EC would refuse any attempt by the Italian government to bail out the ailing Italian national carrier Alitalia.
   State aids to airlines in the European Union are illegal, she said.
   The only choice for the Italian airline is to convince its staff to accept a restructuring plan, or face bankruptcy, the EC commissioner said.
   In an uncompromising speech to the Air Cargo Forum of the International Air Cargo Association in Bilbao Wednesday, De Palacio stressed that the EU airline industry needs to consolidate, and the age of protectionism for national carriers is over.
   “For the first time … in Europe, some flag carriers have gone bankrupt,” she said, citing the former Belgian airline Sabena and France’s Air Littoral.
   Air France and KLM have merged to become one of the largest air cargo carriers in the world.
   “The European market is too fragmented,” De Palacio said. “European carriers are too small compared to their international competitors.”
   Ram Menen, senior vice president, air cargo at Emirates Airline, based in the United Arab Emirates, praised the EC commissioner, and called for a further liberalization of the airline industry to facilitate trade.
   “Governments should not subsidize their national carriers,” Menen told the industry forum. Instead, governments should ensure open market access in air cargo to promote their exports, he argued.