EC TO ALLOW EMERGENCY AIRLINE SUBSIDIES

EC TO ALLOW EMERGENCY AIRLINE SUBSIDIES    The European Commission said on Wednesday that it would approve of certain emergency state aid measures to help European airlines and may allow certain airline agreements.
   “The European air transport industry has been hard hit by the terrorist attacks in New York and Washington on Sept. 11,” the EC said. “In view of the magnitude of the crisis, the European Commission, on the initiative of Loyola de Palacio and Mario Monti, considered it justified to adopt certain emergency measures, for a temporary period, to deal with the exceptional circumstances in which the industry finds itself,” it added.
   The EC considers that aid “to compensate for the losses directly resulting from these exceptional circumstances” is permissible. It also said that it will examine “the assumption of the additional costs of insurance for a maximum period of one month and the temporary continuation of intervention by member states until the end of the year.” This will be subject to the condition that this does not place the airlines in a more favourable position than prior to the withdrawal of their insurance cover.
   With regard to security, the Commission said that it considers that the reinforcement of certain security measures must be borne by the state.
   Concerning agreements between airlines, the EC said that it will examine on a case-by-case basis whether the conditions for an exemption under Article 81 of the EC Treaty — the European antitrust law — are met. “It will also give favourable consideration to the capacity co-ordination agreements designed to maintain a regular service on less frequented routes or to co-ordinate schedules during off-peak periods of the day,” it said.
   “The airlines may find they need to conclude agreements in response to the exceptional events or in order to adapt better to the changing economic context,” said Mario Monti, commissioner in charge of competition.