EU weighs airline aid

EU weighs airline aid

The EU is considering relaxing competition rules

European Transport Ministers are meeting in Brussels to discuss helping out the cash-strapped airline industry.

The war in Iraq has led to a slowdown in global travel, forcing airlines to take emergency measures such as drastic cuts in flight schedules and jobs.

One of the proposals on the agenda for the 15 transport ministers meeting on Thursday and Friday is allowing EU governments to cover the costs of extra security measures.

Regulations forcing airlines to give up under-used routes to rivals could also be relaxed.

Normally, airlines would lose a slot if it were being used less than 80% of the time.

"Favourable eye"

A spokesman for EU Transport Commissioner Loyola de Palacio said the EU would turn a "favourable eye" on airline alliances on particular routes to cut overcapacity.

The war in Iraq could lead to losses of $10bn for airlines around the world

How the world's airlines are cutting costs

But Brussels also said the current crisis is not yet serious enough to allow cash hand-outs to the airlines by EU governments or taking on insurance costs.

These measures were implemented following the September 11 attacks on the US, which sent the airline industry into a global crisis as it was suddenly faced with a drop in demand.

The International Air Transport Association said last week the war in Iraq could add another $10bn (£ 6.4bn) to the huge losses already run-up by the world's airlines.

The industry trade body expects international passenger travel to fall 15 to 20% during the war and said the industry faced one of its worst crises in history.

Meanwhile, on Wednesday, a US senator said Congress was considering putting a $3bn aid package together for the American airline industry.

The war in Iraq has had enormous implications for American airlines.

United Airlines - currently losing $13m a day - warned this week that its financial position was likely to deteriorate because of the war in Iraq, while many of the other main players are also struggling.