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Wednesday, 10 October, 2001, 12:13 GMT 13:13 UK
Full EU statement on airline aid
The European air transport industry has been hard hit by the terrorist attacks in New York and Washington on 11 September.

The European Union has therefore mobilised to tackle the most pressing problems.

In addition to measures to tighten up security, the question arises as to the impact of the attacks on an air transport industry already in need of consolidation.

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 following the events of 11 September.

In particular, the Commission considers that aid to compensate for the losses directly resulting from these exceptional circumstances is permissible.

Moreover, the application of Community competition law allows account to be taken of changes in the economic context.

The framework unveiled today has several dimensions: possibilities of Community law (legislation on airport slots, State aid schemes), insurance problems, assumption of the additional costs of security and compensation for the direct losses suffered in the days following the attacks.

It will enable Member States to act in concert and to avoid creating discriminatory situations.

The Commission also intends to monitor developments closely and it will take rapid action should the current situation deteriorate.

"The European Commission is aware of the serious problems facing European airlines and intends to take all appropriate measures.

"But it must be in a common framework. The range of options presented today will permit a concerted response by all European states, precluding any discrimination between airlines," said Loyola de Palacio, Vice-President responsible for transport and energy.

"The need to unite is once again apparent: from the Single Sky to international negotiations, we have to act together."

In the Communication it adopted today on the repercussions of the terrorist attacks of 11 September in the United States on the air transport industry, the Commission states that it considers justified, in the framework of the current rules and policies, the adoption of certain emergency measures in support of the industry.

1. Possible measures

State aid

The Commission will give favourable consideration, in the light of the criteria set out in the Communication, to measures to compensate airlines for losses resulting directly from the four-day closure of American airspace.

The Commission will examine, in the light of the criteria described, 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 should the need for such cover persist, on condition that this does not place the airlines in a more favourable position than prior to the withdrawal of their insurance cover.

Member States must notify all aid measures to the Commission.

With regard to security, the Commission considers that the reinforcement of certain security measures must be borne by the State.

Agreements between airlines

The Commission will examine on a case-by-case basis whether the conditions for an exemption under Article 81(3)(1) of the Treaty 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.

According to Mario Monti, Commissioner in charge of Competition: "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.

"Community competition law allows such changes to be taken into account.

"The Commission will examine on a case-by-case basis whether the conditions for obtaining an exemption under Article 81(3) of the Treaty are met.

"This is generally the case, for example, for capacity co-ordination agreements designed to maintain a regular service on less frequented routes or to co-ordinate schedules at off-peak periods of the day.

"The current rules should not therefore be changed, in the interests of consumers and the competitiveness of the industry."

Slots

The Commission considers that the airlines are entitled to retain their slots with grandfather status in Community airports during the summer 2002 season.

If the current situation continues into the winter 2001 season, which begins on 26 October, the Commission will examine whether measures should be introduced for the corresponding winter 2002/03 season.

Relations with third countries

The current crisis demonstrates the urgent need to take account of developments in North America, to coordinate actions with the American authorities and to ensure equal conditions of competition.

Therefore, as a first step, the Commission will propose a code of good conduct to the United States authorities in order to avoid distortions of competition resulting from the aid received by the American airlines.

The Commission notes that it has always defended Community competence in the framework of international negotiations on air transport.

As regards transatlantic relations in particular, the Commission considers that the Council should as soon as possible agree the draft negotiating mandate as a basis for negotiating an agreement with the United States in order to create the necessary framework and structures to ensure safe and reliable operating conditions in a competitive environment for airlines on both sides.

This would make it possible to adapt the regulatory framework of the undertakings and in particular the ownership rules.

In the absence of such an agreement and pending the negotiating mandate, it is up to the Member States to proceed with a minimum of Community coordination in the framework of the bilateral agreements.

In addition, in order to maintain equal conditions of competition with third country airlines and to avoid diverging responses by Member States, the Commission considers that all Member States must verify whether third country airlines furnish proof of minimum risk cover.

In the absence of such cover, Member States would be obliged to take appropriate, coordinated action, i.e. to withdraw traffic rights and prohibit overflight in accordance with the Community's international obligations.

Insurance

The terrorist attacks have exposed the vulnerability of the air transport sector, with damage exceeding all rational estimates

The Member States have asked the Commission to draw up guidelines to ensure an efficient and coherent response in such cases.

Possible responses could include the establishment of a "mutual fund" for risks in order to avoid the cost of national measures. In addition, the Commission proposes harmonising the amounts and conditions of insurance required for the issue of operating licences

2. Strengthening the capacity of the industry and of the Community to react

The European Commission notes that the moves to restructure and consolidate Community airlines, already necessary before the attacks, must be continued and even stepped up in some cases.

In addition, the European Commission has today presented a major package of legislative proposals to create the Single Sky as of 2004.

These proposals will help reduce the costs of organising airspace and permit more efficient cooperation to make this space safe.

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