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Wednesday, 17 October, 2001, 05:35 GMT 06:35 UK
Europe says no to airline aid
Lufthansa plane takes-off at Frankfurt Airport
European carriers remain unhappy with aid restrictions
European countries will not be allowed to pump money into troubled airlines, except to cover losses immediately following last month's terror attacks, the European Commission has said.

The ruling is in line with previous advice, and ignores the pleas of governments across Europe that the region's aviation industry should get as generous a handout as its US rivals.

In one small loosening of policy, European Union Transport Commissioner Loyola de Palacio told EU transport ministers that aid would be considered on a case by case basis.

The EC previously said that only damage incurred on the day of the attack, 11 September, and three days afterwards, could be considered eligible for state aid.

Now it has conceded that if the US and Israeli aviation shutdown had effects beyond that date, more compensation could be considered.

Ms de Palacio said: "If we try to broaden this mechanism, we would be getting into a whole new ball game.

"Once you open that door you don't know where it will lead."

The airline industry will not be allowed to collapse, she promised, but support must be offered "in a way that does not distort competition".

US aid

Ms de Palacio did permit a relaxation of so-called "use it or lose it" regulations on landing slots at airports.

And she allowed governments to pick up the tab for heightened security, and extra insurance costs, until the end of this year.

She also promised to consult with her US counterpart, Norman Mineta, to work out a code of conduct covering state aid.

EU airlines accuse US rivals of using the $15bn package of aid they have received to slash fares.

"Price dumping is already taking place," said Belgium's transport minister, Isabelle Durant.

Sabena, the Belgian flag carrier, is in bankruptcy protection, and is still waiting for a decision from Ms de Palacio on whether it can accept a government loan of 125m euros (78.2m; $113m).

The BBC's Mike Sergeant
"Sabena is one of the most vulnerable airlines in Europe"
See also:

15 Oct 01 | Business
France offers state aid to airlines
12 Oct 01 | Business
Airlines ask EU for more aid
10 Oct 01 | Business
Full EU statement on airline aid
04 Oct 01 | Business
EU complains over Swissair aid
23 Sep 01 | Business
Airlines receive $15bn aid boost
12 Oct 01 | Business
Round-up: Aviation in crisis
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