BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: UK  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
England
N Ireland
Scotland
Wales
Politics
Education
Business
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Saturday, 12 October, 2002, 01:31 GMT 02:31 UK
Insurance ruling threatens airlines
Heathrow Airport
Airlines will have to pay full commercial rates
A huge rise in the cost of insurance cover for war and terrorism risks could result in the ruin of UK and other European airlines, aviation experts have warned.

From the end of October, the European Commission is to end an emergency scheme under which EU member states underwrite airlines' war-risk insurance.


There will be a shake up I'm sure of it

Annie Redmile

The move means European airlines will have to pay full commercial rates for the first time since the September 11 attacks.

The attacks last year exposed airlines' potential liability for losses on the ground, highlighting the possibility of claims from families and businesses for the loss of people and property.

Previously Europe's airlines could only obtain third party war risk cover if the government agree to underwrite the policies, effectively to pay out in the event of a claim.

The EU granted an extension to allow national governments to underwrite the insurance in July, but it says airlines should not need the help of governments any longer.

Critical implications

The extension followed a similar move from the US Government.

Many believe the huge leap in costs is likely to be more than some struggling airlines can afford.

Aviation expert Annie Redmile told the BBC that it could have critical implications for the industry and will mean financial ruin for some companies.

"Some will go down, I think, " she said.

"Some even bigger carriers could go down."

In September, trade unions at United Airlines in the United States offered to accept $5bn in cost cuts on staff, including pay cuts, to try and save the firm from bankruptcy.

The airline's top management had warned that the second biggest US carrier could not survive without sweeping cost cuts.

 WATCH/LISTEN
 ON THIS STORY
Hywel Jones reports
"Europe's airlines will find the tough patch that little bit tougher"
See also:

02 Jul 02 | Business
12 Sep 02 | England
29 Jul 02 | Business
24 Jul 02 | England
10 May 02 | Business
05 Mar 02 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more UK stories are at the foot of the page.


E-mail this story to a friend

Links to more UK stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes