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New EU law seeks to curb aid to US airlines
11 March 2004
The European Parliament passed a law Thursday to seek redress for subsidies enjoyed by foreign airlines such as billions of dollars granted to US carriers after the September 11 attacks.
The European Union assembly said European airlines, which are subject to strict EU rules on state aid, could not compete fairly with their US rivals.
The adoption of the law means that the European Commission, the EU's executive arm, must now work out detailed ways to seek redress if, for example, a European airline complains about help offered to US carriers.
Among the possible measures would be to fine the foreign airline the same amount it is found to have received from its government.
The EU lawmaker who steered the legislation through parliament, British Liberal Nick Clegg, said the law targeted aid such as the post-9/11 support given to US carriers.
"Since 11 September 2001, US airlines in particular have benefited from huge government subsidies which have allowed them to lower prices artificially on trans-Atlantic routes in order to win over customers," he said.
"This has hit competing European airlines hard, especially since they have to comply with stringent EU state aid rules."
Airlines around the world were plunged into crisis in the aftermath of the September 11 airborne suicide attacks on New York and Washington, when insurers withdrew or drastically scaled back coverage for acts of terrorism.
Coupled with a slump in air travel, the attacks forced governments, including in the EU, to step in to prevent a total shutdown of air travel.
The EU has been scaling back its state insurance coverage for European airlines, but the European Parliament accused the US government of continuing to extend billions of dollars in subsidies for its carriers.
"The days are long gone when EU airlines were protected from international competition by dollops of public subsidy and US airlines had to survive unaided," Clegg said.
The European Commission has been clamping down on subsidies offered to EU airlines.
In a landmark decision last month, the commission ordered Europe's biggest no-frills carrier Ryanair to repay millions of euros (dollars) in subsidies extended by a state-owned airport south of Brussels.
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