November 2001 - Nr. 11
Germany Demands Strict Limits on Airline Subsidies
TWIG - Germany is putting pressure on members of the European Union to strictly limit subsidies to the region’s beleaguered airlines.
If the public sector wants be in the business of providing liability guarantees, then the airlines should be paying appropriate premiums, said Caio Koch-Weser of the Federal Ministry of Finance during a meeting of EU finance ministers in Luxemburg Tuesday. Most EU member states, including France and Great Britain, voiced support for the German view.
Koch-Weser insisted Europe should stick to the ground rules it set in mid-September in Luettich, Belgium, by which governments can help airlines pay the higher premiums charged by insurance companies for coverage on acts of war and terrorism in the wake of the September 11 attacks. Even that is to be regarded as a short-term measure, to be reassessed on a month-by-month basis.
Insurance companies have to be given incentives to return to normal contracts, said Koch-Weser. "Offers of billion-dollar coverage are back again," he noted. Many insurance companies had cancelled airline policies after the terrorist attacks, so government support was needed to keep the industry running.
European states should provide direct aid only to make up for losses incurred during the four days after September 11 when U.S. air space was closed, and such payments should be reported to the European Commission, stressed Koch-Weser. "There should be no bail-outs hidden in these contributions."
