Tags: Rules | Out | Airline | Subsidy

UK Rules Out Airline Subsidy

Sunday, 23 September 2001 12:00 AM

Chancellor Gordon Brown, Britain's finance minister, said the agreement was not a precursor to a more wide-ranging state aid package. The deal was prompted by insurers' refusal to provide war liability cover beyond midnight Monday.

Brown's decision was announced one day after the U.S. Congress approved a $15 billion rescue package for U.S. airlines.

He told the British Broadcasting Corp. the government had no plans to bail out troubled airlines.

"Over the last 20 years, Europe has spent a lot of time eliminating the possibility of state subsidies for airlines," said Brown. "This is, and should be, a highly competitive business."

Airline industry analysts said that despite Brown's assertion the European Union might still come under renewed pressure from Europe's beleaguered aviation industries and businesses for help to avoid collapse.

EU finance ministers meeting in Brussels, Belgium are hoping to come up with a set of guiding principles that would enable governments across the union to underwrite the insurance of aircraft against acts of war or terrorism.

Insurers are likely to continue insuring the aircraft and their passengers and crew, but will limit their liability for damage caused on the ground in the case of a crash to $50 million. Owners who lease the airplanes to airlines normally demand third party insurance cover of around $750 million each.

The deal provides for a government indemnity for third party war and terrorism liabilities, government sources said.

Industry lobbyists have cited the government's cash handouts of millions of dollars to farmers to cope with the foot and mouth epidemic, which has been sidelined amid the crisis over terrorism but is far from controlled.

So far the only bright spot in British aviation has been an advertising campaign by the no-frills airline EasyJet, offering seats from London to Edinburgh, Scotland, for as little as $40 -- a fraction of the normal price.

Copyright 2001 by United Press International. All rights reserved.

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Chancellor Gordon Brown, Britain's finance minister, said the agreement was not a precursor to a more wide-ranging state aid package. The deal was prompted by insurers' refusal to provide war liability cover beyond midnight Monday. Brown's decision was announced one day...
Rules,Out,Airline,Subsidy
318
2001-00-23
Sunday, 23 September 2001 12:00 AM
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