EU set to approve help for national airlines

European Union governments will be allowed to step in to help their countries' airlines deal with the effects of the war in Iraq under plans scheduled to be announced by the European Commission this week.

But after more than a decade of trying to eliminate state aid to the sector, the Commission wants to prevent the war from becoming an excuse for new subsidies.

The US government is considering a request from US airlines for financial assistance, and congressional Democrats have already proposed a $4-$5 billion package (€3.8-€4.7 billion).

By contrast, the Commission's plan would merely give governments the green light to help airlines with insurance and take-off and landing slots, as well as compensation for travel restrictions and heightened security costs.

Such measures formed the basis of the Commission's response to the effect of the September 11th attacks, which was markedly less generous than the $15 billion package granted by Washington to US airlines.

The Commission plan is scheduled to be unveiled tomorrow and discussed by transport ministers at a meeting on Friday.

But Greece, which will chair the meeting by virtue of its current presidency of the EU, plans to submit a "discussion paper" of its own, which the Commission fears could increase the pressure for more state aid.

Athens is already in a fight with the Brussels authorities over €194 million in alleged state aid to Olympic Airways that the Commission has ordered the airline to pay back.

The Greek paper, which is still being drafted, calls for the EU to consider "measures of support" for the aviation industry if the US grants a substantial aid package of its own.

But a presidency official said he expected its recommendations to be largely in line with the EU's steps after September 11th.

Delta Air Lines said yesterday it would cut its network capacity, both domestic and international, by about 12 per cent at least until the end of April in response to declining passenger demand.