Palacio stands by ideals, steadfastly refusing to allow state aid to airlines

It is cold comfort for the thousands of Aer Lingus staff threatened with redundancy but their fate is one that is shared by tens of thousands throughout Europe.

Italian pilots will stage a four-hour strike on Monday following reports that Alitalia is about to cut 5,200 jobs, twice the number previously announced.

In Spain, the Netherlands and Britain, thousands of job cuts have been announced and Belgium's national carrier, Sabena, could fold with the loss of 12,000 jobs.

Amid all this misery, the European Transport Commissioner, Ms Loyola de Palacio, remains rock-like in her determination to forbid any state aid to struggling airlines. When officials from the Department of Public Enterprise met Ms de Palacio's staff in Brussels last Friday, they were told categorically that neither a loan guarantee nor any other form of state aid to Aer Lingus had any chance of being approved.

The Irish officials were taken aback by the firmness of the Commission's tone, not least because Commission President Mr Romano Prodi had indicated to the Taoiseach two days earlier that some flexibility might be considered.

Ms de Palacio claims, with some justification, that by taking a firm line, she is fulfilling her duty as the guardian of EU treaties that place strict limits on such aid.

And she points out that the Commission has approved compensation for EU airlines that lost money during the four days after September 11th when US airspace was closed. The cost of extra security measures will be borne by governments rather than airlines and governments have been allowed to guarantee war-risk insurance.

But she has made no secret of her conviction that the age of the national flag carrier is ending and that Europe's future lies in a few big airlines similar in scale to US carriers.

In a Commission with more than its fair share of committed free-marketeers, Ms de Palacio is among the most ideologically driven right-wingers. She is also regarded as being close to the conservative Catholic group Opus Dei.

Born in Madrid in 1950, Ms de Palacio is a protΘgΘ of the veteran prime minister of Galicia, Mr Manuel Fraga, who served as a minister under Franco.

At 27, she founded the Nuevas Generaciones, a youth movement attached to the conservative Alianza Popular. She entered parliament in 1989 and, although her contributions to debates were sometimes mocked, the Socialist government regarded her as a formidable opponent.

When the conservatives gained power in 1996, incoming prime minister Mr Jose Maria Aznar appointed Ms de Palacio agriculture minister. Ms de Palacio spent much of her tenure in permanent combat with Agriculture Commissioner Mr Franz Fischler over Spain's milk quota and subsidies for sheep farmers and olive growers.

While she was minister, agriculture department officials enriched themselves by abusing EU subsidies for flax growers. But Ms de Palacio was cleared of any wrong-doing and, although the issue was raised by the European Parliament when she was nominated to the Commission, her appointment was approved without difficulty.

Ms de Palacio had a good start in the Commission, reinventing the unglamorous transport brief to become a champion of consumer rights. She worked hard to push through proposals for a unified European air traffic control system that could cut delays. And she persuaded airlines to agree a voluntary charter of passengers rights aimed at giving passengers a better deal.

But the air traffic control plans have been blocked by an argument between Britain and Spain over Gibraltar. And the Commission has not worked out how to monitor compliance with the charter of passenger rights.

One of Ms de Palacio's biggest ambitions is to gain for the Commission airline negotiating rights with the US, thereby abolishing the bilateral "open skies" agreements the 15 member-states now have with Washington.

The Republic's "open skies" agreement with the US guarantees the Shannon stopover and allots certain transatlantic routes to Aer Lingus.

Ms de Palacio argues that the Commission could get a better deal for European airlines by negotiating for the EU as a whole. But some smaller member-states fear that abolishing the open skies agreements would bring forward the day when Europe has just three big airlines - Lufthansa, British Airways and Air France.

Ms de Palacio made clear recently that, if such consolidation were to take place, she would welcome it. "A market such as air transport is a global one, competing with the great US and Asian carriers. We need in Europe, also, worldwide-sized carriers which can compete," she said.