The September 11 hijack attacks were an exceptional event that justified some state help to European airlines and a flexible interpretation of antitrust rules, a draft European Commission report said.
The draft, obtained by Reuters today, said European Union airlines would suffer losses of 3.6 billion euros ($3.29 billion) in revenues by the end of the year and faced job losses that could eventually rise to 30,000-40,000.
In the report, due to be formally published on Wednesday, the Commission -- the EU's competition watchdog -- said the exceptional circumstances meant governments would be allowed to help the sector where state aid was normally strictly controlled.
Governments would be allowed to pay for extra security measures put in place and to help ensure airlines receive war risk insurance cover, possibly until the end of the year.
Certain air sector regulations would be more flexible, the report said. Rules stating that airlines lose their takeoff and landing slots if they do not use them would be suspended for the summer 2002 season, and perhaps the season after that.
In addition, the Commission would look favourably on requests from airlines to coordinate capacity reductions -- normally outlawed by EU antitrust rules -- if this could be shown to have benefits to customers, the draft report said.
The Commission would also propose creating a code of conduct with the United States to ensure airline aid did not create competition distortions. Washington has approved a $15 billion aid package for U.S. airlines.