EU suggests the beginning of new trade war over airline subsidy...
Fears of a further trade war between the US and European Union have been raised with moves by the Brussels to levy tariffs on airlines receiving ?unfair? state subsidies.
The EU Transport Commissioner Loyola de Palacio has proposed lumbering state-sponsored airlines, which fly to the EU, with penalties including duties and landing rights restrictions.
The move, to be presented to European Commission on Tuesday, is being seen by some observers as retaliation against the US, which last week imposed duties of up to 30% on steel imported from major producer nations. The US government gave America's airlines $15bn in aid as the carriers struggled to cope with a downturn prompted by the 11th September strikes
European airlines, denied comparable aid, have continued to condemn the move. The Swiss government has also supported the creation of a new flag carrier after the failure of Swissair last year.
But EU officials on Sunday denied the duty proposals were directed against any particular nation or airline. "We have a legal void to fill," a commission spokeswoman said. "We have to make sure there is fair competition in the market."
While the EU has already introduced regulations to counter the advantages of state subsidies in areas including shipping and goods imports, air travel had yet to be tackled, the spokeswoman said.
Kevin O'Toole of Airline Business Magazine said that there may be implications for US airlines if help given after the 11th September attacks were taken into account but other airlines may also be affected.
"There are carriers elsewhere in the world where there is renationalisations taking place such as Air New Zealand and perhaps some in developing countries where heavy subsidies have been put through," he said.
And even if Ms de Palacio's measures are adopted by the commission, they will take several more months to be cleared by EU nations.
The EU has in recent years increasingly cracked down on state airline aid within member countries, a factor seen as key in the decision by the Belgian government last year to allow the collapse of flag carrier Sabena.