European transport ministers are today expected to agree to help insure airlines against the risk of terrorist attacks until the end of May. This will mean extending for two months an agreement reached after September 11th last year to allow governments to take on part of the cost of such insurance.
Some governments, including the Republic's, are concerned that such assistance to airlines should end as soon as possible because they believe it acts as a hidden subsidy for insurance companies. The decision to help airlines followed a move by insurers to increase premiums and to reduce dramatically their liability in the case of terrorist attacks. Strictly speaking, the issue of state aid to airlines is entirely a matter for the European Commission. But the Transport Commissioner, Ms Loyola de Palacio, has sought to agree a policy in consultation with the member-states. Both Ms de Palacio and the member-states hope to persuade insurers to increase their liability in the case of terrorist attacks from its present level of $50 million (€57 million).
The Commission and member-states are negotiating with the aviation industry the establishment of a mutual fund to cover terrorist risk. Airlines, charter companies, airports and aircraft manufacturers are expected to contribute to such a scheme.
The industry wants governments to underwrite the scheme for the first few years and to take on direct liability for claims above $1.5 billion. At their meeting in Brussels today, the ministers are also expected to give the final go-ahead to Galileo, a positioning system involving 30 satellites. The system, which would be a rival to the US Global Positioning System (GPS) would be the biggest infrastructure project in the EU's history, costing at least €2.5 billion.
Most member-states agree that Europe needs its own positioning system even though the US offers information from GPS at no cost. But some governments fear that unless private investors play a significant role, Galileo could become a "black hole" for taxpayers' money for years to come.
