EU ministers differ over giving aid to airlines

European Union transport ministers look set to clash today over how far governments should intervene to help airlines hit by …

European Union transport ministers look set to clash today over how far governments should intervene to help airlines hit by the crisis following the September 11th US attacks.

The ministers are meeting in Luxembourg, where they are discussing a limited state aid package proposed by the European Commission last week.

The EU's executive arm has said there is no European money to hand to airlines, despite a $15 billion package hastily put together by Washington for US carriers.

It also insisted the hijack attacks should not be used as an excuse for EU member governments to bail out airlines already in trouble.

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Aid should be limited to compensating for losses incurred during the four days after September 11th when US airspace was closed, paying for extra security, and higher war risk insurance, the Commission said.

But some countries will ask the Commission for more scope to help their airlines.

French Transport Minister Mr Jean-Claude Gayssot said yesterday the French airline sector would receive aid totalling some two billion French francs ($276 million) - half from the state and half from increased airport taxes.

Minister for Public Enterprise Mrs O'Rourke will seek permission to help the Aer Lingus, which is now reportedly losing £2 million a day.

The Commission is also due to decide on Wednesday whether to approve a euro 125 million government loan to Belgium's Sabena amid protest from rival airlines.

Ministers will also discuss airlines' allegations that US carriers were using their government cash to undercut fares. EU Transport Commissioner Ms Loyola de Palacio has written to US Transportation Secretary Mr Norman Mineta to raise the issue.