EU passes bill to crack down on foreign airline subsidies

EU passes bill to crack down on foreign airline subsidies

The European Parliament on Monday approved controversial legislation that allows the European Union to penalize foreign airlines benefiting from government subsidies or engaging in "unfair" pricing practices.

The measure, which is largely aimed at the U.S. industry, frees the European Commission, the EU's executive, to impose punitive duties on private and state-owned foreign carriers if it can prove subsidies or "unrealistic" pricing have harmed European airlines.

The legislation, which mirrors U.S. government powers to combat anti-competitive behavior by foreign carriers, will take effect soon after being approved by the European Parliament's transport committee.

A spokesman for the committee said the U.S. and other governments had given their airlines "huge" handouts after the Sept. 11 terrorist attacks that distorted competition, particularly in the trans-Atlantic market. The EU, by contrast, is applying strict limits on state aid to European carriers.

Rob Eddington, chief executive of British Airways, last week sharply criticized subsidies paid by Washington to U.S. carriers in the last three years that had "clearly distorted" the international market. In the U.S. "tens of billions of dollars have been poured into their airlines in the form of cash injections, loan guarantees, tax relief, insurance cover, security costs and most recently deferment of pension obligations," he said.

By contrast European airlines "had to look to self-help to steer a passage through the downturn," Eddington said.