EU to act against subsidised airline tickets

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BRUSSELS, March 11 (Reuters) - Airlines outside the European Union may be
forced to pay duties to the EU if they use government subsidies to slash
their ticket prices under plans the European Commission is expected to
endorse on Tuesday.

The plan could affect airlines in the United States -- and any other
subsidised non-European price cutter -- but is not in any way a response to
a U.S. decision to erect tariff barriers to steel imports, an EU official
said.

It is a response to subsidies granted to airlines following the attacks of
September 11, when European airlines suddenly faced subsidised competition.
Countries complained to the EU.


"We were defenceless," said EU spokesman Gilles Gantelet. "We didn't have
any legal tools to do anything." So the EU has proposed a provision similar
to one that the U.S. has had since 2000.

"This is simply closing a loophole," Gantelet, spokesman for EU Transport
Commissioner Loyola de Palacio, told Reuters.

The plan, which has to win approval from the European Parliament and the
governments of the 15 member states, would impose measures similar to
anti-dumping provisions used for goods such as steel and for maritime trade.

The proposal is so uncontroversial at this point that the Commission has
scheduled no debate on the matter and is expected to rubber stamp the plan
unanimously.

In fact, Gantelet said that there are no problems for the time being that
would require use of the provision.

"There are no problems currently with the Americans or the Swiss," he said.
"We had had more problems in the past with the Swiss."

Airlines could complain to the EU about unfair treatment or the Commission
could initiate an action, Gantalet said. In either case there would be time
for talks before the duties were imposed.

"It's one thing to say 'please,'" he said. "It's another thing to say, 'If
you don't stop this practice I will apply the regulation.'"

An EU official expressed concern that without the measure, unfair
competition by government-subsidised airlines could eventually drive some EU
airlines out of business.

"EU airlines are under strict rules and get no operating subsidies," the
official said. "They have to struggle to survive."

Belgian national airline Sabena declared bankruptcy in November after it was
barred by EU rules from getting government help to bail it out.

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