EU May Aid Airlines Hurt by Iraq War
BRUSSELS, Belgium (AP)--European Union regulators may relax EU competition rules to help airlines cope with the Iraq war, which the industry fears will lead to $10 billion in losses, officials said Tuesday.
Proposals under discussion would allow governments to cover costs of extra security measures and loosen rules that oblige airlines to give under-used routes to rivals.
EU spokesman Gilles Gantelet said regulators may cast a ``favorable eye'' on airline alliances on particularly cluttered routes.
However the Iraq crisis does not yet merit any direct compensation payments to airlines, nor will EU members be allowed to cover airlines' insurance costs.
Such measures were adopted to help airlines through the crisis that followed the Sept. 11, 2001, attacks on the United States.
The International Air Transport Association last week warned that the Iraq war could cost airlines $10 billion on top of $30 billion in estimated losses they have already accumulated since the Sept. 11 attacks.
The EU's head office is expected to approve the proposals Wednesday and recommend them to transport ministers from the 15 EU nations meeting Thursday in Brussels.
Meanwhile, Europe's second largest airline, Germany's Lufthansa, said Tuesday it was cutting flights to the United States and Asia, blaming a sharp fall in bookings since the start of war in Iraq.
Lufthansa said it was putting off plans to expand its long-distance flights starting March 30, saying demand on trans-Atlantic routes had fallen ``particularly sharply.''
It said it would cut one flight a day on routes between Frankfurt and New York, Boston and Los Angeles. Flights to Dallas and Phoenix will also be reduced and smaller planes will be used for services to Philadelphia.
In Asia, Lufthansa said it was dropping plans to add flights to Nagoya in Japan and would use smaller planes to fly to Osaka and the South Korean capital Seoul.
It also announced cuts on services to Caracas, Venezuela and Johannesburg, South Africa.