As Much As $3.3 Billion Lost Due To Eruption In Iceland

The executive body of the European Union says European governments should help the Union's aviation industry recover from more than $3 billion in losses following the eruption of an Icelandic volcano.

European airlines said it was unnecessary to close large areas of airspace over Europe after the eruption, which spewed a massive ash cloud over the Continent. The Associated Press reports that Eurocontrol has put together a team to determine if the reaction was appropriate.

Transport Commissioner Siim Kallas (pictured, below) said in a news release published on the EU Transport Commission website that the Commission considers that Member States can rapidly implement measures in favor of the air industry which do not constitute state aid – notably loans and guarantees granted at market conditions. Certain support measures could also be sen as state aid from Member States to make good damage caused by natural disasters or exceptional occurrences. If support from Member States takes the form of state aid measures it must be granted on the basis of uniform criteria established at European level. It cannot be used to allow unfair assistance to companies which is not directly related to the crisis. The Commission could produce a communication to establish clear and precise guidance in this regard.

Additionally, the Commission will recommend that slot coordinators take into account the effects of the crisis, so that airlines can keep slots which were not used during the crisis and the period immediately afterwards. The Commission will not object to Member State measures to waive operational restrictions for short periods – for example flight restrictions – until the return to normality of the overall network and the repatriation of all stranded passengers. Finally, the Commission will recommend to Member States and to Eurocontrol to assess immediately the possibility to defer the actual payments for en-route charges for a defined period of time. This is an important measure to provide some relief to immediate cash flow problems. Member States should take all appropriate steps in relation to their air navigation service providers.

Still, member states were cautioned not to give aid other than as outlined by the EU. "This must be granted on the basis of uniform criteria established at the European level," Kallas said. "It cannot be used to allow unfair assistance to companies which is not directly related to the crisis."

The eruption caused the cancellation of over 100,000 flights, and there were as many as 10 million passengers who were unable to reach their destinations.

The event has also led to a call for an emergency meeting of EU transport ministers on May 4th to discuss sweeping reforms in the European air traffic system. "Europe needs a single regulator for a single European sky," Kallas said. He added that, given fast-track authority, the first phase of such a consolidated system ... called "Single European Sky" ... could be up and running by the end of this year.

FMI: http://ec.europa.eu/transport/index_en.htm