EU Commission considers common fund for airline insurance

The European Commission may set up a “mutual fund” that would cover insurance risks caused by the threat of terrorism to airlines.

The aim is for no single airline or government to have to pay for the extra costs of a serious incident, and for preventing one company or country from obtaining an unfair advantage, said the EC’s transport commissioner Loyola de Palacio.

The commission said the terrorist attacks of Sept 11 “have exposed the vulnerability of the air transport sector with damage exceeding all rational estimates.”

The EC is also proposing harmonising the rules and amounts of insurance needed for the issue of airline operating licences.

The measures, in addition to setting out strict conditions for government financial support, will allow governments to temporarily offer war risk insurance cover and foresee legislation on airport slots and agreements between airlines.

The commission also said moves to restructure and merge airlines, already necessary before Sept 11, must be continued and even stepped up in some cases.