EU airlines call for state help in case of war against Iraq

The European aviation industry said yesterday it will need government help with extra security and insurance costs in the event of a possible US-led war against Iraq or any new terrorist threats.

The cash-strapped industry is still recovering from the devastating hijacked airliner attacks on US cities on September 11, 2001, which forced airline companies to pay more for insurance and increased security.

In a joint statement, the Association of European Airlines (AEA) and Airports Council International (ACI), the sector's two main industry bodies, said the European Union needed a contingency plan to ensure airlines could cope with a new shock.

"Present geopolitical developments are causing major concerns within the air transport industry," the statement said.

"(We) urge the EU, member states and other European governments to absorb the direct and indirect costs resulting from enhanced anti-terrorist security measures reinforced in the wake of a war or terrorist attack."

An EU ban on most forms of state aid to airlines restricted governments in the bloc to offering only minimal assistance to airlines. US carriers received $5 billion cash aid.

One of the industry's biggest concerns is that any new attack could lead insurers to withdraw their third party war and terrorism cover, as they did after September 11.

On both sides of the Atlantic, governments stepped in to guarantee cover, but EU states had to gain permission to do so from the bloc's competition watchdog, the European Commission.

The industry wants this permission to be granted automatically.

"We are asking for state aid rules to be suspended so European governments can bridge the gap in what's offered by the insurance market and what airlines and airports need," ACI spokesman Ronan Anderson said.

The aviation industry is still trying to set up an international mutual fund to cover such risks.