EU wants united airspace after ash cloud

(Reuters) – European authorities have seized on this week’s airline crisis to fast-track their control of airspace, but they appear to have less interest in helping airlines pay the bills left by the volcanic ash cloud.

European transport commissioner Siim Kallas will next week present recommendations learned from a week of aviation chaos, which the airline industry says cost it about $1.7 billion in lost revenue, though it also saved some $660 million in costs such as fuel.

Unifying Europe’s airspace is likely to top the list of proposals ahead of a meeting of EU transport ministers on May 4.

“We need a fast coordinated European response to such crises,” said Kallas. “Instead we have a fragmented patchwork of 27 national airspaces. Without a central regulator, Europe was operating with one hand behind its back.”

Kallas’ predecessors have been trying to unite Europe’s airspace for the last decade under the “Single Sky Package,” which would streamline the 27 national airspaces to just nine by June 2012.

“I don’t think we can afford to wait that long,” said Kallas. “I want to start work to fast-track the Single Skies project.”

Previous efforts have been hampered by member nations’ reluctance to cede control.

PASSENGER RIGHTS

Airlines have reluctantly swallowed the lost revenues and their own heavy fixed costs over the last week, but low-cost airlines are less compliant about EU laws forcing them to pick up hotel and restaurant bills for stranded passengers.

Ryanair’s combative chief executive Michael O’Leary initially challenged the EU passenger rights law “EU 261.”

But he later backed down once it became clear that EU lawyers had gone into painstaking detail to force airlines to provide everything a passenger might need, right down to “two telephone calls, telex or fax messages.”

“The airlines are required by regulation to meet potentially unlimited expenses,” O’Leary complained, as Ryanair announced on Thursday it would be reimbursing expenses after all.

“We will continue to work … to persuade the European Commission and the European Parliament to alter this regulation to put this reasonable limit on these reimbursement claims,” he added.

At the time the law was set in 2004, airlines warned it could have painful consequences if airspace was shut down as it has been in the last week, but politicians ignored them, says the European Low Fares Airlines Association (ELFAA).

“Its application now is transforming a crisis into an economic catastrophe,” ELFAA said in a statement.

NO DISCOUNT

But Kallas rejected the challenge by low-cost airlines.

“EU law must be respected,” he told reporters. “There are no discount passenger rights for discount airlines.”

Regulation EU 261 does relieve airlines of their obligations in “extraordinary circumstances.” “Such circumstances may, in particular, occur in cases of … meteorological conditions incompatible with the operation of the flight concerned,” it says.

But close examination of the legal small print reveals that exemptions only apply to cash compensation, not to cost of caring for passengers. That is inescapable.

The proper channel for airlines to recover their costs would be by applying for state aid, just as they did after the flight disruption in the wake of the September 11 attacks.

But Kallas warned that the European Commission would not blindly wave through overblown state aid claims.

“I am an economist, and I see the immense creative force that has been put behind calculations of losses,” he said. “This is normal. If I would be on the side of those suffering, I would go to maximum efforts to show my trouble is as big as possible.”

http://www.reuters.com/article/idUSTRE63M2GO20100423

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