Taxpayer won't bail out airlines crippled by volcano chaos losses
Published 28/04/2010 | 05:00
THE Government last night refused to implement a recommendation by the EU to compensate Ryanair and Aer Lingus after the volcano chaos of last week.
The EU said yesterday that governments could help compensate airlines for their losses earlier this month.
measures recommended to help airlines with short-term cash-flow problems include temporarily deferring the so-called en-route charges normally paid by airlines to air traffic control.
However, Transport Minister Noel Dempsey, in a move certain to infuriate the airlines, said afterwards that the Government would not be providing compensation to the aviation industry. Mr Dempsey said that we did not have the money in the current economic climate and that the recommendation by the EU was just that -- a recommendation.
The announcement by the minister means that taxpayers will be spared yet another costly bailout.
Ryanair -- which lost €40m during the week-long volcanic ash crisis -- said it would now be seeking a "full recovery" from the Government of "all refunds to passengers, both of air fares and any reasonable receipted expenses".
Welcoming the EU announcement, Ryanair confirmed it had written to the Department of Transport expressing its opposition to state aid for airlines, but proposed four alternatives.
The airline called for the 40pc price increases currently planned by the Dublin Airport Authority (DAA) airports from May 1 to be deferred for a minimum of 12 months and for the €10 tourist tax also to be scrapped from the start of next month.
Ryanair called for the Department of Transport to direct the Aviation Regulator to reject any follow-on claims for price increases by the DAA and the Irish Aviation Authority to compensate them for the loss of revenue during the crisis closure.
It also demanded the Government limits the liability of airlines in cases where the problem is not within the control of the airlines, such as the closure of EU airspace.
"Ryanair and the other Irish airlines who have written in similar terms to the Department of Transport are waiting for a positive response from the minister and the department," the statement added.
Ryanair's Stephen McNamara said they welcomed the confirmation that EU governments could compensate their airlines for the losses suffered last week through the closure of EU airspace.
"The Irish airlines, operating as we do from an island country, were more severely impacted by last week's events since passengers could not transfer to alternative ground transportation in order to complete their journeys," Mr McNamara said.
"These EU regulations weren't designed for catastrophic, prolonged closures of European airspace.
"When even travel insurers are not obliged to pay out because the cause of this was an act of God, it is clearly unfair that Europe's airlines are expected to be the insurer of last resort," Mr McNamara added.
EU Transport Commissioner Siim Kallas said national governments could compensate the airlines forced to shut down their planes for almost a week, obliging them to pay for accommodation and meals for hundreds of thousands of stranded passengers.
The European Commission estimated that the volcanic ash emergency has already cost the air transport sector up to €2.5bn.
Following yesterday's EU recommendation, the Department of Transport said it would consider the decision and noted its plan to establish guidance on the rules of state aid following the volcanic ash plume.
The issue would be discussed by Mr Dempsey and his EU counterparts at the extraordinary transport ministers' council meeting next tuesday, a statement read.
Many airlines are now pushing for government bailouts that would have to be sanctioned by Brussels if they amounted to state aid.
Mr Kallas, speaking after the announcement, said that national authorities could forge ahead with non-state aid airline supports such as temporary loans and guarantees at market rates.
However, he stressed that state aid could not be used to allow unfair assistance to companies that were not directly affected by the crisis.