The EU will soon have the power to impose sanctions on foreign airlines that have benefited from state aid or engage in "unfair pricing practices" - a move that is likely to cause concern among non-European carriers.

Under new rules approved by the European parliament yesterday, Brussels will be able to levy punitive duties where subsidies or unfair pricing have damaged European carriers. The legislation will close what the European Commission sees as a dangerous gap in its defences against unfair competition from abroad.

At present, the EU cannot punish foreign airlines, because aviation is not covered by any of the regular trade defence instruments enshrined in EU and World Trade Organisation rules.

This meant that in recent years Brussels could only watch while countries such as Switzerland and the US poured money into loss-making airlines.