Virgin Express, the Brussels-based low-cost airline, plans to move to Ireland to escape Belgium's high labour costs and what it regards as excessive government and union interference.
Belgium's second biggest airline is applying for an Irish air operator's certificate. This would allow it to transfer its headquarters and employment contracts to Ireland, while continuing to fly most of its scheduled services out of Brussels.
Virgin Express is not the only Belgian airline seeking to avoid the country's high social charges and taxes. The country's largest carrier, Sabena, recently warned it was considering moving its pilots' employment contracts to Switzerland.
Virgin Express, 51 per cent owned by Richard Branson's Virgin Group, believes the move will substantially cut costs. Social charges in Belgium represent 37 per cent of employees' salaries, compared with about 9 per cent in Ireland.
Salomon Smith Barney, the US investment bank, said the move could increase the airline's earnings per share by between 30 and 40 per cent by 2000. This would help Virgin Express compete with low-cost competitors such as EasyJet, registered in Britain and Ryanair, registered in the Republic.
Virgin Express is understood to have chosen Ireland as its base both for operational reasons and because of proposals that could reduce Irish corporate tax to just 121/2 per cent in 2000.
The airline is taking advantage of last year's liberalisation of the European aviation market, which allows airlines to compete freely on routes between European cities if they are headquartered in the European Union. Previously, the right to fly such routes was governed by bilateral treaties between countries.
Virgin Express, which was listed on the Brussels stock exchange and on Nasdaq in the US last year, has operated from Brussels since acquiring Euro-Belgian airlines, a charter operator, in 1996.
It flies scheduled and charter services in continental Europe and operates between London and Brussels under an agreement with Sabena.
Virgin Express has started the application procedure and expects to receive its Irish operator's licence in November, after which it would be free to relocate.
