MINISTER FOR Transport Noel Dempsey has said the Government will not be compensating airlines financially hit during the volcanic ash shut-down of European airspace.
His comments came as the European Commission tried to open the door for the aviation sector to seek taxpayer aid to offset losses, saying the crisis may have cost the industry as much as €2.5 billion.
Mr Dempsey said the airlines had not yet asked for compensation but in any case the Government would not be able to pay it. “We don’t have the kind of finances available and ready for that.”
Transport commissioner Siim Kallas told reporters in Brussels that the “exceptional circumstances” of the shutdown may justify special support measures and that European governments could provide compensation to airlines and other businesses struck by the cancellation of 100,000 flights in six days.
While about 10 million people had their flights cancelled during the disruption, Mr Kallas also said no company should benefit from a competitive advantage by avoiding its legal obligation to reimburse passengers for food and accommodation costs they incurred.
“The working number is somewhere between €1.5 billion and €2.5 billion,” he said in reference to the estimated losses. This includes the impact on airlines, airports, tour operators, ground handlers and other businesses.
The commission said the “lessons learnt” from the crisis showed the need to accelerate research to improve data collection and modelling methodologies to support “a more robust and more detailed risk assessment”.
It also said work should be done to see whether unmanned aircraft could be used to carry out atmospheric measures to complement data from weather balloons.
While senior industry figures have said airlines want to draw down aid, the commission said yesterday it had not received any formal application for help.
An information note Mr Kallas prepared for his commission colleagues said the EU executive “considers that a set of immediate and mid-term measures should be taken to take account of the economic consequences of the crisis on air transport” and to improve the situation in the future.
The commission, he said, would examine favourably, within the framework of state-aid rules, support measures by member states to compensate airlines.
“Such temporary measures should be granted on the basis of uniform criteria established at EU level so as not unduly to distort the market.”
The EU executive will make sure that such measures are granted only for net losses “directly linked to the exceptional occurrences”. The executive will make sure the measures are non-discriminatory and neither result in “overcompensation for the damage suffered” nor serve as a “pretext” for bypassing the commission’s rules on other forms of State aid.
Mr Kallas also called for the establishment of a single European air regulator, saying the commission would advance plans this year for the creation of a “single European sky”. He said, “stronger European co-ordination will not solve every problem. But faced with such a pan-European crisis, it would have enabled a much more agile response,” he said.
Commenting yesterday, Ryanair’s Stephen McNamara said: “We welcome Commissioner Kallas’s confirmation that EU governments must compensate their airlines for the losses suffered last week through the unnecessary closure of EU airspace, which was not the fault of airlines.”
The carrier said it had written to the Department of Transport expressing its opposition to any State aid, but that it would “in time” be seeking from the Government a full recovery of all refunds to passengers, both of air fares and any reasonable receipted expenses during the seven-day closure of EU airspace. The carrier called for a number of measures to be implemented, including deferral of price increases planned by the Dublin Airport Authority from May 1st and the scrapping of the €10 tourist tax. Ryanair also called on the Government to limit the liability of airlines in cases where the problem is not within the control of the airlines.
Counting the cost shut-down loss
Airlines:$1.7 billion (€1.28 billion) – International Air Transport Association
Holiday operators:€388 million – European Travel Agents' and Tour Operators' Association
Airports:€250 million – ACI Europe airports group
Ground handlers:€200 million – International Aviation Handlers' Association
Navigation services:€25 million – Air Navigation Service Providers