Brussels, 05/03/2002 (Agence Europe) - On Tuesday during a working dinner, ECOFIN Council Economics and Finance Ministers discussed the extension of the system that would allow Member States to insure airlines against the risk of war and terrorism but no decisions were taken. Put into place after the attacks on 11 September to compensate the commercial insurance sector, this system is due to expire at the end of March. Ministers have chosen to wait the decisions from the USA and Japan, before asking the Commission to extend the system.
The Association of European Airlines (AEA) has put forward a mutual insurance fund to cover the risks of terrorism and war and has asked Economics and Transport Ministers to extend the current system to 20 June 2002, which would give them time to iron out any difficulties in the system. The idea is that the market takes responsibility for risks less than USD 100-150 million, whereas the funds would cover the risks that are more than USD 1.5 billion, which falls to the public authorities. According to a note sent by the AEA to Member States, the mutual fund would cover damages caused to third parties up to the amount of USD 1.5 billion per accident linked to terrorism or war.
It would be financed by the industries concerned (airlines, airports ground controllers) by way of a 0.5 dollar surcharge for each ticket. During a transition period of a year and a half, Member States would contribute to the fund on a budgetary pro-rata basis, that would allow the fund to be established, before becoming the sole responsibility of the industry.. This European fund would be temporary over a period that would allow for an international fund to be set up as proposed by the International Civil Aviation Authority (ICAA). The AEA has called on Member states and the Commission to help the rapid setting up of this global fund a proposed by the ICAA and has stressed that the US authorities and industry are currently developing a funding system based on a "purely American solution", which could precede, but not necessarily, the system put forward by the ICAA. Whilst calling on the EU to be more pro-active, the AEA has also claimed that without a European level system they will be unable to respond to the situation, in which there are numerous risks to competition. The AEA has noted that in practice, the creation of such a system would allow for savings of 60% in relation to market costs, which would be a better option for both consumers and industry. The AEA declared that the last proposal made by the insurance sector would have represented an annual surplus of EUR 600 million for the companies. The AEA expressed in a press statement that is was firmly against this "take it or leave it" option.