EU Governments Likely to Extend Airline Terror Coverage

March 26, 2002

The European Commission, under the leadership of Transport Commissioner Loyola de Palacio, seems poised to extend emergency terrorist coverage for the airlines of EU member states for another two months.

The emergency measures, in place since last September, are due to expire at the end of this month, but no scheme has yet been formulated which is acceptable to the airlines, the insurance companies and the various governments to replace it. An extension of the present plan, which limits airline exposure to claims arising from terrorist acts to $50 million, with governments responsible for losses above that figure, would give all parties additional time to come up with a workable plan.

The EU has been critical of the U.S.’ emergency legislation concerning the airlines, that involved releasing $10 billion to keep planes flying, and to temporarily give them terrorist cover. It views the measures as subsidies, which give an unfair competitive advantage to U.S. airlines.

The EU is currently working on a mutual insurance plan in which private insurers, airlines, aircraft manufacturers and governments would participate.

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