EU transport ministers want to continue insurance aid for airlines 

When commercial insurers withdrew or drastically scaled back coverage for acts of terrorism following September 11, the Commission decided to allow for state insurance schemes.

These guarantee schemes will expire on 31 October 2002. Denmark, Luxembourg and Sweden have already withdrawn their cover.

The Commission has made it clear that it does not want to allow the temporary guarantees to continue after the end of October. According to Commissioner de Palacio, commercial insurers are now offering reasonable prices, and there is no longer a need for potentially market-distorting government assistance.

The European aviation industry has expressed its anger at this decision, which comes at a time when the US looks set to extend similar subsidies of their own.

EU finance ministers are expected to decide on the issue at the Ecofin Council of 8 October. Some countries, including Denmark, Sweden, Luxembourg, the UK and the Netherlands are expected to back the Commission's stance. Several other member states, led by Germany and France, are known to favour a continuation of the present system.

In theory, the Commission - being the body responsible for applying EU rules on state aid - has the final say in the issue. It is however unlikely that it will put up a fight with the member states if a majority of them decides for an extension of the state aid scheme.

In the future, a mutual insurance fund (Globaltime) is likely to be set up to cover airlines for third-party liability. It will still take months to be established.