Air Transport World

Ideally imperfect; despite the EC goal of free competition, carriers are finding ways to hand on to those government subsidies. (European Community airlines) (Industry Overview)

Of the many obstacles standing between the EC commission and its goal of opening up the European skies to free competition, the most imposing is that of weaning carriers from the government backing that has kept many aloft. As has been the case in a number of other business sectors, the airline industry is trying to postpone objectives of the Treaty of Rome by continuing to avoid the transformation of national government from shareholder to interested observer.

While most experts say that the ultimate privatization of nationalized airlines is an eventuality that even the most loyal government-owned carriers have come to terms with, they also admit that there is no way of knowing just how long the date with the stock market can be put off. This delay is insured by the EC's lack of any defined policy or mechanism to force member states out of their role of shareholder, or even--according to officials--the ECC's mandate to do so.

"We have no way of forcing member states to privatize their airlines," says Bruno Julien, spokesman for the EC's Transport Ministry. "Member states are free to choose between the right of [governmental] ownership or private direction and each does what it wants to do. We have very clear and precise rules regarding funding and subsidies, but have no say in the shareholding structure."

Despite this contention that the EC has no obligation or desire to see airlines controlled by private investors, most analysts say Brussels is pushing things in such a direction.

"The EC has no way of speeding up privatization and can only push for an eventual selling off of governmental participation," says Bertrand d'Yvoire, founder/president of Paris-based Consultair. "However, the EC program, and undeniable financial logic, have led everyone to conclude that privatization is unavoidable."

In an effort to encourage state-owned carriers to meet their fate earlier rather than later, the Transport Commission has warned nationalized airlines that it "will not give any privileges to state-owned carriers and that they will not have any guarantee for survival. …

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