EU concerned about state financing of Crossair

The Swiss President, Moritz Leuenberger, (left) with the EU's transport commissioner, Loyola de Palacio, in Brussels last month Keystone Archive

The European Union has voiced concerns over the Swiss government's participation in the revamped Crossair, but has said it is satisfied with the reassurances it has received from the Swiss president, Moritz Leuenberger.

This content was published on October 24, 2001 minutes

The EU commission raised doubts about the financing plan of the new Crossair and the sums it involved, suggesting it could contravene EU anti-competition laws.

Earlier on Tuesday a spokesman for the European Union said that Brussels would consider asking Switzerland to modify its Swissair salvage package if it was deemed to go against such commercial laws.

But following a telephone conversation with Leuenberger, the EU transport commissioner, Loyola de Palacio, said she was satisfied with the Swiss government's justifications for helping Swissair.

The Commission will now study the Swiss plan in light of the information provided by Bern to determine if the state aid complies with EU regulations.

The sticking point is that Brussels believes Switzerland may have to comply with EU laws, even if a bilateral agreement between EU and Switzerland on air transport has yet to be implemented.

It plans to discuss the issue during a scheduled meeting on bilateral accords on November 15.

Competition is paramount

The accord says that state aid that distorts or threatens to distort competition is incompatible with the agreement. For the Swiss plan to follow EU law, it must either not be considered as state aid, or fall within possible exemptions.

To qualify for an exemption, the plan needs to comply with strict rules. The financing must be a one-off payment, there must be a restructuring plan and Crossair must not use the funds to expand its operations.

As a rule of thumb, in order to be legal, the public money used must also take the form of a commercial investment to EU officials.

Further criticism

Apart from the EU, the budget airline, Easyjet, also raised concerns about the Swissair rescue plan on Tuesday.

A spokesman for the airline, which runs flights from the UK to Zurich and Geneva, said that it was unfair to reward airlines for their inefficiency. The company is now investigating possible legal action against the decision.

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