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STRATFOR.com
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THE INTERNET SOURCE FOR GLOBAL INTELLIGENCE
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Airline Woes to Test EU
September 24, 2001
Summary
Ripple effects from the Sept. 11 suicide hijackings in the United States will soon wreak havoc on European airlines. Unlike in the United States, where the Congress quickly passed a $15 billion industry bailout package, the European Union does not have the money, the sense of urgency or the unity to pass a similar measure. In fact the union's ultimate strategy for dealing with the airline industry will turn the academic debate over European federalism into a very real crisis over the union's future.
Analysis
European Union Transport Commissioner Loyola de Palacio moderated his opposition to airline bailouts Sept. 21 after meeting with executives from leading European carriers.
Although European carriers seem to have escaped the brunt of the fallout from the events of Sept. 11, a false sense of security is lulling the union into inaction. European airlines will soon experience the confidence abyss that now engulfs their American counterparts. If Brussels can do no more to address the airline industry's problems than remand solutions back to national governments, the underpinnings of the union itself may come into question.
The European airline industry does not seem to register the scope of the current economic threat. One obvious outcome of the Sept. 11 hijackings is that many travelers are reluctant to fly. But aside from Swissair, whose 3,000 job cuts announced Sept. 24 are limited to its catering unit, only British carriers have cut staff so far. European airlines clearly expect some sort of bailout. This makes sense when one considers the Continent's interventionist past and the laboriousness of firing workers in Europe.
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(c) 2001 Stratfor, Inc.
Dan
Airline Woes to Test EU . . .