EU regulators concerned about Swiss airline plan

by PAUL AMES
The Associated Press

BRUSSELS, Belgium - European Union regulators are concerned about the Swiss government's plan to create a new national airline out of the remnants of Swissair and will scrutinize it under EU regulations limiting state subsidies, a spokesman said yesterday.

In a statement, the European Commission said the aid package should be examined under EU law, even though Switzerland is not an EU member and an agreement setting out cooperation in air transport regulation has not yet come into force.

"The decisions in favor of Swissair and (its subsidiary) Crossair have direct and immediate repercussions on air transport in Europe," the Commission said. "These companies are in direct competition with their EU counterparts who are facing the same crisis situation."

Gilles Gantelet, the Commission's transport spokesman, also warned France it would face legal action over its "open skies" agreement initialed Friday with the United States, which should lead to closer links between Delta Air Lines and Air France.

The Commission says such agreements give unfair advantages to national airlines, infringing EU rules creating an open market for companies within the-15 nation bloc.

Switzerland's government and private investors agreed Monday to spend $2.65 billion to create a new national airline on the ruins of Swissair, which was wrecked by bad investments and the turmoil in air travel after the terror attacks on the United States.