EU Questions Austrian Plans For Minimum Air Fares

Editorial

The European Commission has questioned a plan by the Austrian government to introduce minimum fares of 40 euros for airline tickets.

Minimum airline ticket fares

In exchange for financial support, many airlines were presented with “greening” requirements over the past year. In Austria, coalition party “the Greens” announced a plan to introduce a minimum fare for airline tickets of 40 euros. This would make offering low-cost tickets practically impossible.

Illegitimate

However, it is still very questionable whether the minimum rate will actually see the light of day. The European Commission has expressed its concerns about it. Austria’s plan may be in violation of European regulations. According to an important European air service regulation from 2008, airlines are free to set their own airfares.

The European Commission would therefore like to see more details. “The Commission supports measures to promote the greening of aviation, and of transport in general, which are compatible with the internal market rules,” a spokesman for the Commission told Reuters.

State aid in disguise

he criticism of the Austrian plan does not end there, however. According to the government, the plan is environmentally motivated. However, critics argue that the measure is essentially a form of protectionism. At the same time that the minimum fare plan was introduced last year, Austrian Airlines received EUR 600 million in state aid. The airline would not be significantly disadvantaged by the minimum prices since the majority of its tickets are already sold above this rate.

In addition to the minimum rates, a new air passenger tax was introduced. Instead of the tax that depending on the length of a flight, a fixed rate of 12 euros per flight now applies. This measure also mainly affects cheaper, short flight airlines as, within Austria, Austrian Airlines is the main airline operating longhaul flights flights.

The question now being asked is whether the combination of measures constitutes a form of state aid in disguise. The financial support, the high minimum fares and the flat air passenger tax are beneficial for primarily one airline: Austrian Airlines. Other, especially cheap flight providers are hit significantly harder. In addition to protectionism, therefore, there may also be a distortion of competition.

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