British Airways Chief Executive Bob Ayling today called for the abolition of state aid in Europe, saying that it “operates against the consumer’s interest”.
Speaking in Brussels at a conference on state aid, he said that it “distorts competition, provides unfair competitive advantages and works to the detriment of new carriers”.
“State aid prevents competition, smothers choice and any industry that is without these fundamental competitive pressures will not thrive in the long term,” he said . The truth is that state aid puts off the moment when hard decisions about restructuring have to be taken”.
He said that the answer was the privatisation of airlines and companies that did depend on state aid. British Airways’ success was testimony to the fact that this was the right policy.
” My company has, I believe, shown that state aids are not necessary in the airline industry, indeed in any industry at all. British political policy in the 1960s and 1970s was littered with state aid and almost every industry which received it subsequently collapsed”.
Mr Ayling said that he was pleased that Competition Commissioner Karel van Miert was taking a tough line on state aid and he praised the European Commission’s efforts to create “a vast and dynamic single market to propel us to the level of competitiveness that global circumstances and the size of the market demand.”
Mr Ayling said: “Both the European Commission and British Airways want to see a strong and healthy European air transport industry, enterprising enough to compete against the giants of the United States and the tigers of the Far East. We recognise that global competition has come to the airline industry.”
He said that the liberalisation of the European airline industry and the successful restructuring of British Airways were examples of how increased competition can be more widely applied to European industry in general. It was in the interest of consumers that companies are allowed to develop in a free market place without state aid and government interference.
In an increasingly global civil aviation market, a number of European airlines still depend on state aid, whilst others do without it. Since 1991 aid and capital injection put by governments into the European civil aviation industry amounted to £8 billion.
Bob Ayling said: “British Airways, without a penny of public subsidy, took tough decisions, cut jobs and restructured, to become a successful and profitable company.”