Allianz: No Plans to Cancel Airline Coverage, EU Prepares Back-up Help

March 26, 2003

Germany’s Allianz AG, one of the largest providers of coverage to the European Community’s air carriers, has issued a statement indicating that, while it has no plans to cancel coverage on flights headed for the Middle East, its customers were asked to provide the company with flight schedules to the area.

Other than the B-52’s, F-18’s and other war planes currently operating in the region, there are few flights headed for Iraq, and even fewer that are insured by Allianz, but flights to other countries in the Middle East, including Israel, Lebanon, Kuwait and Eastern (but not Western) Turkey, are subject to the review. Allianz, and most other airline insurers, have said they will require special coverage on a per flight basis for companies that continue to operate in the region.

The European Union has also announced plans to assume some of the risks of coverage for the airlines of EU members in case it is needed. The European Commission is expected to approve emergency legislation today, similar to that provided after Sept. 11, which would permit individual governments to offer their airlines guarantees covering war risks in the event that private insurance carriers cancel their coverage, or it becomes prohibitively expensive.

The EC is also considering allowing member states to help their air carriers financially to cope with the increased security expenses, and will relax rules on when an air carrier is subject to losing a “slot” if it isn’t used enough. Carriers have been cutting back on flights not only to the Middle East, but also in Europe generally, following the beginning of the war. The EC, however, has indicated that it will not permit direct help to the EU’s airlines along the lines of proposals currently being made in Congress for beleaguered U.S. air carriers.

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