Thursday 9 June 2011

Subsidies and Liabilities:- It's the farmers get the pleasure. It's the airlines get the pain.

The EU has agreed to pay £ 170 million in compensation to farmers who claim to have lost money due to the German E-coli episode. Agriculture consumes nearly 50% of the growing EU budget (otherwise known as an overhead on Europe's overall balance sheet). The reason for the compensation is said to be that E.Coli's appearance in the food chain is an eventuality beyond the farmers' control

It's a different story for the airlines then. Volcanic activity is beyond their control and yet they held entirely responsible for the costs their disappointed customers incur when through no fault of their own EU directives ground them. The over-the top panic EU response Icelandic flareup in spring 2010 cost the airlines around £2.2 billion. They were again held liable to compensate passengers affected by the recent smaller scale repeat and there are no signs that the EU will change that in the future although the original legislation was aimed at an entirely different purpose,- to prevent or discourage the cancellation of services simply to save operators money or inconvenience.

This difference of approach by the EU is blatantly unreasonable. Why further protect the very expensive, protectionist and powerful farming lobby but not the mainly (in Europe) unsubsidised airline business which at no cost to governments provides countries with the enormous social and economic benefits of quality, frequent and often low cost transportation for businessmen, tourists and other leisure travellers?

Those like former British Prime Minister Tony Blair who recommend expansion of the EU's barely democratic powers need to understand the crushing effect of its attitudes to successful forward looking private businesses. Aviation brings very real benefits all over the world and at the moment is in danger of being discouraged by an unholy alliance of stay-in-your-own-village environmentalists and governments who see a successful industry as a easy source of revenue. Currently these governments make far more money out of airlines than do the airlines themselves. In the EU this adds to the funds available to further subsidise farmers so the successful are subsidising the unsuccessful. No wonder the industry isn't happy.

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