European airlines will be forced to pay four times more for their insurance cover than they paid in 2001, according to a report in The Times today.
European airlines, which have already been hit by the downturn in travel resulting from the Iraq war, will pay $1.5 billion (£950m) for cover this year, the report said. Their US rivals however will pay only $140m (£89.3m) for cover.
The extra financial burden could damage the airlines' ability to compete with US carriers, which benefit from a subsidised US government insurance scheme, from the Federation Aviation Administration (FAA).
Ken Coombes, senior vice-president at Marsh, said: "The European airlines are having to meet a very high price for very restricted cover.
"The US carriers have been subsidised tremendously since September 11, while the EU carriers have had hardly anything."
