- The European Union (EU) today approved of French air transport subsidies for Réunion that could harm the competing tourism and aviation industry in Mauritius and Seychelles. A new, subsidised Réunion-Paris line is now to open.
The island Réunion, located close to Mauritius, is a French overseas department and thus considered one of the EU's "outermost regions". The island depends on large-scale subsidies from Paris to maintain its relatively high living standards.
In Réunion, as in neighbouring Mauritius and Seychelles, the tourism industry is one of the main vehicles of the economy and the main employer. Additionally, Réunion and the two neighbouring island states compete on the same market; Western tourists wanting to experience an Indian Ocean paradise.
Now, the EU has accepted to tilt the region's competition over European tourists in favour of the French overseas department. The European Commission today authorised French government subsidies for the Réunion airliner Air Austral to open a line to Paris.
- The aid will enable Air Austral to reduce its operating costs when opening the new line, the EU says today. The French government is to subsidise the refitting of Air Austral's aircrafts. Consequently, Air Austral will be able to offer cheap and competitive direct long-haul flights from Europe to Réunion.
Meanwhile, Air Seychelles and Air Mauritius are using large efforts to make European tourists choose their airliner and their destinations. These are made on a parallel basis with expensive marketing campaigns from the two nations' national tourism boards.
Among the three airliners, it is clear that they are competing for the same potential tourists. None of the islands is sufficiently know as a tourist destination, but the south-western Indian Ocean is jointly gaining a favourable reputation. Earlier this year, Air Austral, Air Mauritius and Air Seychelles took this into account and jointly introduced the so-called 'Indian Ocean Pass' for overseas travellers.
Nevertheless, European tourists tend to stay on the island they have flown to and only seldom are tempted to split their vacations in two parts. Thus, the winning overseas carrier also represents the island state winning the regional competition for tourists.
With French subsidies, Air Austral is enabled to offer the lowest air fares from Europe to the region.
This latest move only comes in addition to Réunion's other market advantages derived from its Paris connection. Flights to Réunion are considered domestic and are thus taxed cheaper and the overseas territory uses the euro, as do hundreds of million Europeans.
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