Manipulated Rules, Contested Solutions: Europeanisation and the politics of restructuring Olympic Airways

In recent years much debate has been generated over the reshaping of the European airline industry and the restructuring of many of the heavily indebted national flag carriers across the European Union. Ever since the early 1990s the European Commission has sought to orchestrate this reform process following a twin-fold strategy: the gradual break up of monopolies held by national flag carriers in air travel and its associated services (handling, electronic reservation systems, fuel supply etc) and a much tighter policing of state aid practices which for years have been used to keep many state-owned airlines afloat. Under increasing pressure from European competition rules and against a background of international volatility for the airline industry (9/11, high oil prices, the SARS virus etc), many of the plans elaborated by European governments to rescue their embattled national flag carriers have met with strong domestic opposition. Nowhere else has the domestic resistance to reform been stronger than in Greece, where for a decade the attempts of successive governments to restructure or privatise Olympic Airways have yielded very limited success.By focusing, in particular, on the Socialist government???s 2003 initiative to create a new ???Olympic Airlines???, the paper seeks to shed more light on how European stimuli for reform are mediated and dealt with in the domestic context. By linking the narrative to the conceptual literature on Europeanisation and rational choice institutionalism the paper addresses a number of themes including, governmental strategies for resisting European pressure and dealing with powerful domestic veto points to reform, the contestation of European competition rules and the ability of national governments to manipulate them, policy entrepreneurship and complex problem solving as well as the Commission???s role as a stimulus, but potentially as an obstacle to domestic reform. The paper forms part of an ongoing collaborative project on the politics of structural reform in Greece and has been informed by a large number of interviews with ministers, public managers and trade unionists.