Commission gives free hand to capitals to subsidise small airports

Despite being inaugurated in 2011, Castellón airport was only open sporadically until late 2015. Today, only a few hundred passengers pass through its terminal. [NG/ Flickr]

The European Commission announced today (17 May) a review of state aid rules that will allow member states to pour millions of euros of support into struggling regional airports without prior approval from Brussels.

The Commission will no longer have to give national capitals the green light for financial aid for ports, cultural projects, sporting arenas or the EU’s remote regions.

“You will save time, you will save money and it increases the legal certainty for companies receiving the aid” as they will not have to wait for the executive’s blessing, Competition Commissioner Margrethe Vestager told reporters.

Brussels makes concessions on state aid to regional airports

New European Commission rules for state aid to aviation will be more flexible for airports with up to 700,000 passengers per year until 2024, but green campaigners are angry at the EU executive for “backing down”.

The Commissioner explained that the new rules will benefit ongoing cases in which public aid aims to maintain or improve existing airports, not build new ones.

Regional airports have been under the spotlight over the last years. In some cases, authorities misspent millions of euros without a solid business case. The result were “ghost airports” including Ciudad Real and Castellón in Spain.

Regional governments also supported these smaller airports in order to attract low-budget airlines, providing tax benefits to these companies in some cases.

Once the rules are in place next month, member states will be allowed to invest in regional airports handling up to 3 million passengers per year without prior approval. According to the Commission, more than 420 airports across the EU (about 13% of air traffic) fall under this category.

MEPs join forces to raise EU state aid limit on regional airports

A group of lawmakers has called on the European Commission to raise the state aid threshold for regional airports, arguing they are “vital” to the local economy and create “thousands of direct and indirect jobs”. But green campaigners disagree entirely and back what they describe as a “balanced” set of rules.

The Commission maintained some principles in order to ensure competition. Accordingly, a state aid application will have to be made if there is another airport within less than 100 km (or one hour drive).

At the same time, any airport receiving support should be fully used in the future and its improved capacity should not exceed expected demand.

In addition, public aid should only cover the funding gap, as initial capital to attract further investment, taking into account future revenues.

Besides, the Commission explained that only a certain percentage of the investment costs can be subsidised, depending on the size of the airport and on whether the airport is located in a remote region.

For small airports handling up to 200,000 passengers annually (half of all airports in the EU), the rules will be even more flexibile. Authorities will be capable of covering the operating costs.

Vestager highlighted the “important role” these smaller airports play in terms of connectivity in Europe.

In order to guarantee that budget airlines are not the final beneficiaries of the financial aid, the Danish official said that airlines that use the airports would have to pay market prices in order to ensure “fair competition”.

Over the past few years, the Commission has ordered regional governments to recover illegal subsidies given to airports and airlines such as Ryanair, TUI’s German carrier TUIfly and Lufthansa’s Germanwings.

Ryanair ordered to repay €10m in French state aid

Two low-cost airlines must repay almost €10 million of French state aid, after the EU Commission decided that it gave them an unfair competitive advantage. EURACTIV France reports.

Vestager said that it was “difficult to quantify the value of making everybody’s life easier” but she expected billions of euros in savings.

The Commission made more than 50 decisions related to airports last year.

The new rules will also allow member states to invest up to €150 million in maritime ports and up to €50 million in inland ports without the Commission’s okay.

State aid for start-ups will be allowed for up to five years. Companies in French overseas territories, Spain’s Canary Islands and Portugal’s Azores and Madeira will also find it easier to apply for support.

Background

The 2014 General Block Exemption Regulation exempts certain categories of state aid from the requirement of prior notification to the Commission, if these are unlikely to distort competition in the Single Market. State aid measures which meet the criteria of the Regulation can be implemented by Member States directly, without prior Commission approval. As a result, about 95% of state aid measures implemented by member states (with a combined annual expenditure of about €28 billion) are now exempted.

The criteria set out in the General Block Exemption Regulation determine, in particular, eligible beneficiaries, maximum aid intensities (i.e. the maximum proportion of the eligible costs of a project that can benefit from state aid) and eligible expenses. These criteria are derived from the Commission's market experience and decision-making practice.