European Commission launches long-awaited consultation on new aviation guidelines

Thanks to Alexander Rose of DCLG for today’s blog

The European Commission has launched a consultation into a new set of State aid guidelines for the funding of airports and airlines. These revised rules are intended to replace the 1994 and 2005 guidelines and are designed to address the significant changes to the sector that have taken place over the last decade.

At the launch of the consultation Joaquín Almunia said “Our aim is to ensure that taxpayers’ money is well-spent and goes where it is truly needed. The next state aid guidelines will be a key ingredient for a successful and competitive European aviation industry, preserving fair competition regardless of the business model – from flag carriers to low-cost airlines and from regional airports to major hubs”.

In addition to providing guidance on the existence of State aid within the meaning of Article 107(1), and the circumstances in which public service compensation might fall under Article 106(2), the new draft guidelines indicate that the Commission will authorise State aid for, in particular:

> Investment in airport infrastructure where it can be shown there is sufficient need and that the funding will contribute to the accessibility of a region. The current guidelines were silent on the maximum aid intensity allowable, whereas the new rules prescribe maximum percentages based upon the size of the airport. The aid intensities are higher for smaller airports than for larger airports.

> The operating costs of airports, provided that the funding only covers a transitional period of up to ten years (with the aid decreasing over this time). The current guidelines do not contain provisions allowing such support, which is designed to enable airports to adapt their business models to the new rules.

> The costs of setting up new routes, provided that such support is limited in time.

Within the European Union there are approximately 2.3m people working in the aviation sector operating from over 460 airports. The industry transports 822 million passengers between European airports each year and contributes an estimated €140bn to the EU’s gross domestic product.

The competitive nature of the aviation industry has resulted in a number of high profile State aid cases over the last ten years. At the launch of the consultation it was confirmed that DG Competition is currently investigating 61 cases relating to potential unlawful State aid in respect of airport infrastructure or operating costs, of which 30 are formal investigations, with a further nine pending cases involving rescue and restructuring aid to airlines.

The consultation exercise will be open until 25 September 2013 and the consultation documents can be found here.

This entry was posted in Commission guidelines. Bookmark the permalink.