Guidelines on State aid for developing regional airports
Developing the regional airports in the European Union (EU) enhances the mobility of the general public and gives a boost to the regions. The Commission wants to help this process along by laying down competition rules for State aid to airports and airlines.
Commission Communication of 9 December 2005 "Community guidelines on financing of airports and start-up aid to airlines departing from regional airports" [PDF ] [Official Journal C 312 of 09.12.2005].
The purpose of these guidelines is to clarify how the competition rules apply to the financing of airports and to start-up aid granted to airlines by the State. The Commission's aim is to tackle air transport congestion in the main European airports and make it easier for the European public to travel, while ensuring that the competition rules are complied with. It also takes the view that developing the regional airports also helps to develop the regional economies concerned.
Financing of airports
The Commission makes it clear that the financing and provision of airport infrastructure by the public authorities must comply with the Community rules on State aid. Aid may be justified and declared compatible provided it meets an objective of general interest, such as regional development or accessibility. Additional conditions are that the aid must be in proportion to the objective set and must not adversely affect the development of trade within the EU.
Addressing the issue of subsidies for the operation of airport infrastructure, the Commission makes a distinction according to airport size since, while funding granted to airports with fewer than one million passengers a year is unlikely to distort competition or affect trade to an extent contrary to the common interest, an operating subsidy for an airport with more than one million passengers a year may constitute State aid and must therefore be notified to the Commission, which will examine its impact on competition and trade between Member States and, where appropriate, its compatibility. On the other hand, the Commission has decided that public service compensation constituting State aid granted to airports with fewer than one million passengers entrusted with a mission of general economic interest should be exempted from the notification obligation and declared compatible.
Start-up aid for airlines
Start-up aid granted to airlines operating from regional airports is a way of attracting airlines to new destinations. Operating aid of this kind is justifiable, temporarily, only in the case of small airports that do not yet have the critical mass needed to reach break-even point. In addition, the aid must provide airlines with the necessary incentive to create new routes or new schedules operated from the regional airports in question.
Large airports, on the other hand, benefit from economies of scale and are able to attract connections. This results in air traffic being concentrated on a small number of hubs which are then faced with major congestion problems. Encouraging the development of regional airports will help to make air traffic in Europe less congested and provide scope for economic development in the regions concerned.
Consequently, the Commission considers that start-up aid for the operation of new routes should be allowed for a maximum of three years (five years in the case of the outermost regions). The duration of start-up aid is clearly a sensitive issue. A balance needs to be found between facilitating the development of regional airports in their formative years and open and fair competition between European airports. The Commission takes the view that a period of three years (five years in the case of the outermost regions) meets the objectives of regional development while satisfying the requirements of fair competition.
This type of State aid may be granted to airlines either by a public authority (central, regional or local government) or through the airports that receive public subsidies. The Commission emphasises the fact that subsidies must be granted only for new routes or new schedules.
In addition, it will not be acceptable to grant start-up aid for a new air route corresponding to an existing high-speed rail link. This concern to ensure that the different modes of transport are mutually complementary is a reflection of the intermodal approach that the Commission is seeking to promote, e.g. by encouraging cooperation between the rail and air transport sectors in an effort to deal more effectively with the effects of saturation and pollution around urban areas.
The State aid guidelines apply equally to both private and public airports. The term "State aid" refers to the origin of the funds not the status of the airport. For example, a public airport may act as a private investor by granting subsidies to airlines from its own resources on the basis of commercial profitability considerations. Conversely, if a private airport uses public resources, granted by a regional or local authority for example, this constitutes State aid.
The Commission recognises the role of airlines and airports in the process of opening up European airspace and certain regions. The exponential growth of low-cost carriers in Europe has done much to help the establishment of a network of interregional air routes, making it easier for the general public to travel and promoting the growth of the local economies and job creation.
These guidelines set out a legal framework for the financing of airports and for State start-up aid used by regional airports for the benefit of airlines. They thus spell out the principles underlying Commission Decision 2004/393/EC of 12 February 2004 in the Ryanair/Charleroi case. These new guidelines add to rather than replace the 1994 guidelines. They are the outcome of extensive consultation of the various parties involved in air transport and its effects on regional development.