Brussels, 25 July 2012
State aid: Commission adopts three decisions in aviation sector in Finland, Greece and Ireland
The European Commission has concluded that financial arrangements between the airport of Tampere Pirkkala in Finland and Ryanair do not constitute state aid in the meaning of EU rules because they are in line with market terms. In another case, the Commission has found investment aid in favour of the Chania airport in Greece to be in line with EU state aid rules, in particular because it is well-targeted and proportionate to the objective pursued. In a third decision, the Commission ordered Ireland to recover incompatible state aid in the form of preferential airport taxes for certain short-haul destinations from the airlines that had benefitted from this measure, as they distorted competition between airlines.
Commission Vice-President in charge of competition policy Joaquín Almunia said: "Our ultimate aim is to establish a level playing field for all airlines and airports regardless of their business model, from flag carriers to low-cost airlines. Today's decisions further clarify the application of principles of EU state aid control to the sector. We will look at other cases of state aid to airports and airlines in the coming months, applying a consistent approach."
Tampere Pirkkala airport and Ryanair agreement
The Commission found that financial arrangements to implement a low-cost strategy at Tampere-Prikkala airport, in particular the agreement between the airport and Ryanair, have been concluded on terms that a private investor operating under market conditions would have accepted. In particular, the agreements are based on an ex ante business plan showing profitability expectations and therefore confer no economic advantage to Ryanair. The business results of the airport further confirm these expectations (see also MEMO/12/597).
The Commission found that investment aid of €77.7 million for Chania airport in Greece was limited to the minimum necessary. The Commission also took into account the important role of this regional airport for the accessibility of Crete and for local development, reaching a balance between fair conditions of competition in the aviation industry and transport needs.
Irish air travel tax
In 2009, Ireland introduced an air travel tax for flights departing from Irishs airports. The tax was set at €2 for destinations at maximum 300km from Dublin and at €10 for all others. The Commission found that the lower rate favoured flights within Ireland and to nearby parts of the UK, giving the companies concerned an economic advantage over their competitors and thus distorting competition in the internal market. To ensure a level playing field between airlines, the Commission ordered Ireland to recover this advantage from all airlines that had benefited from it. The main beneficiaries were Ryanair, Aer Lingus and Aer Arann.
The aim of state aid control in the aviation sector is to find the right balance between fair conditions of competition in the industry and customers' transport needs.
Traditionally, air transport has been a highly regulated industry, dominated by national flag carriers and state-owned airports. The liberalisation of air transport in the EU has removed commercial restrictions for airlines flying within the EU, such as restrictions on routes, the number of flights or fares. This has resulted in unprecedented industrial expansion and contributed to economic growth and job creation. It has also led to a differentiation in the business models of airlines and airports.
Today, air transport makes a major contribution to the European economy, with more than 130 scheduled airlines, a network of over 450 airports, and 60 air navigation service providers. The aviation sector employs more than 3 million people in the EU. Airlines and airports alone contribute more than €120 billion to the EU's GDP. Linking people and regions, air transport plays a vital role in the integration and competitiveness of Europe, as well as its interaction with the world.
In 2011, the Commission initiated a review of its guidelines on state aid in the aviation sector with a public consultation (see IP/11/445), with the aim of adjusting them to recent market developments and to adapt them to the different business models, from flag carriers to low-cost airlines, that have emerged since the start of liberalisation. The new guidelines need to better address the role of regional airports for economic growth and territorial cohesion in order to avoid a duplication of infrastructure and the creation of unused or sub-optimally used airports. The Commission plans to adopt new guidelines – covering both airlines and the financing of airport infrastructure - in 2013. A new consultation will be launched in the Fall.
Today's decisions are part of over 60 on-going cases in the aviation sector, out of which 34 are in-depth investigations.
The non-confidential version of the decisions will be made available under the case numbers SA.23324, SA.29064 and SA.34586 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.