Brussels, 9 April 2014
State aid: Commission approves aid scheme for airlines launching new routes to Canary Islands
The European Commission has found that a Spanish scheme aimed at providing "start-up" aid to airlines launching new routes to the Canary Islands is in line with EU state aid rules. The Commission has concluded that the project will boost the economic development of the region, in line with EU objectives, without unduly distorting competition in the Single Market.
The scheme aims both to support the further development of the tourism sector in the Canary Islands, and to improve connections with this remote region. It is also expected to create jobs.
The scheme will allow the Canary Islands regional government to subsidise up to half of the airport charges paid by airlines for the operation of new routes to the islands for a period of up to three years. The new routes must be genuinely new routes to destinations not currently connected to the Canary Islands. The destinations do not necessarily have to be inside the EU, and therefore the scheme will allow the region to achieve a greater geographical diversification of its tourism sector, and rely less on its traditional markets. The aid will be granted to airlines following a call for proposals. The total budget is for up to €10 million until the end of 2017.
This is the first start-up aid scheme that the Commission has assessed under its new guidelines on state aid to airports and airlines which came into force on 4 April 2014 (see IP/14/72. The guidelines have simplified the rules on public support granted by Member States for the start-up of new air transport routes.
The scheme allows the granting of aid up to 50% of the costs (so-called "aid intensity") for a maximum duration of three years, in line with the guidelines. Airlines are required to submit business plans to demonstrate how the new routes will become profitable after the aid period has expired.
This scheme provides a good example of state aid which is useful for the development of remote regions while keeping distortions of competition to a minimum. The Commission's guidelines encourage this type of aid.
On 20 March 2014, the Commission adopted new Aviation guidelines (see IP/14/72. These came into force on 4 April 2014. The new guidelines replaced two previous sets of guidelines from 1994 and 2005.
Start-up aid schemes were already possible under the previous 2005 Aviation guidelines. In order to improve connectivity between regions, these rules allowed airlines to receive start-up aid for operating new destinations from regional airports or operating new schedules with increased flight frequencies. In the public consultations on the drawing up of the new guidelines, many submissions from airlines, airports and public authorities considered the conditions for granting such aid complex and cumbersome.
Indeed, under the old rules, only airlines at 18 airports in eight Member States received start-up aid for launching new routes and new schedules from those airports.
Therefore, the Commission has reduced the number of compatibility criteria, and simplified those that remain, so that more airlines should be able to receive aid they are legitimately entitled to. Under the new guidelines, airlines are now able to receive aid covering up to 50% of airport charges for new destinations during a three-year period, whereas under the previous guidelines the "additional start-up costs" the aid was linked to, were less well defined. There are also more flexible arrangements than under the previous rules with regard to conditions on airport size and eligible destinations for airports located in remote regions, for example on islands (e.g. the Canary Islands), or in sparsely populated areas.
The non-confidential version of the decision will be available under the case number SA.37121 in the State Aid Register on the 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.