The European Commission (EC) has revealed plans to drastically reduce state aid to regional airports and streamline rules on airline subsidies for adding new routes or services from these airports.
The new guidelines, the EC argues, are necessary to limit distortions of competition within the European Union and avoid airport overcapacity.
The new rules will preserve “fair competition regardless of the business model—from flag carriers to low-cost airlines and from regional airports to major hubs,” EU Competition Commissioner Joaquin Almunia said at a July 3 briefing in Brussels. He noted that a revision of the 1994 and 2005 community guidelines on airport financing and start-up aid to airlines departing from regional airports is necessary because the aviation industry has changed considerably over the past 10 years, with low-cost carriers (LCCs) now accounting for a larger share of intra-European traffic than incumbent legacy airlines.
However, the EC’s competition directorate general says it is not questioning the “successful” business model of the LCCs, which have “brought extremely important benefits to passengers, enabling millions of European citizens to travel cheaply.”
Under the proposed guidelines, airports handling more than 5 million passengers a year will not be allowed to receive public aid to support infrastructure investments, while for smaller facilities new limits on funding will be imposed so that state aid for airports with less than 1 million passengers a year cannot exceed 75% of eligible costs and not more than 25% for airports with 3-5 million passenger annually.
Investment costs related to non-aviation activities—in particular parking, hotels, restaurants, and offices—and investments in ground handling services by an airport itself are ineligible.
The rules currently in force do not address investment aid.
For operating aid to airports, which is not allowed under the current guidelines, the EC proposes such aid for a transitional period of up to 10 years in order to give airports time to adjust their business model. Operating aid in the transitional 10 year-period is only allowed if the airport’s annual traffic does not exceed 3 million passengers.
Only airports with fewer than 3 million passengers per year will be allowed to give start-up aid to operators for launching a new route or a new schedule with increased frequencies, according to the draft proposal. Such support may only last for 24 months and cannot exceed 50% of start-up costs.