French Aviation State Aid Approved

"La lettre B" l'essentiel de l'actualité économique et financière européenne décryptée

French Aviation State Aid Approved

The European Commission has finally endorsed three state aid schemes for the French aviation sector. These schemes involve the three main types of aid subject to the new Guidelines on state aid to airports and airlines approved by the Commission in February 2014, which is to say investment aid and operating aid to airports and start-up aid for new routes.

The new Guidelines were adopted within the context of the global modernisation of EU state aid policy and aim to maintain the accessibility of regions and promote regional economic development, while simultaneously avoiding the duplication of unprofitable airports, waste of public resources and undue distortion of competition.

A further aim is to provide legal certainty concerning the financial relationships between airports and airlines. When an airport concludes an agreement with an airline, it must ensure that the likely costs generated by the agreement are covered by expected revenues. The airline is otherwise considered to benefit from an unjustified advantage which constitutes, in principle, incompatible state aid.

The Guidelines offer Member States a certain amount of flexibility in granting investment aid for regional airports.

Moreover, operating aid may be granted for a 10-year transitional period to airports with fewer than 3 million passengers and airports with up to 700,000 passengers may benefit from operating aid regardless of the transitional period foreseen.

The Commission has concluded that the aforementioned French state aid schemes promote regional connectivity without unduly distorting competition in the Single Market and will allow the country to grant individual aid in compliance with the new Guidelines.

Furthermore, the monitoring mechanisms prepared by the French authorities should ensure conformity with the new Guidelines.

Following the approval, Competition Commissioner Margrethe Vestager, declared:

These Commission decisions illustrate the effectiveness of the new rules on state aid to airports and airlines. The three aid schemes approved today will enable more sustainable support to the European aviation sector, thereby improving the mobility of citizens.

Airlines seem to be playing the game, as recently shown at the Paris Air Forum where EasyJet Chief Executive Carolyn McCall, Ryanair CEO Michael O’Leary, Air France- KLM’s CEO Alexandre de Juniac and Lufthansa head Carsten Spohr called on Transport Commissioner Bulc to ease airport charges on airlines within the new EU Aviation Strategy.

Confirming its support for the liberalisation of the whole aviation sector, the unprecedented alliance among airlines bosses stressed the need for pro-competition policy and regulation within the EU, affirming its opposition to the provision of State-aid, as a general principle, to airlines and airports.

The skies are changing these days, with airlines invoking more EU competition interventions and less subsidies…

Natasha Slater

 

 

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