After years of consultations, the European Commission has finally released new guidelines to tighten up the rules covering how state aid is distributed to European airports and airlines.
Under the new draft rules, due to come into force in 2014, state aid for airport operations will come to an end after a 10-year transitional period, with only those deemed to be in "isolated, remote or peripheral regions of the EU" still eligible for continued aid on a case-by-case basis.
Joaquín Almunia, the Commission's vice-president for competition, says the practice of subsidising airport operating costs through public money has become "widespread over the last years".
"Operating costs should normally not be subsidised by the taxpayer," he says, adding that the new rules will also curb the "duplication of unprofitable airports, the creation of unused capacities or the public financing of connections that private agents could afford anyway".
However, the new guidelines have come in for savage criticism from some in the industry.
Airport body ACI Europe denounces the "harsh" consequences of the new rules and warns they will lead to a loss of airline routes and unsustainable costs that could even lead to the closure of some airports.
Olivier Jankovec, ACI Europe's director general, says that while he is not asking the Commission for a "blank cheque", the guidelines need to be changed to allow smaller airports - those with one million passengers per annum or less - to continue to receive aid as they lack the "critical mass" of passengers to become profitable in their own right.
"These new rules - and in particular the 200,000-passenger threshold [below which airports can apply for exemptions] - risk condemning small regional airports to limit their development or to close down," he warns.
Jankovec also questions the claim that there is overcapacity in the European airport system: "The Commission has a view that there is too much capacity in the European airport system, which is a bit strange, as Eurocontrol says we are facing a capacity crunch across Europe.
"In the real world airports need to plan their capacity on the basis of 10-, 20-, 30-year growth rates, thank goodness some of them do have extra capacity."
The Commission has also turned its attention to the way state aid is given to airlines in the form of start-up support provided by airports to launch new routes.
Under the new guidelines, the size of the airport that can offer such aid, the amount of aid provided and its duration will be reduced, while airports will need to show a route will "increase the connectivity of a region" to be eligible.
Simon McNamara, director general of the European Regions Airline Association (ERA), calls the new start-up aid guidelines a "missed opportunity", arguing that the Commission "has historically failed to enforce fair and consistent rules for the allocation of state aid to Europe's airports and airlines". He says the new provisions do not go far enough in creating a transparent process whereby all subsidies are out in the public domain and therefore open to scrutiny.
While the Commission has proposed forcing airports to publish details of the subsidies it gives to airlines, McNamara says this information should be disclosed immediately once they are discussed, in order to give rivals a chance to lobby for the same incentives and prevent court proceedings such as the Charleroi-Ryanair case: "While we support state aid, it is really important it is done in a transparent way and does not distort competition, so what we are saying is that when an airport offers airline A an incentive to launch a route, that should be published immediately so that airline B can also get that incentive."
With the caveat that he does not necessarily support the actual provisions, Jeremy Robinson, partner at law firm Kennedys, welcomes the new guidelines as a positive clarification to what were confusing regulations.
"Before we had two sets of complex rules which caused confusion and a backlog in state aid appeal cases," he says. "It should also be borne in mind that the Commission is taking an economic approach to state aid regulation, and this is better reflected in the new guidelines. The start-up aid rules are now shorter and much clearer. They are also much fairer as before start-up aid was restricted to airlines with a European air operator's certificate. Why is this? If a foreign-based airline operates into Europe, it should be entitled to the same benefits as anyone else."
Source: Air Transport Intelligence news
