European Commission consultation on less strict rules on state subsidies for aviation sector

The European Commission wants to loosen state aid rules for Europe’s regional airports and ports, reducing the red tape burden on government investment below a certain threshold. The European state aid regulator, the Directorate-General for Competition, has launched a public consultation on the planned changes, with the aim of presenting an updated initiative by this autumn. The consultation ends on 30th May, and there will then be another. The European Commissioner for Competition said the aim was to make state aid investment easier, to create jobs.  The Commission has reviewed 54 cases of financial support for airports (and more than 30 for ports). The revision would be one of the last steps of a sweeping overhaul of Europe’s rules governing public subsidies. Under the draft plans now out for consultation, the cultural industry and the overseas regions would also get looser conditions for gaining state aid. The EU rules for state aid to airports and airlines were last changed in March 2014. The rules said state aid is allowed if there is seen to be a genuine need for accessibility by air to a region. One category was for operating aid to regional airports (with less than 3 million passengers a year) to be allowed for a transitional period of 10 years under certain conditions.
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Commission reviews financial support for airports and ports

By NICHOLAS HIRST  (Politico EU)

7.3.2016

The European Commission wants to loosen state aid rules for Europe’s regional airports and ports, reducing the red tape burden on government investment below a certain threshold.

Europe’s state aid regulator Monday launched a public consultation on the plan with the aim of presenting an updated initiative by autumn.

“Our proposals aim at facilitating unproblematic public investments in ports and airports that can create jobs, by exempting them from scrutiny under EU state aid rules,” said Margrethe Vestager, the European commissioner for competition.

She said the reforms reflected the Commission’s experience in reviewing 54 cases of financial support for airports and more than 30 for ports.

The revision would be one of the last steps of a sweeping overhaul of Europe’s rules governing public subsidies. Under the draft plans published today, the cultural industry and the overseas regions would also win a reprieve from strict state aid rules.

http://www.politico.eu/article/commission-reviews-financial-support-for-airports-and-ports/


 

Public Consultation

From the Directorate-General for Competition

Targeted review of the General Block Exemption Regulation [GBER] (State aid): extension to ports and airports

Policy field  – State aid

Target group – All citizens, organisations and public authorities are welcome to contribute to this consultation.

Consultation period
From 07.03.2016 until 30.05.2016

Objective of the consultation

In recital 1 of the GBER (Regulation 651/2014), it is announced that the Commission envisages including ports and airports in the GBER, which have so far not been included, as soon as sufficient case experience has been collected. This initiative aims to simplify the application of State aid rules, thus reducing administrative burden and costs and speeding up the implementation of projects. By including aid measures for ports and airports into the GBER, Member States will no longer have to notify the measures to the Commission and wait for the approval of the Commission before they can start implementation.

As required by the legal basis of the GBER (Council Regulation (EU) 2015/1588 of 13 July 2015), the Commission will carry out two public consultations on drafts of the Regulation and will consult Member States in Advisory Committee meetings on both drafts. This is the first public consultation.

 

View the consultation document

  • Draft amending Regulation en (translations in all language versions will be published within the next week)
  • Explanatory memorandum en

Reference documents and other, related consultations

Roadmap

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We welcome contributions from citizens, organisations and public authorities.

  • If you are answering this consultation as a citizen, please click here to submit your contribution

……… and more at

http://ec.europa.eu/competition/consultations/2016_gber_review/index_en.html

Public consultations

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Earlier:

European Commission Commission adopts new guidelines for state aid to airports and airlines

The European Commission has now adopted new guidelines on how Member States can financially support airports and airlines in line with EU state aid rules. The EC says the guidelines are “aimed at ensuring good connections between regions and the mobility of European citizens, while minimising distortions of competition in the Single Market.” The aim is to ensure fair competition for flag carriers down to low-cost airlines, from regional airports to major hub airports and avoid overcapacity and the duplication of unprofitable airports. Aid is allowed if there is  seen to be a genuine need for accessibility by air to a region.  Operating aid to regional airports (with less than 3 million passengers a year) will be allowed for a transitional period of 10 years under certain conditions, in order to give airports time to adjust their business model. Airports will less than 700 000 passengers a year get more favourable treatment. Start-up aid to airlines to launch a new air route is permitted provided it remains limited in time. The formal adoption of the new guidelines in is expected by March 2014. 

http://www.airportwatch.org.uk/2014/02/european-commission-commission-adopts-new-guidelines-for-state-aid-to-airports-and-airlines/

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See also:

Finavia has secured a €230m (£175m) loan for an expansion that will enable Helsinki Airport to serve 20 million passengers by 2020. The loan is from the European Investment Bank

http://www.theconstructionindex.co.uk/news/view/finland-secures-funds-for-helsinki-airport-expansion

Comment:  The EIB (European Investment Bank) regularly describe their lending policy as climate progressive and had given assurances that funding for airports was limited to circumstances where such investment would reduce emissions. They would point to investment in air navigation improvements. But its hard to square that with increasing capacity from 16 to 24 million passengers. The info is on the EIB page here. (13.12.2011 – see aviation section copied below).

Bank Watch Europe conducted analysis of EU regional and cohesion funding to 9 central and eastern European countries for the period 2014 – 2020. It was regional and cohesion funding for airports which was subject to the damning report by the European Court of Auditors last year.

People were again told that regional and cohesion funding would no longer be used – the Bankwatch report indicates that funding for airports will amount to 0.5% of all funding. So not huge, but still problematic.

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Earlier:

Ryanair has been ordered to repay illegal state aid to Germany… AGAIN

Ryanair has been hit with its second illegal state-aid bill in two weeks after it was ordered to repay €300,000 to the German government. The European Commission ordered the money be returned due to Ryanair’s setup at the Alternburg-Nobitz regional airport about 42km south of Leipzig, where Ryanair was the only airline between 2003 and 2011.  Ryanair is fighting the order, saying this is outside the rules, and it no longer flies from the airport. The European Commission said  “certain service and marketing agreements” between the Alternburg-Nobitz airport manager, Ryanair and its marketing offshoot AMS gave the Irish carrier an unfair advantage to the tune of around €300,000. The contracts had no chance of returning a profit for the airport even in the long term, but they gave Ryanair an unfair economic advantage. Another EC decision earlier this month told Ryanair to pay back €500,000 to the German government for its contract at the Zweibrücken Airport, which amounted to illegal state aid.  

http://www.airportwatch.org.uk/2014/10/ryanair-has-been-ordered-to-repay-illegal-state-aid-to-germany-again/


 

Also recently:

Highlands & Islands Airports Ltd (HIAL) (publicly owned operator of 11 Scottish airports, subsidized by Scottish government) have announced an £900,000 expansion plan for Inverness Airport, including a new arrivals hall, a bigger departures lounge and improved security facilities.

Expansion of the airport will complement Inverness Airport Business Park – which is planning commercial development on 620 acres of land, with 36 acres of serviced land currently available

http://www.adsadvance.co.uk/hial-invests-in-inverness-airport-expansion.html

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The EIB Transport Lending Policy Document (Dec 2011) states on aviation:

http://www.eib.org/attachments/strategies/transport_lending_policy_en.pdf

CIVIL AVIATION

Consistency with Objectives

100. Civil aviation forms an essential component of EU mobility and this is recognised in the White Paper. Many of the economic benefits generated by air travel, particularly for long distance travel, are not substitutable by other modes. The revolution in low cost air travel has enabled EU citizens, in unprecedented numbers, the freedom to travel the world, spreading wealth and mutual understanding. At the same time, air transport also remains one of the safest modes of passenger transport. The EIB intervention in this sector is strongly linked to the economic benefits generated by air transport services. However, as with all transport, these benefits come at an environmental cost which in the case of certain types of air travel can be higher than other modes. The Bank’s intervention in the sector therefore seeks projects with strong economic benefits which at the same time improve the environmental performance of the sector.

101. The EIB finances airport projects forming part of the TEN-T. The TEN-T airport network covers hub airports that are essential nodes for distributing passengers and cargo through the network as well as smaller airports that give smaller communities access to the European and world air transport networks. The Bank will also finance airports situated in Convergence regions or outside the EU under the Bank’s external mandates; such projects indirectly support growth and employment through improved accessibility to less developed regions.

102. The whole of European airspace must be managed in real time to ensure safe and efficient air transportation. National Air Traffic Management is supplied by single national service providers, and all are potential beneficiaries of EIB financing. More direct air routes and efficient procedures play a central role in helping air transport improve its environmental performance. The Bank also actively supports financing that contributes to the implementation of the Single European Sky, a central element of European air transport policy.

103. The Bank prioritises Air Traffic Management projects through the VA method and they may also count towards meeting the Climate Action indicator in the COP.

104. EIB financing for aircraft manufacturing is limited to investments located in Convergence regions in the EU or under mandate outside the EU.

105. The financing of aircraft acquisition will continue to be supported only by exception when very strong value added can be demonstrated. Examples could be connections to remote or less developed areas where air services form an essential role in maintaining the territorial integrity of the EU, or lifeline services providing medical, rescue or fire fighting services. In addition, aircraft purchases should normally involve a significant increase of fuel efficiency over existing fleets. Outside the EU a similar approach will be followed.

Other considerations

106. The EIB requires that airport capacity expansions are commensurate with reasonable demand forecasts. Projects shall meet International Civil Aviation Organisation safety and operational standards. Air Traffic Management projects shall meet standards set by the International Civil Aviation Organisation and, in the EU, equipment requirements agreed through Eurocontrol. For aircraft acquisition projects, the airlines must demonstrate best international operative practice, fully meeting International Civil Aviation Organisation standards, and the equipment purchased must be of the best technology standards available.

107. Civil aviation projects have to demonstrate a high economic return after incorporating both costs already internalised through taxes and the new Emission Trading Scheme, as well as additional carbon costs set by the Bank as an approximation to the full cost of emissions. In the case of airports in markets where the Emission Trading Scheme is not applicable, traffic projections will be adjusted to reflect the effect that would be expected from the introduction of the Scheme in the market. For Air Traffic Management projects, the Bank will ensure that the service provider is subject to an effective regime of economic regulation to ensure that there is no abuse of monopoly position.

http://www.eib.org/attachments/strategies/transport_lending_policy_en.pdf