# C_2006031EN.01002301.xml

| 7.2.2006 | EN | Official Journal of the European Union | C 31/23 |
| --- | --- | --- | --- |

7.2.2006

EN

Official Journal of the European Union

C 31/23

---

Own-initiative opinion of the Committee of the Regions on the Draft Community guidelines on financing of airports and start-up aid to airlines departing from regional airports

(2006/C 31/06)

THE COMMITTEE OF THE REGIONS,

Having regard to the decision of its Bureau of 22 February 2005, under the fifth paragraph of Article 265 of the Treaty establishing the European Community, to instruct its Commission for Territorial Cohesion Policy to draw up an own-initiative opinion on this subject;

Having regard to the draft guidelines of the European Commission on financing of airports and start up aid to airlines departing from regional airports;

Having regard to its outlook opinion of 2 July 2003 on The capacity of regional airports (CdR 393/2002 fin) (1);

The capacity of regional airports

1

Having regard to its opinion on the Commission report on Better Lawmaking 2002 and the Commission Communication on Updating and simplifying the Community acquis (CdR 62/2003 fin) (2);

Better Lawmaking 2002

Updating and simplifying the Community acquis

2

Having regard to its own initiative opinion on Low cost airlines and territorial development (CdR 63/2004 fin) (3);

Low cost airlines and territorial development

3

Having regard to its draft opinion (CdR 76/2005 rev. 1) adopted on 29 April 2005 by its Commission for Territorial Cohesion Policy (Rapporteur: Cllr Gordon Keymer CBE, Leader of Tandridge District Council (UK/EPP);

Cllr Gordon Keymer CBE,

Whereas:

Whereas

| 1) | the continued vitality of regional airports has a clear and significant impact on regional development and territorial cohesion: they facilitate region-to-region connection; support citizens' mobility; encourage economic development and employment growth; promote tourism; and promote the regeneration of peripheral and less-developed regions in particular. |
| --- | --- |

1)

the continued vitality of regional airports has a clear and significant impact on regional development and territorial cohesion: they facilitate region-to-region connection; support citizens' mobility; encourage economic development and employment growth; promote tourism; and promote the regeneration of peripheral and less-developed regions in particular.

| 2) | the attempt by the European Commission to tackle the current problem of uncertainty and confusion on the issue of state aids in the aviation sector is welcome. |
| --- | --- |

2)

the attempt by the European Commission to tackle the current problem of uncertainty and confusion on the issue of state aids in the aviation sector is welcome.

| 3) | the guidelines will have significant effect on the ability of public authorities to give aid to regional airports having the objective of promoting territorial cohesion of the EU. Given the importance of this aspect, and that the ‘guidelines’ appear to have the effect of a formal regulation, the Council and Parliament should be consulted. |
| --- | --- |

3)

the guidelines will have significant effect on the ability of public authorities to give aid to regional airports having the objective of promoting territorial cohesion of the EU. Given the importance of this aspect, and that the ‘guidelines’ appear to have the effect of a formal regulation, the Council and Parliament should be consulted.

| 4) | there is an ongoing legal challenge in the Ryanair/Charleroi case, leading to concern that the guidelines could be contradicted by the outcome of this case causing further confusion and lack of clarity. It is not clear whether the Commission seeks to limit state aid or simply render it more transparent. The use of Article 19(2) Regulation 659/1999 does not appear appropriate to enforce these guidelines and the Commission needs to justify and give precedents for its use in this case. |
| --- | --- |

4)

there is an ongoing legal challenge in the Ryanair/Charleroi case, leading to concern that the guidelines could be contradicted by the outcome of this case causing further confusion and lack of clarity. It is not clear whether the Commission seeks to limit state aid or simply render it more transparent. The use of Article 19(2) Regulation 659/1999 does not appear appropriate to enforce these guidelines and the Commission needs to justify and give precedents for its use in this case.

| 5) | there is only one reference in the guidelines to the Market Economy Investor Principle (MEIP). This principle is intended to judge the actions of public authorities against the likely decision that would have been taken by a ‘rational’ private investor. On this basis, only public funding in excess of what a private operator might have invested could be deemed state aid, and even then public service obligations might justify that additional investment (e.g. to link an island with the mainland, even if that route is operated at a loss). |
| --- | --- |

5)

there is only one reference in the guidelines to the Market Economy Investor Principle (MEIP). This principle is intended to judge the actions of public authorities against the likely decision that would have been taken by a ‘rational’ private investor. On this basis, only public funding in excess of what a private operator might have invested could be deemed state aid, and even then public service obligations might justify that additional investment (e.g. to link an island with the mainland, even if that route is operated at a loss).

| 6) | the time limit for start-up aid to new routes is set at 3 years, or 5 years in the case of small or peripheral airports. This is not justified in the guidelines and is of a shorter duration than most business plans and regional economic development plans. However, no-one would advocate subventions for an unlimited period. A reasonable compromise would seem to be to provide for an automatic review. Similarly, setting the maximum intensity of state aid at 50 % appears to be fairly arbitrary, and higher levels might be warranted in some cases. |
| --- | --- |

6)

the time limit for start-up aid to new routes is set at 3 years, or 5 years in the case of small or peripheral airports. This is not justified in the guidelines and is of a shorter duration than most business plans and regional economic development plans. However, no-one would advocate subventions for an unlimited period. A reasonable compromise would seem to be to provide for an automatic review. Similarly, setting the maximum intensity of state aid at 50 % appears to be fairly arbitrary, and higher levels might be warranted in some cases.

| 7) | the draft guidelines allow the first entrant on a new route to exclude any potential competitors on that route for five years, irrespective of whether subsequent entrants could offer a better, more frequent or lower cost service. |
| --- | --- |

7)

the draft guidelines allow the first entrant on a new route to exclude any potential competitors on that route for five years, irrespective of whether subsequent entrants could offer a better, more frequent or lower cost service.

| 8) | the prohibition on state aid for new routes where a similar route exists from another airport within the same ‘economic attraction zone’ or population centre, would seem designed to protect existing operators and airports (notably national airlines and major hub airports) from competition by lower-cost airlines operating out of smaller airports within the region. |
| --- | --- |

8)

the prohibition on state aid for new routes where a similar route exists from another airport within the same ‘economic attraction zone’ or population centre, would seem designed to protect existing operators and airports (notably national airlines and major hub airports) from competition by lower-cost airlines operating out of smaller airports within the region.

| 9) | small airports have limited administrative capacity. The imposition of the full panoply of EU notification procedures on these airports will impose a bureaucratic burden out of all proportion to the impact on the internal market. It should be possible to pursue the de minimis principle by which aid under a certain value, or routes operating under a certain volume threshold need not be reported. There are some regional schemes (e.g. Scotland) where a single notification could be submitted on behalf of all of the airports within the scheme. |
| --- | --- |

9)

small airports have limited administrative capacity. The imposition of the full panoply of EU notification procedures on these airports will impose a bureaucratic burden out of all proportion to the impact on the internal market. It should be possible to pursue the de minimis principle by which aid under a certain value, or routes operating under a certain volume threshold need not be reported. There are some regional schemes (e.g. Scotland) where a single notification could be submitted on behalf of all of the airports within the scheme.

de minimis

| 10) | in summary, the guidelines must be as flexible as possible and be able to deal with state aid on its merits and on a case by case basis if regional airports and regional airlines are to help create a competitive and cohesive European Union, free of excessive red tape. |
| --- | --- |

10)

in summary, the guidelines must be as flexible as possible and be able to deal with state aid on its merits and on a case by case basis if regional airports and regional airlines are to help create a competitive and cohesive European Union, free of excessive red tape.

| 11) | the guidelines do not constitute a breach of the subsidiarity principle, although there is concern that in some respects the freedom of local and regional authorities to promote regional airports is diminished. |
| --- | --- |

11)

the guidelines do not constitute a breach of the subsidiarity principle, although there is concern that in some respects the freedom of local and regional authorities to promote regional airports is diminished.

adopted the following opinion at its 60th plenary session of 6-7 July 2005 (meeting of 7 July):

adopted the following opinion at its 60th

The Committee of the Regions' Recommendations

The Committee of the Regions

The Committee of the Regions

| 1. | requests that the views of the Council and European Parliament be sought by the Commission before a decision is taken and that an impact assessment be undertaken; |
| --- | --- |

1.

requests that the views of the Council and European Parliament be sought by the Commission before a decision is taken and that an impact assessment be undertaken;

requests

| 2. | proposes that the Commission should suspend drafting its guidelines pending outcome of the appeal in the Ryanair/Charleroi case in the Court of Justice in order to avoid possible contradiction between the new guidelines and the legal judgement that is awaited; recommends that the guidelines be reviewed two years after entry into force; |
| --- | --- |

2.

proposes that the Commission should suspend drafting its guidelines pending outcome of the appeal in the Ryanair/Charleroi case in the Court of Justice in order to avoid possible contradiction between the new guidelines and the legal judgement that is awaited; recommends that the guidelines be reviewed two years after entry into force;

proposes

recommends

| 3. | advocates that only aid given by a public authority (based on the ‘single till’ principle) in excess of that which would have been given by a private investor should be regarded as non-permissible state aid (Market Economy Investor Principle); similarly, proposes that public airports should be able to incur early year losses in the same way as private airports; |
| --- | --- |

3.

advocates that only aid given by a public authority (based on the ‘single till’ principle) in excess of that which would have been given by a private investor should be regarded as non-permissible state aid (Market Economy Investor Principle); similarly, proposes that public airports should be able to incur early year losses in the same way as private airports;

advocates

| 4. | proposes that there should be an automatic review of state aid to new routes after the 3/5 year limit has elapsed, with the possibility of an extension (again time-limited) with the possibility of further extensions, in all instances to be judged on a case-by-case basis; |
| --- | --- |

4.

proposes that there should be an automatic review of state aid to new routes after the 3/5 year limit has elapsed, with the possibility of an extension (again time-limited) with the possibility of further extensions, in all instances to be judged on a case-by-case basis;

proposes

| 5. | rejects the proposal that the first entrant on a new route can in effect ‘freeze’ the route by excluding potential competitors for up to five years; |
| --- | --- |

5.

rejects the proposal that the first entrant on a new route can in effect ‘freeze’ the route by excluding potential competitors for up to five years;

rejects

| 6. | rejects the prohibition on state aid for new routes where a similar route exists from another airport (e.g. a major hub airport) within the same ‘economic attraction zone’; proposes that the concept of ‘economic attraction zone’ be clarified; |
| --- | --- |

6.

rejects the prohibition on state aid for new routes where a similar route exists from another airport (e.g. a major hub airport) within the same ‘economic attraction zone’; proposes that the concept of ‘economic attraction zone’ be clarified;

rejects

| 7. | proposes that Category C and D airports be excluded from the notification requirements; if only Category D airports are excluded then it should include airports with up to 2 million passengers per year. Point 92(c) of the guidelines should make explicit reference to the particular territorial cohesion needs of Category C and D airports in island regions; |
| --- | --- |

7.

proposes that Category C and D airports be excluded from the notification requirements; if only Category D airports are excluded then it should include airports with up to 2 million passengers per year. Point 92(c) of the guidelines should make explicit reference to the particular territorial cohesion needs of Category C and D airports in island regions;

proposes

| 8. | recommends a general application of the principles of de minimis and of ‘silent approval’ throughout the guidelines, including the practice of single notification for regional schemes covering several airports. |
| --- | --- |

8.

recommends a general application of the principles of de minimis and of ‘silent approval’ throughout the guidelines, including the practice of single notification for regional schemes covering several airports.

recommends

de minimis

Brussels, 7 July 2005

The President

of the Committee of the Regions

Peter STRAUB

---

(1)  OJ C 256 of 24.10.2003 p. 47.

1

(2)  OJ C 73 of 23.3.2004, p. 38.

2

(3)  OJ C 318 of 22.12.2004, p. 7.

3

---