EN Official Journal of the European Union C 451/123

Opinion of the European Economic and Social Committee on the ‘Review of the Community Guidelines on the financing of airports and start-up aid to airlines departing from regional airports’

C(2014) 963 final

(2014/C 451/20)

Rapporteur: Jacek KRAWCZYK Co-rapporteur: Nico WENNMACHER

On 8 May 2014, the Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on:

State aid to airports and airlines.

The Consultative Commission on Industrial Change (CCMI), which was responsible for preparing the Committee’s work on the subject, adopted its opinion on 11 June 2014.

At its 500th plenary session, held on 9 and 10 July 2014 (meeting of 9 July), the European Economic and Social Committee adopted the following opinion by 183 votes to 3, with 2 abstentions.

1. Conclusions and recommendations

1.1. The EESC welcomes the new European Commission regulation on Guidelines on State Aid for Airports and Airlines. This regulation, long awaited by both airports and airlines, sets out a framework with, in particular, a transitional period addressing some of the important problems of the EU transport sector undergoing profound changes.

1.2. The EESC regrets that, due to unjustified pressures coming from regional lobbies and locally elected politicians, the final regulation adopted by the European Commission does not provide sufficient tools for the substantial improvement of transparency in the European aviation market/sector. Aviation ground infrastructure development needs to be better coordinated at different levels (EU, Member State, regions). The spending of taxpayers’ money, including EU budgetary resources, must be well prepared on the basis of a feasibility study not distorted by purely local politics but validated by relevant economic and social demand. This study should also assess the sustainability of the project by integrating land use criteria, the impact on employment, working conditions and the environmental impact. Consistency with EU strategic projects such as the Single European Sky as well as SESAR are to be taken into account as well.

1.3. The EESC is concerned about the growing number of ‘competition cases’ by the Commission and the inadequate attitude of the Member States as regards the lack of a level playing field in EU aviation. Allowing an extremely long transitional period for airports to achieve profitability is not providing sufficient incentive for meaningful change in this respect.

1.4. The EESC is deeply disappointed that the study which would have presented the ongoing state of public aid and similar practices as regards implementation of the Aviation Guidelines — and which it requested in its previous opinion — was never conducted. Too much room was left for political ‘mist’ on the subject and not enough hard data was provided to propose reliable solutions. The EESC resubmits its request, which it regards as still relevant and justified. This study should provide information on the amount and type of aid, its actual impact on the development and efficiency of the economy and its impact on employment from a quantitative and qualitative point of view.

1.5. The EESC believes that it is important to stimulate social dialogue and avoid social dumping in this area. It is also important that some sort of arrangement is put in place to ensure that up-to-date data on the evolution of the labour market in aviation is available on an ongoing basis.

1.6. One of the serious problems resulting from the implementation of previous Guidelines was insufficient enforcement. The EESC is concerned that the high number of ‘exceptions’ in the current regulation — in addition to the extremely long transitional period — will enable weak enforcement to continue in the future, thus undermining the main purpose of this regulation: the creation of a level playing field.

1.7. The retroactive application of the Aviation Guidelines to operating aid should enable those airports and airlines which for years have exceeded the terms set by the 2005 Guidelines to comply with the new rules. Similarly, a retroactive application of the new Aviation Guidelines should prevent market players who did comply with the then applicable Commission Guidelines of 2005 from being penalised.

1.8. A level playing field is necessary to bring back sustainability to the European aviation industry. The public hearing organised by the EESC in 2014 showed clearly that the current ‘race for subsidies’ is jeopardising the situation of European aviation and seriously undermining its sustainability.

1.9. The EESC acknowledges the approach of the Aviation Guidelines to the regulation of start-up aid to airlines, although it is only implementation and enforcement of the new rules which will ultimately determine whether clarity and simplicity have been achieved.

1.10. Concerning plans for new airlines involving extensive public funding, the EESC considers that awareness programmes and supporting practices are organised for owners and managers of regional airports which are poorly equipped to deal with such issues.

1.11. The implementation of state aid rules within the internal market needs to be followed in third countries too. The EU authorities need to be consistent and adapt their policy when it comes to EU market access, especially for operators who benefit from favourable conditions in their home countries likely to produce unfair competition. The important thing is to ensure a level playing field for all.

1.12. If the EU aviation industry is to meet growing demand in a sustainable manner, it must offer quality jobs and good working conditions to satisfy both travellers’ interests and security requirements. As has already been said, it is important to encourage social dialogue and prevent social dumping in the sector. Several groups already exist in the EU aviation sector, for holding discussions with the relevant social partners and for reasons of efficiency they need to be further enhanced and their membership fleshed out by airport representatives. It is also important to further raise awareness among operators and to withhold state aid in the event of non-compliance with the relevant rules, and in particular when the applicable labour laws are breached.

1.13. That is also why it will be extremely important to closely monitor implementation of the ‘new’ current Aviation Guidelines. The European Commission should review the extent to which the targets have been achieved and report back no later than within 12 months.

2. Introduction

2.1. The European aviation industry was designed as a market where demand determines air fares and where users pay for the cost of aviation through fees and charges aiming at establishing a ‘competitive and resource-efficient transport system’ (White Paper on Transport, 2011). However, state aid to airports and airlines has created fundamental structural deficiencies in the European aviation market which need to be corrected.

2.2. The European Commission envisaged for a long time reviewing the 1994 Guidelines on the application of Articles 92 and 93 of the EC Treaty to state aids in the aviation sector and the 2005 EU Guidelines on the financing of airports and start-up aid to airlines departing from regional airports (further referred as the Aviation Guidelines). Clearer rules had long been needed to allow airports to receive support where really necessary — particularly since it was widely acknowledged that the preceding Aviation Guidelines had not been enforced effectively.

2.3. At its 482nd plenary session, held on 11 July 2012, the European Economic and Social Committee (EESC) adopted an additional opinion on the ‘Revision of the 1994 and 2005 EU aviation and airport guidelines’ CCMI/95. In its opinion the EESC presented clearly the development of the European Aviation market as well as the serious obstacles regarding implementation of the existing Aviation Guidelines. It also came up with a series of conclusions and recommendations.

2.4. In this opinion the EESC advocated the need for a standardised EU legal framework for the entire aviation sector, which would prevent uncontrolled subsidy practices and would ensure a level playing field for all market participants, including at local level.

2.5. The EESC pointed out that new Aviation Guidelines must be established through a clear and simple set of rules to achieve legal certainty for the European aviation sector. The EESC underlined the importance of proper implementation of the Aviation Guidelines; enforcement was of the utmost importance.

2.6. According to the previous Committee opinion (CCMI/95) the new Aviation Guidelines to be proposed by the Commission should have aimed at protecting all types of carriers against discriminatory, unclear or distorting financial aid by regional governments or airports. Public funding must not distort competition either between airports or airlines.

2.7. The EESC insisted that state aid for investments in airport infrastructure and start-up aid for airlines should only be possible in strictly defined cases, and be limited according to the period of time and intensity. Moreover, it should only be granted in exceptional circumstances and with due regard to the principles of transparency, equal treatment and non-discrimination.

2.8. Concerning transparency, the EESC concluded that the conditions under which public aid was to be available should be published. There should be full disclosure of the aid available to airports and carriers and the conditions under which aid would be paid.

2.9. As a general principle it was the EESC’s opinion that private investment cannot be considered as state aid. At the same time, a public operator can act as a private investor if the investment is commercially justifiable.

2.10. The EESC considered it necessary to prepare a study which would present the on-going state of public aid and similar practises as far as implementation of the Aviation Guidelines was concerned. In particular, in order to evaluate to what extent ongoing practice did or did not distort a level playing field among the airports as well as among the airlines, the study should provide information on the amount and type of aid granted, its impact on real economic development/efficiency and its quantitative and qualitative impact on employment.

2.11. The EESC pointed out that any new guidelines must take into account the interests of employees and travellers. As human resources are an essential component of the quality of an air transportation system, a sustainable civil aviation industry needs to offer quality employment and good working conditions. In this order of ideas it is important to stimulate social dialogue and avoid social dumping in the sector.

2.12. The EESC also called for a long-term policy concerning the development of regional airports. Aviation Guidelines can only be enforced successfully if clear policy priorities for regional airports development are agreed. It should have been the task of the Commission to work out such a political agenda to be prepared without any further delay.

2.13. The EESC called upon the Member States for their strong support and commitment to preparing and implementing new Guidelines. This was particularly relevant as far as the allocation of EU funds in the new MFF was concerned. ‘Doing more for less money requires clear priorities. Regional development is very important, but it should not justify the further development of airports, where there is no possibility to create sufficient demand.’

3. Aviation Guidelines — current state of play

3.1. On 20 February 2014 the European Commission adopted their Guidelines on State Aid for Airports and Airlines, replacing those which have been in place for almost 10 years (1994 and 2005).

3.2. The new rules allow the granting of operating aid to small unprofitable airports during a 10-year transitional period. After that the airport must be able to cover its own costs. The maximum permissible amount of aid is: — 50 % of the initial operating funding gap for airports handling less than 3 million ppa; — 80 % for airports handling up to 700 thousand ppa.

3.2.1. However, it will still be possible to receive compensation for uncovered operating costs of services of general economic interest (SGEI). This will apply to airports with an important role in improving the regional connectivity of isolated, remote or peripheral regions.

3.3. Better targeted investment aid is allowed only if there is a genuine transport need and only when the positive effects are clear. Additional transport capacity should be created only where there is a demand for it. No investment aid should be given when investment would undermine existing airports in the same catchment area, and no investment aid should be granted to areas which are already well connected by other modes of transport.

3.3.1. Maximum permissible investment aid: — up to 25 % for airports handling 3-5 million ppa; — up to 50 % for airports handling 1-3 million ppa; — up to 75 % for airports handling less than 1 million ppa; — no aid for airports handling more than 5 million ppa (with minor exceptions: i.e. relocating).

The ceiling for investment aid to finance airport infrastructure may be increased by up to 20 % for airports located in remote regions.

3.4. Airlines will be able to receive aid covering up to 50 % of airport charges for new destinations during a three-year period. More flexible arrangements could be justified for airports located in remote regions.

3.5. Arrangements between airlines and airports will be considered free of aid if a private investor, operating under normal market conditions, would have accepted the same terms. If the arrangement is not profitable, the airport/airline deal will be considered as public support to the airline.