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
Date: 2005-07-07
Institutions: European Committee of the Regions
Subjects: State aid, air transport, airport, control of State aid, regional development, transport company

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);

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);

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

Whereas:

1)

2)

3)

4)

5)

6)

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.

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

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.

there is an ongoing legal challenge in the Ryanair/Charleroi case, leading to concern that the guide-
lines 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 guide-
lines and the Commission needs to justify and give precedents for its use in this case.

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 obli-
gations might justify that additional investment (e.g. to link an island with the mainland, even if that
route is operated at a loss).

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 busi-
ness 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.

(1) OJ C 256 of 24.10.2003 p. 47.
(2) OJ C 73 of 23.3.2004, p. 38.
(3) OJ C 318 of 22.12.2004, p. 7.

C 31/24

EN

Official Journal of the European Union

7.2.2006

7)

8)

9)

10)

11)

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.

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.

small airports have limited administrative capacity. The imposition of the full panoply of EU notifi-
cation 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.

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.

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 dimin-
ished.

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

The Committee of the Regions' Recommendations

The Committee of the Regions

the possibility of
judged on a case-by-case basis;

further extensions,

in all

instances to be

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;

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

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 judge-
the guidelines be
ment
reviewed two years after entry into force;

is awaited; recommends that

that

advocates that only aid given by a public authority
3.
(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 Prin-
ciple); similarly, proposes that public airports should be able to
incur early year losses in the same way as private airports;

proposes that there should be an automatic review of
4.
state aid to new routes after the 3/5 year limit has elapsed,
with the possibility of an extension (again time-limited) with

Brussels, 7 July 2005

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;

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
the guidelines
million passengers per year. Point 92(c) of
should make explicit reference to the particular territorial cohe-
sion needs of Category C and D airports in island regions;

recommends a general application of the principles of de
the guidelines,
regional

8.
minimis and of
including the practice of
schemes covering several airports.

throughout
single notification for

‘silent approval’

The President

of the Committee of the Regions

Peter STRAUB