While the AER and ACI Europe consider that promoting fair competition, efficiency in public financing and attracting more private investment are legitimate goals, they are extremely concerned with some of the Commission’s proposals, for a number of reasons.
BRUSSELS & STRASBOURG – Reacting to the publication by the European Commission of proposed new Guidelines on State aid to airports and airlines, the Assembly of European Regions (AER) and European airport trade body ACI Europe denounced the harsh consequences of these new rules for regional development.
With these new Guidelines, the Commission is explicitly seeking to curb the public financing of airport infrastructure. National, regional and local authorities would therefore have to comply with more restrictive rules limiting their ability to invest in the development of new or existing airport infrastructure (investment aid) as well as in the financing of day-today operations of smaller airports (operating aid).
While the AER and ACI Europe consider that promoting fair competition, efficiency in public financing and attracting more private investment are legitimate goals, they are extremely concerned with some of the Commission’s proposals, for a number of reasons.
These proposals will affect regional airports in particular. Following a 10 year transitional period, regional airports with more than 200,000 passengers per year will no longer be able to receive public operating aid.Instead, they will be required to hike the fees they charge to passengers and airlines so as to fully cover their costs. This ignores the economic reality of the airport business, where full cost recovery through user charges is simply unachievable due to extremely high capital intensity and fixed costs. This is particularly the case at smaller airports, where these costs need to be borne by fewer airlines and a much smaller number of passengers. The result will be a loss of air services and decreasing connectivity, and even airport closure – with very harsh consequences for the regional communities they serve.
Per Inge Bjerknes, Chairman of the AER Working Group on Regional Airports and Vice-Chariman of the County Council of Ostfold (N) commented “For our Regions, there is no escaping the fact that airports are strategic public infrastructure and that they need to be treated as such. In particular for peripheral and scarcely populated regions, the connectivity they afford is essential and unparalleled – it allows more than 5 million jobs across Europe and needs to be supported, not degraded. Part of these new State aid rules seem to show that the Commission is more concerned with fiscal austerity than promoting growth and jobs. They absolutely need to be reconsidered”.
Beyond regional airports, the Commission is also looking at prohibiting investment aid at larger airports. While these airports are usually able toself-finance their development, public aid can still be required for once-off landmark airport projects involving massive investment. The Commission proposal is in sharp contrast to the way airport development is being financed outside Europe in both developed and emerging economies. Public financing is an essential part of airport infrastructure development not only in the Gulf and Asia, but also in the United States.
Olivier Jankovec, Director General ACI Europe added “These new rules – and in particular the 200,000 passenger threshold – risk condemning small regional airports to limit their development or to close down. They are also introducing limitations on public financing of airport development which fly in the face of the airport capacity crunch brewing here in Europe – a move that would probably be considered foolhardy in the rest of the World. Clearly, these proposals have not been properly thought through in terms of their impact on our sector and beyond on the wider European economy.”
He added “We fail to understand the overt discrimination these rules would introduce in favour of the competing rail sector, which gets an astonishing and unquestioned 32billion euros of public aid every year.”
EC missed opportunity on state aid rules to Europe’s airports and airlines, says ERA
The European Commission’s (EC’s) proposed rules on state aid to Europe’s airports and airlines are detrimental to ERA and its members.
“While the EC has a declared objective to protect regional development and accessibility in Europe’s more remote regions, this is at odds with its intention stated in the new guidelines to phase out some elements of aid for airports over a 10-year period. Regional operators and airports are crucial to the economic prosperity of Europe’s regions. In some cases aid plays a vital role in supporting regional communities and air services. It is essential that this is done fairly and transparently to avoid distortions of competition but simply banning aid does not address the problem. What is needed is more transparency on where aid is granted so that distortions of competition are avoided. The launch of some new routes could be impacted by today’s announcement, as will the future viability of some existing routes to, from and between the regions of Europe”, said ERA’s Director General, Simon McNamara.
McNamara continues: “The European Commission has historically failed to enforce fair and consistent rules for the allocation of state aid to Europe’s airports and airlines. The revised guidelines published today are a missed opportunity to address this failure and to provide more clarification and transparency.”
“In addition, the proposed guidelines do not establish an efficient complaint-handling procedure that would allow operators or airports to challenge guideline breaches.”
ERA’s Director General also highlights the fact that the guidelines do not address intermodal competition in the EU. “The guidelines do not consider the disproportionate difference in treatment of rail and air when it comes to state aid. The rail sector in Europe has always been hugely subsidised and yet this seems to be accepted as the norm – where is the level playing field when it comes to air and rail competing?”
“ERA has consistently defended its members’ position to support growth in the regions and will continue to lobby the EC on their behalf for a fair and transparent system,” concludes McNamara.
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