The 2005 guidelines on the financing of airports and start-up aids to airlines
Practical experiences
Annabelle Lepièce8 September 2009
April 20, 2023 Slide 2 The 2005 guidelines on the financing of airports and start-up aids to airlines
Adoption by the European Commission of the Guidelines in 2005 :
Following the Ryanair decision of 12 February 2004, annulled by the CFI on 17 November 2008
Evaluation of the Guidelines in 2009
April 20, 2023 Slide 3 The 2005 guidelines on the financing of airports and start-up aids to airlines
Principles of the Guidelines
a) Financing of airports :• No aid for the managing of airports or infrastructure (private
investor principle)
Except : – Activities that normally fall under State responsibility:
safety air, traffic control, police, customs– Public financing of Services of General Economic Interest
(SGEI)– Authorized aids for the infrastructure for regional airports
(EC notification)
b) Incentives in favor of airlines :• Private investor principle• Authorized start-up aid (EC notification)
April 20, 2023 Slide 4 The 2005 guidelines on the financing of airports and start-up aids to airlines
Financing of airports
Principle : airports should be run as private companies Consequence : public interventions should conform to the private
investor principle (business plan, foreseeing and reasonable return on investment)
Examples : inquiries of the European Commission following complaints :
Tampere airport : public financing of the conversion of a freight terminal into a low cost terminal
Tortoli-Arbatax airport : fee for the additional infrastructure to be paid by the airport manager only if the passengers traffic exceeds 500.000 per year
In practice : assessment of all public financing (subsidies, capital injections, guarantees and loans, lease or sale of public land and buildings)
April 20, 2023 Slide 5 The 2005 guidelines on the financing of airports and start-up aids to airlines
SGEI (public service missions)
Guidelines : notification of public financing for airports above 1 million passengers per year
Decision of November 2005 on the financing of SGEI : no notification if the public compensation is below 30.000.000 EUR and the turnover of the airport manager is below 100.000.000 EUR
No EC decision
In practice : strict compliance to the EU conditions ensures the legality of public funding
April 20, 2023 Slide 6 The 2005 guidelines on the financing of airports and start-up aids to airlines
Public financing of airport infrastructure
Principle : Private investor principle If not : aid in favor of regional airports (below 5 millions
passengers per year) to be notified to the EC
Very broad conditions for authorization :
1. Defined objective of general interest (regional development, accessibility, etc.)
2. Infrastructure necessary and proportional to the objective
3. Satisfactory medium term prospect for use
4. Access for all potential users
5. No affection of the development of trade
April 20, 2023 Slide 7 The 2005 guidelines on the financing of airports and start-up aids to airlines
Public financing of airport infrastructure
In practice : • In-depth assessment of all conditions by the EC• Examples of subsidized Infrastructure : runway extension,
new terminal, conversion of a military airport into a civil one, safety equipments, aprons, cargo warehouse, etc.
• Authorized aid for Berlin Brandenburg Airport (category A)
Motivation of the authorization : connectivity and regional development, improvement of the safety of the infrastructure, tourism, decrease of aircraft noise
Aid intensity : 50 to 70 %
April 20, 2023 Slide 8 The 2005 guidelines on the financing of airports and start-up aids to airlines
Incentives to airlines
Principle : Private investor principle: difficult assessment in regional
airports
In practice : • Business plan showing the profitability of the routes incentives• European Commission’s inquiries on alleged aids to Ryanair,
EasyJet, DHL, etc. (Tampere airport, Leipzig, Berlin, Bratislava, Alghero, Hahn, Pau, etc.)
• Airlines and airports’ creativity : marketing agreements, general reduction of airport charges, etc.
• De minimis aid : 200.000 EUR by airline for a three years period
April 20, 2023 Slide 9 The 2005 guidelines on the financing of airports and start-up aids to airlines
Start-up aids
Compulsory notification to the European Commission 12 conditions to fulfill, some inadequate or too
constraining : Only in favor of European airlines and for EU
destinations No aids for regional airports close too major
hubs Development plan by destination
Lack of success (7 EC decisions)
April 20, 2023 Slide 10 The 2005 guidelines on the financing of airports and start-up aids to airlines
Conclusions
The 2005 Guidelines : new EC policy towards the financing of airports
Financing of airport infrastructure : flexible approach of the European Commission on notified aids (8 Member States)
Incentives to airlines :• great uncertainty for airports• in-depth inquiries of the European Commission
following complaints
April 20, 2023 Slide 11 The 2005 guidelines on the financing of airports and start-up aids to airlines
Conclusions
Revision of the Guidelines :
More precise conditions for the financing of airport infrastructure to increase legal certainty
Start-up aids :
suppression of inadequate or too constraining conditions
abolition of the notification to the European Commission
April 20, 2023 Slide 12 The 2005 guidelines on the financing of airports and start-up aids to airlines
Merci pour votre attention
Annabelle LepièceAvocat
CMS DeBackerChaussée de La Hulpe, 178
1170 - BruxellesTél. +32 2 743 69 34
Email : [email protected]