Three decisions in aviation sector in Finland, Greece and Ireland
By Isabelle Smets | Wednesday 25 July 2012
The financial arrangements between the airport of Tampere Pirkkala (Southern Finland) and the low-cost airline Ryanair do not constitute state aid in the meaning of EU rules. They are therefore perfectly legal. Such was the decision taken by the European Commission, on 25 July, thus closing an investigation that was opened in 2007 following a complaint by a competitor airline. As per an arrangement concluded with Ryanair, the airline pays an ‘all inclusive’ charge differing from the terms offered to other airlines at the airport. The Commission’s investigation found that this agreement respected market terms as it was concluded on terms that a private investor operating under market conditions would have accepted. “The agreements are based on an ex ante business plan showing profitability expectations and therefore confer no economic advantage to Ryanair. The business results of the airport further confirm these expectations,” said the Commission.
Ryanair will not be quite so pleased with another decision made by the Commission, which requires the reimbursement of incompatible Irish state aid in the form of preferential airport taxes for certain destinations, which the airline benefitted from. The facts are as follows: in 2009, Ireland introduced an air travel tax for flights departing from Irish airports. The tax was set at €2 for destinations at maximum 300 km from Dublin and at €10 for all others. The Commission found that the lower rate favoured flights within Ireland and to nearby parts of the UK, giving the companies concerned an economic advantage over their competitors. The Commission ordered Ireland to recover this advantage from all airlines that had benefited from it. The main beneficiaries were Ryanair, Aer Lingus and Aer Arann.
In another case, the Commission found that investment aid of €77.7 million for Chania airport in Greece respected EU state aid rules. It therefore received the green light. According to the Commission, this aid is targeted and limited to the minimum necessary. The Commission notes that it took into account the “important role” of this airport for the accessibility of Crete and for local development. The Commission namely highlights the need to reach “a balance between fair conditions of competition in the aviation industry and transport needs”.
Commenting on these decisions, Commissioner Joaquín Almunia, in charge of competition policy, said: “We will look at other cases of state aid to airports and airlines in the coming months” in the context of preparing a review of the guidelines of state aid for the air travel sector (review planned for 2013).