"EU Drafting New Airport Finance Rules"

Tuesday, February 8, 2005

EU proposes new rules for regional airport aids
The Associated Press


BRUSSELS - The European Commission said Tuesday that it was drafting new rules 
to clarify what aid could be given to regional airports and airlines across 
Europe, in the wake of its ruling last year involving subsidies received by the 
Irish low-fare carrier Ryanair.

The commission's draft guidelines set out conditions under which airports may 
receive public financing and offer access discounts to airlines. Released for 
public consultation, the rules aim to ensure fair competition while letting 
governments use smaller airports to cut congestion and boost regional 
development.

"Increased use of regional airports is an asset," the commission said. 
"Low-cost companies are not always prepared, without appropriate incentives, to 
run the risk of opening routes from unknown and untested airports."

The guidelines divide Europe's airports into four groups based on annual 
traveler numbers: More than 10 million, between 5 million and 10 million, 
between 1 million and 5 million, and less than 1 million.

Start-up benefits will generally be restricted to airports handling up to 5 
million passengers a year. 

In exceptional circumstances such as a "severe recession," all but the largest 
airports may also be able to offer such aid, according to the commission.

"We welcome the guidelines to have a clear view of what we have the right to 
do," Gerard Borel, the general counsel at Airports Council International 
Europe, said in an interview in Brussels. ACI Europe is a body representing 
more than 450 airports.

The commission last year struck down a 15-year pact between Dublin-based 
Ryanair and Charleroi airport, located on a former coalfield 60 kilometers, or 
37 miles, south of Brussels. Under pressure from complaints by Virgin Express, 
a rival carrier using the larger and better-established Brussels International 
Airport, the commission ruled illegal a landing-fee discount for Ryanair, cut 
the duration of aid for promoting routes to five years from 15 and ordered the 
airline to repay €4 million, or $5.1 million, in benefits.

The European Commission said the aim of the guidelines was to "guard against 
all forms of discrimination to the exclusive benefit of any one company."

Jacques Barrot, the EU commissioner in charge of transport policy, said action 
was needed to "promote regional airports and the development of new air 
services in Europe" under clear rules.

"Everything must be done to ensure equality of treatment between companies and 
between airports," he said in a statement.

Low-cost carriers, which account for about 15 percent of Europe's air-travel 
market, increasingly rely on secondary airports where costs are lower. They 
faced the threat of having to renegotiate their pacts with airports as a result 
of the February 2004 ruling, which Ryanair is appealing.

Public financing of airports will continue to fall outside the scope of EU 
state aid rules when it covers public services including customs, security and 
fire fighting. 

It will also be permitted for services of "general economic interest" as long 
as these are properly defined, the methods for calculating compensation are 
transparent and the aid isn't excessive.

Aid for the launching of a new route will be allowed provided it does not 
exceed five years, is scaled back over time, is calculated per passenger, does 
not cover recurring operating costs such as fuel and crew salaries, and is 
based on objective criteria, the commission said. The new route must also not 
already be operated by an air service or a high-speed rail link, it said.

The Commission aims to finish and adopt the new rules before the coming autumn.


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