The Assembly of European Regions (AER) and ACI EUROPE have denounced the European Commission’s proposed new Guidelines on State aid to airports and airlines.

 

 

Both organisations claim that these new Commission guidelines are “explicitly seeking to curb the public financing of airport infrastructure”, forcing national, regional and local authorities to inevitably have to comply with more constraining rules. These would limit their ability to invest in the development of new or existing airport infrastructure (investment aid) in addition to the financing of day-to-day operations of smaller airports (operating aid).

 

Both AER and ACI EUROPE say they are in favour of promoting fair competition and efficiency in public financing and attracting more private investment is a legitimate goal. But they claim to be “extremely concerned” with some of the Commission’s proposals, which they say will affect regional airports in particular.

 

Under the Commission’s new proposed guidelines and following a 10-year transitional period, regional airports with more than 200,000 passengers a year will no longer be able to receive public operating aid. AER and ACI EUROPE say that instead, they will have to raise their passenger and airline fees to fully cover their costs.

 

Not surprisingly, both organisations say that such a proposal displays ignorance as to the economic realities of the airport business, considering full cost recovery through user charges is already unobtainable due to the extremely high capital intensity and fixed costs. They argue rightly that this is most pronounced at smaller airports, where economics dictates that these costs need to be covered by revenues from fewer airlines and a much smaller number of passengers.

 

Olivier Jankovec, Director General ACI EUROPE.

 

POTENTIALLY SEVERE DAMAGE

Both AER and ACI say that if these proposals are approved, then there will be a loss of air services, decreasing connectivity, or even potential airport closures. This will result in disastrous consequences for the regional communities they serve and not the least tourism on top of basic transportation losses to remote regions in many instances.

 

Per Inge Bjerknes, Chairman of the AER Working Group on Regional Airports and Vice-Chairman of the County Council of Østfold (N) said: “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 five 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 to self-finance their development, public aid can still be required for one-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 said: “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 of public aid every year.”