EU puts low-cost, classic airlines on same state-aid norm

(BRUSSELS) - The European Commission on Thursday amended state-aid rules to put low-cost airlines on a par with traditional carriers which complain their rivals can undercut them because of unfair local subsidies.

The new rules "will ensure fair competition regardless of the business model - from flag carriers to low-cost airlines and from regional airports to major hubs," EU Competition Commissioner Joaquin Almunia said.

The aim is to ensure air links "while preserving a level playing field between airports and airlines," Almunia said.

Low-cost carriers base their business on flights to and from regional airports, rather than city hubs, winning passenger payments or lower charges from local authorities anxious to attract people to their regions.

A regional airport can generate significant business, especially if it can get several low-cost carriers to locate there.

Traditional carriers say such payments gives these airlines an unfair advantage while low-cost operators charge back that their competitors are just slow to adapt to a changing market.

The Commission said its new guidelines ensure state aid is properly used and in such a way to "limit distortions of competition that would undermine a level playing field."

Among the measures, aid to regional airports with fewer than three million passengers a year will be allowed for a transition period of 10 years, a statement said.

This will allow these airports "time to adjust their business model" so that in due course the business will result in "full coverage of operating costs."

Recognising the plight of many smaller regional airports, the Commission said those with annual passenger numbers below 700,000 will get special treatment, allowing them higher aid levels and a review of the situation after five years.

Many such airports have passenger numbers of several hundred thousand a year and had feared the Commission would set this threshold at just 200,000.

The Commission said state aid for airport infrastructure will be allowed "if there is a genuine transport need and public support is necessary to ensure the accessibility of a region."

Similarly, state aid is allowed for airlines to launch a new air route "provided it remains limited in time," it added.

Almunia told a press conference he believed the changes would ensure that airports are "not financed by taxpayers ... they should be financed by the owners."

The new guidelines are to come into force in March.

Aviation Guidelines on state aid to airports 
and airlines - background guide