Alitalia decision and state aid to the air transport sector

12 November 2008
by eub2 -- last modified 12 November 2008

The European Commission today concluded that the sale of Alitalia’s assets does not constitute State aid provided that the Italian authorities fully comply with the undertakings they have given. The sale is planned in the context of the special administration procedure which will lead to the winding-up of the Italian airline. The Commission has therefore given Italy the go-ahead to start selling the assets. The decision follows the Commission’s earlier decision to close the official State aid investigation procedure it started on 11 June 2008 to look into a €300 million loan from Italy to Alitalia. The Commission’s conclusion was that the loan was unlawful aid and incompatible with the common market.

What is the rationale behind state aid control in this sector?

The reason for State aid control is that the air transport sector is liberalised and as such the Commission must ensure that a level playing field exists as between Community air carriers

What are the procedural steps + timeframe?

Cases can arise either from complaints or from notifications. The procedural regulation provides that following receipt of a fully detailed notification the Commission must take a position thereon within two months. If the notification is incomplete then the Commission can request additional information – this suspends the time period. If the Commission decides that it has doubts regarding the compatibility of a measure with the common market it can open a formal investigation procedure inviting the member state concerned and third parties to provide their comments and additional information. Ordinarily, the Commission has 18 months after such an opening of the investigative procedure to conclude its investigation.

What constitutes state aid and what not + different types of aid + examples

State aid is in essence a gratuitous advantage granted from State resources to an economic operator which distorts or could distort competition. What this means is that firstly the State or an emanation thereof should be involved and that there has to be a transfer of resources. State aid can take many forms (e.g. capital increases, debt write-offs, loans, loan guarantees, direct grants, tax breaks, investments, business incentives etc). State aid to a buyer arises when an undertaking arises is sold below market price.

When should state aid be notified?

State aid should always be notified prior to being implemented

What are the particularities in the air transport sector compared to general state aid rules?

In general all of the rules generally applicable to state aid apply also to the air transport sector, these rules include those relating to State aid for the rescue and restructuring of firms in difficulty, training of staff etc. However given the particularities of the air transport sector two specific set of rules have been adopted in 1994 and 2004. The 1994 guidelines relate primarily to the privatisation of flag carriers, the 2005 guidelines provide rules with regard to start-up aid for new routes and the financing of airport infrastructure.

Reference documents / links to them

Procedure rules relating to State aid generally

Rules specific to State aid to air transport

Source: European Commission