EU to update aviation rules on state aid

EU regulators investigating 15 cases of state aid in the aviation sector plan to update the rules to ensure that support given by governments does not disadvantage either budget airlines or national carriers, the EU’s antitrust chief said on Thursday.

The European Commission is investigating whether authorities in France, Germany, Ireland, Austria, Sweden, Hungary and Romania have provided funding and other subsidies that might have unfairly favoured some airlines and airports.

A number of the cases involve deals between airports and budget airlines Ryanair, Lufthansa’s Germanwings, TUIfly, which is part of German travel group TUI AG , and Air Berlin, which is partly owned by Gulf airline Etihad.

EU Competition Commissioner Joaquin Almunia said he would review the state aid rules for the sector over the next 12 months, though he did not specify which provisions needed reconsideration.

“The need to update the aviation guidelines is clear; in 2012 we have opened in-depth investigations on 15 regional airports in five different countries,” Almunia told a conference organised by the European State Aid Law Institute.

“It goes without saying that the review will also establish a level playing field for all the airlines that use these airports, regardless of their business model – from flag carriers to low-cost airlines,” he said.

The Commission can order companies to repay state aid if it finds that the assistance broke EU-wide rules.

Almunia also said he was considering making shareholders share the burden of bailing out troubled companies that receive state aid.

Regulators aim to have the updated rules in place by the end of 2013.
source:Reuters (June, 2012)