The European Commission today published new draft guidelines [1] that will allow regional airports and EU carriers serving them to keep receiving subsidies worth €3bn a year. In a good number of cases [2] these rules prop up unprofitable regional airports and low-cost carriers, allowing them to continue to operate in an unsustainable way which distorts competition between budget and national carriers. The proposed guidelines also permit the bail out of financially unviable operations for a decade and allow infrastructure aid for building new airports to continue in aeternum.
Receive them directly in your inbox. Delivered once a week.
Notes to Editors:
[1] These EU guidelines govern taxpayer monies that subsidise regional airport operations and start-up aid for airlines serving them. These rules are not subject to parliamentary oversight and will be legally binding once the public review process is closed. Stakeholders will have three months to comment on these draft guidelines and is expected that the Commission, after reviewing all submissions, will publish the final, revised guidelines in early 2014.
[2] To name but a very select few examples: Antwerp Airport (with three investigations relating to State Aid: Cases N355/2004, N156/2007 and N114/2010); Aid directly to Ryanair to fly from Toulon to London (Case N563/2005); Lodz Airport in Poland (with two investigations relating to State Aid: Cases N741/2006 and N638/2007); Aid to Derry Airport (also with two investigations: Cases NN21/2006 and NN65/2009)
[4] David Lee et al ‘Aviation and global change in the 21st century, available at https://www.tiaca.org/images/tiaca/PDF/IndustryAffairs/2009%20IPCC%20authors%20update.pdf
[5] For the calculation on VAT: Europe’s global market share is almost 30%, of a 2010 market of $565bn or €430bn https://www.iata.org/pressroom/pr/Pages/2010-12-14-01.aspx. Europe’s aviation market is therefore worth about €120bn, of which approx. €100bn for passenger transport. Well over half of passenger transport revenues, or about €50bn+, is leisure and would hence normally be subject to VAT (after business deduction of input VAT). Assuming an average 20% VAT rate we arrive at an estimated €10bn subsidy as a result of the current zero rating. Fuel Tax is worked out by looking at the EU-27 use of aviation fuel 2011: international: 44,489,000 toe and domestic 6,026,000 toe with the total of 50,515 000 toe. The energy content Jet A1: 9600 kWh/m3 and 1 toe = 11630 kWh. 50,515,000 toe x 11630 kWh = 583,256,130 000 kWh / 9600 kWh/m3 = 60,755 846,875 m3. If EU minimum kerosene tax of 330 euro per m3 is applied, the tax bonus is: €20,05 billion. If EU average petrol/diesel tax 530 euro per m3 is applied, the tax bonus is: €32,30 billion, from: https://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do;jsessionid=9ea7d07d30dc86e2dfa07dda4b96b123bed7dada4c23.e34MbxeSaxaSc40LbNiMbxeNax8Pe0?tab=table&plugin=1&pcode=tsdtr250&language=en
Lessons from EU funding in Central and Eastern European countries
Is the aviation sector ready to transition to sustainable jet fuel?
Half the airlines in the ranking score zero for their lack of uptake of sustainable aviation fuels.