Milan ground handler hit with €360m fine over EU state aid

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Milan's airport operator SEA has been hit with a €360 million ($478 million) bill for breaching European state aid rules, after Brussels determined that aid granted between 2002 and 2010 to its ground handling subsidiary gave the unit an undue economic advantage over unsubsidised competitors.

SEA Handling has been ordered to pay back to the Italian government the sum with interest.

Milan Linate and Malpensa airports operator SEA is nearly 56% owned by the city of Milan, with other public shareholders owning another 15%. The remaining 29.75% is held by Italian infrastructure investment fund F2i, whose investors are principally banks, insurance companies and pension funds.

The European Commission investigated aid to SEA Handling following a June 2010 complaint. Brussels determined that, owing to the unit's consistently difficult financial situation, no private investor would have funded it under market conditions - a key measure of the acceptability of state aid in the European Union.

The Commission also determined that SEA Handling could have received state aid in accordance with the EU's rescue and restructuring guidelines, but the capital injections it received did not meet these criteria, as its business plan failed to demonstrate how it could become viable and operate without continued state support.

Moreover, SEA Handling had no plan to contribute to the cost of any restructuring, nor were there any measures in place to minimise competitive distortions stemming from the state support.

The ruling comes as the European Parliament continues to debate a package of measures proposed by Brussels to improve airport efficiency, with the aim of increasing capacity at congested hubs such as Milan Linate. While Parliament has partly approved Commission proposals for establishing a transparent secondary market in takeoff and landing slots, it has put to further discussion a number of ideas related to ground handling, including one that would force airports to issue contracts by competitive tendering.