Airlines, airports and regional governments are getting increasingly frustrated over long deliberations by the European Commission (EC) over issuing guidelines on airport state aid, and are worried the new rules might hamper their development.

It now appears that the guidelines, which the EC said it would issue to clarify what aid is allowed following its February 2004 ruling on the Ryanair/Charleroi airport state aid case, will not be forthcoming until the summer. The guidelines will be sent out to European Union (EU) member states for a three-month consultation, which may occur by late January. The EC says it will review their comments before issuing the guidelines, which means they can be expected "by the summer".

In February 2004, the EC ruled that the deal on charges between Belgium's Charleroi airport, majority owned by the Walloon regional government, and Ryanair breached state aid rules. Soon after, the EC decided it would issue new state aid guidelines for airports. These were expected in July 2004, then year-end and are now more likely this summer. For now, the players are in a "grey zone", using the EC's Ryanair/Charleroi decision as their benchmark. But this is far from satisfactory, as the new guidelines may change things. "Our members have to renew a lot of contracts and specify a lot of incentives used to attract airlines. More clarity is urgently required," says Gerard Borel, general counsel of ACI Europe, the airports lobby group.

The guidelines are expected to restrict aid to 50% of the start-up costs of a route and with a five-year limit, as well as saying that it should be applied only to new routes with no alternative high-speed rail link. It is unclear exactly what effect such guidelines would have, but low-fare carriers and smaller regional airports in particular are concerned that without the ability to strike aggressive deals many routes will not be started. Regional governments are similarly worried that if the growth of their local airports is stunted so will regional economic development.

The European Low Fares Airline Association (ELFAA) is upset that the EC is not putting the guidelines out to industry consultation, nor is it going to undertake a full economic impact on the effect of the guidelines. While private airports are offering good deals to encourage new routes, "the guidelines proposed by the EC would prevent publicly owned airports from competing for this business", says Jan Skeels, ELFAA secretary general.

Most want the guidelines to be flexible. For instance, rebates should be allowed for an increase in aircraft size on a route, says Skeels. Borel of ACI Europe adds: "We don't want incentives to be limited to new routes, but we want them on existing routes too." This could be for new frequencies or for increases in traffic on existing routes.

The need for flexibility is also stressed by the Forum of European Regional Airports (FARE), which represents smaller airports. "FARE wishes to urge the Commission to issue very flexible guidelines, to take into account the wide diversities in airport financing, ownership and management," says Piergiorgio Ballini, chief executive of Italy's Pisa airport and acting chairman of FARE.

"The whole air transport deregulation process was aimed at granting EU citizens the right to air mobility, lowering the cost of air transport and extending it to a wider share of the population," he says. "The partnership between regional airports and low-fares carriers has made all this happen. Now these guidelines must not be a step into re-regulation, starting from the weaker component of the air transport network, ie the regional airport, against the interest of the EU consumer, and in favour of large airports and legacy carriers."


Source: Airline Business