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The 2005 guidelines on the financing of airports

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  • 1. The 2005 guidelines on the financing of airports and start-up aids to airlines Practical experiences Annabelle Lepièce 8 September 2009
  • 2.
    • Adoption by the European Commission of the Guidelines in 2005 :
      • Following the Ryanair decision of 12 February 2004, annulled by the CFI on 17 November 2008
    • Evaluation of the Guidelines in 2009
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 3. Principles of the Guidelines
    • Financing of airports :
      • No aid for the managing of airports or infrastructure (private investor principle)
      • Except :
        • Activities that normally fall under State responsibility: safety air, traffic control, police, customs
        • Public financing of Services of General Economic Interest (SGEI)
        • Authorized aids for the infrastructure for regional airports (EC notification)
    • Incentives in favor of airlines :
      • Private investor principle
      • Authorized start-up aid (EC notification)
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 4. Financing of airports
    • Principle : airports should be run as private companies
    • Consequence : public interventions should conform to the private investor principle (business plan, foreseeing and reasonable return on investment)
    • Examples : inquiries of the European Commission following complaints :
      • Tampere airport : public financing of the conversion of a freight terminal into a low cost terminal
      • Tortoli-Arbatax airport : fee for the additional infrastructure to be paid by the airport manager only if the passengers traffic exceeds 500.000 per year
    • In practice : assessment of all public financing (subsidies, capital injections, guarantees and loans, lease or sale of public land and buildings)
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 5. SGEI (public service missions)
    • Guidelines : notification of public financing for airports above 1 million passengers per year
    • Decision of November 2005 on the financing of SGEI : no notification if the public compensation is below 30.000.000 EUR and the turnover of the airport manager is below 100.000.000 EUR
    • No EC decision
    • In practice : strict compliance to the EU conditions ensures the legality of public funding
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 6. Public financing of airport infrastructure
    • Principle :
      • Private investor principle
      • If not : aid in favor of regional airports (below 5 millions passengers per year) to be notified to the EC
    • Very broad conditions for authorization :
      • Defined objective of general interest (regional development, accessibility, etc.)
      • Infrastructure necessary and proportional to the objective
      • Satisfactory medium term prospect for use
      • Access for all potential users
      • No affection of the development of trade
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 7. Public financing of airport infrastructure
    • In practice :
      • In-depth assessment of all conditions by the EC
      • Examples of subsidized Infrastructure : runway extension, new terminal, conversion of a military airport into a civil one, safety equipments, aprons, cargo warehouse, etc.
      • Authorized aid for Berlin Brandenburg Airport (category A)
    • Motivation of the authorization : connectivity and regional development, improvement of the safety of the infrastructure, tourism, decrease of aircraft noise
    • Aid intensity : 50 to 70 %
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 8. Incentives to airlines
    • Principle :
      • Private investor principle: difficult assessment in regional airports
    • In practice :
      • Business plan showing the profitability of the routes incentives
      • European Commission’s inquiries on alleged aids to Ryanair, EasyJet, DHL, etc. (Tampere airport, Leipzig, Berlin, Bratislava, Alghero, Hahn, Pau, etc.)
      • Airlines and airports’ creativity : marketing agreements, general reduction of airport charges, etc.
      • De minimis aid : 200.000 EUR by airline for a three years period
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 9. Start-up aids
    • Compulsory notification to the European Commission
    • 12 conditions to fulfill, some inadequate or too constraining :
        • Only in favor of European airlines and for EU destinations
        • No aids for regional airports close too major hubs
        • Development plan by destination
    • Lack of success (7 EC decisions)
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 10. Conclusions
    • The 2005 Guidelines : new EC policy towards the financing of airports
    • Financing of airport infrastructure : flexible approach of the European Commission on notified aids (8 Member States)
    • Incentives to airlines :
      • great uncertainty for airports
      • in-depth inquiries of the European Commission following complaints
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 11. Conclusions
    • Revision of the Guidelines :
      • More precise conditions for the financing of airport infrastructure to increase legal certainty
      • Start-up aids :
        • suppression of inadequate or too constraining conditions
        • abolition of the notification to the European Commission
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines
  • 12.
    • Merci pour votre attention
    • Annabelle Lepièce
    • Avocat
    • CMS DeBacker
    • Chaussée de La Hulpe, 178
    • 1170 - Bruxelles
    • Tél. +32 2 743 69 34
    • Email : [email_address]
    June 10, 2010 Slide The 2005 guidelines on the financing of airports and start-up aids to airlines