Tougher rules on state support may force EU’s smaller airports to close

Airports with fewer than half a million passengers a year risk being shut down if they’re propped up by government aid, the European Union said as it published tougher rules on state support.

“Some smaller airports may close if they fail to improve efficiency and increase revenues,” the European Commission said in a summary of an impact assessment of rules published today. “No airports handling over 500,000 passengers will close.”

Regulators are aiming to limit the drip feed of government support for the 42% of Europe’s 440 airports that lose money, caps they say will save as much as €2.35bn for taxpayers. Several airports’ deals to attract low-cost airlines such as Ryanair are separately being probed by the EU to check if they misused public money.

The EU’s guidelines, due to take effect next month, envisage a 10-year transition to caps on aid. Airports with fewer than three million passengers a year will be asked to draft a business plan to show how they eventually plan to make a profit. They can receive government subsidies to cover half of anticipated losses. Airports with fewer than 700,000 passengers may receive aid to cover as much as 80% of projected losses.

Larger airports with more than five million passengers a year shouldn’t get aid to cover business costs but may seek state help in certain circumstances to build infrastructure, the EU says. Airlines that plan to start up new routes can receive aid to cover 50% of airport charges for three years.

Fewer subsidies for air travel may lead to only “minor” increases in ticket prices of at most €3 per trip, according to the EU document. This may be balanced by savings as airports become more efficient and gain new revenue from shops or restaurants. Such gains could be as high as €20.80 per passenger.

The EU said it intends to take decisions on some 28 investigations into state aid for airports by September.

- Bloomberg


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