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  4. Recent developments in state aid to airports and airlines – challenges for local governments




Recent developments in state aid to airports and airlines – challenges for local governments




Speaker: Dr Jakub Kociubinski - Wrocklaw University

Series: The City Law School research seminar series

Around half of the regional airports throughout the European Union are unprofitable and thus subsidy-dependent. These regional markets are usually small and often undeveloped and untested in the business sense. From the airline’s perspective, this poses a plausible risk of sunk costs in a case of unsuccessful entry. Resulting low traffic on smaller airports was accepted on State level as long as public authorities could resort to granting operating air – aid to cover current expenditures. One of the elements of the EU-wide State Aid Modernization plan is the total resignation form this category of aid to an airport which has always been perceived as particularly disruptive for competition. The new Aviation Guidelines provided that after 10 years unprofitable airports should reach break-even point or be forced to go bankrupt.

Additionally the European Commission began actively countering various contractual and marketing arrangements between airlines and airports, where the carriers paid less than the additional costs linked to their presence in the airport. Previously there had been accusations of various airlines benefiting from illegal state aid granted via publicly funded airports, to ensure the company continues to serve these regional airports.

To sum up, recent developments in EU State aid rules requires States to redesign their approach towards financing of air transport. Such financial involvement is inevitable to a certain degree since there is significant analytical material depicting the positive influence that an active airport have on a region’s economy, so the issue fall under regional development category. This seminar will provide an overview of legal tools State have at its disposal to stimulate air traffic and in turn keep regional airports afloat in the light of recent developments in EU State aid law.

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When and where

1.00pm - 3.00pmThursday 10th December 2015

D106 Social Sciences Building City, University of London Northampton Square London EC1V 0HB United Kingdom