European Union law on state aid to airlines

Abstract

The aviation industry plays a fundamental role within the European economy for the benefit of citizens and the market alike. The decade gone by has left a great impact on the industry both on a national and a global scale, as a result of the rapid shift in the economic market, the liberalisation process, and the introduction of low cost airlines. These developments have posed challenges to national carriers that had to adapt to changing market realities. This thesis analyses European Union State aid rules and the relationship they have with the aviation industry along with the rescue and restructuring guidelines and sector specific legislation, including the aviation guidelines. Although as a general rule State aid is prohibited by the Treaty on the Functioning of the European Union, the Treaty does provide for instances when State aid is permitted, provided that certain conditions are met. Other forms of aid, that do not fall within the definition of State aid or which may be considered compatible with the internal market and which may be availed of by airlines will be discussed. These include aid for services of general economic interest and public service obligations, aid of a social character, start-up aid, aid under the general block exemption regulation and de minimis aid. Through the evaluation of these forms of aid the author seeks to provide an outline of the different forms of aid mechanisms available to airlines within the European Union, particularly for those which are facing financial difficulties, and the adequacy of these mechanisms in an ever changing competitive market both on a European and global scale. Among other cases, special attention is placed on the national case of Air Malta which has been a focus point in Malta for a number of years.