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Carcassonne Airport in EU Investigation

Tuesday 01 May 2012

The European Commission has opened an investigation into State aid at Carcassonne airport, as well as certain other airports in France, including support given to Ryanair.

The Commission stated that it has ''doubts whether the measures comply with the 2005 EU guidelines on state aid in the aviation sector. In particular, the Commission will check whether the subsidies were necessary to carry out the investment, whether the aid was proportionate to the objectives pursued and whether the infrastructure had satisfactory medium-term prospects for use.''

The airport at Carcassonne, in the Aude department of France, is owned by the Languedoc-Roussillon region and until May 2012 was operated by the local Chamber of Commerce (CoC). Following a tendering process, the operation of the airport was then awarded to Veolia Transport.

Ryanair is the only major airline present at the airport, running 10 international routes and carrying around 370,000 passengers a year.

According to the EU, the CoC received subsidies of at least €11 million between 2000 and 2010 from various public bodies (notably the region, Aude Department and the city of Carcassonne), to finance various infrastructure projects at the airport.

Between 2001 and 2011 the CoC also benefited from a range of support measures, including subsidies of more than €8 million for its activity as operator of Carcassonne airport, as well as cash advances.

The Commission stated that ''it considers at this stage that these support measures merely cover ordinary business expenses and may therefore constitute operating support in breach of EU state aid rules.''

Veolia Transport, operator of the airport since May 2011, has also been granted public subsidies linked to the number of routes operated from Carcassonne airport.

The airport owner, the Languedoc-Roussillon region, has pledged to finance several infrastructure investments linked to the commercial activity at the airport (e.g. aprons for commercial aircrafts), which will be used by the airport operator free of charge. Over the period 2011 to 2018 the total cost of this investment amounts to €55 million.

The Commission is also to examine whether agreements between the airport operators and Ryanair, such as marketing support contracts and discounts on airport charges, granted unfair favourable support to the airline.

The Commission stated that it has ''concerns that such arrangements could give the airline, sole commercial user of the airport, an undue economic advantage that its competitors do not enjoy.''

Other Investigations

Carcassonne airport is not the only one under the EU spotlight. According to an EU spokesperson there are currently 21 investigations taking place concerning airports in Europe, most of which involve financial support to routes operated by Ryanair.

Within France the investigations cover financial aid at La Rochelle in Charente-Maritime (Poitou-Charentes), Pau airport in the Pyrénées-Atlantiques, public support received by Marseilles airport for its low cost terminal MP2, and assistance to the airport at Nîmes (Languedoc-Roussillon), together with support accorded to airline companies, notably Ryanair.

Somewhat ironically, following a breakdown in negotiations with the Chamber of Commerce about continuing marketing support, Ryanair quit Pau airport in March 2011, since when it transferred its operations to Lourdes-Tarbes airport.

In January 2011 it also closed its operating base at Marseilles airport as a result of a legal dispute with the French social security authorities over work contracts. However, the airline continues to run some routes from the airport.

A number of these investigations have been launched directly as a result of complaints by Air France.

Level Playing Field?

While Ryanair seems to capture the attention of the EU Commission, many airline routes in France receive direct support from the French government and local authorities, which seem to attract less attention from the EU Commission.

According to EU rules, public investment in airline companies is not illegal under EU rules, but ''only when they are necessary, proportionate, pursue an objective of general interest, ensure non-discriminatory access for all users and do not unduly affect trade in the internal market.''

There is bound to be a fair chunk of subjectivity in any such assessment, and the differences in the support arrangements to French airlines by the public authorities from those involving Ryanair and regional airports are not easily discernable.

It is noteworthy that in 2008 the European Court threw out a complaint by the EU Commission involving Ryanair and Brussels Charleroi airport, although the EU have continued to investigate, taking into account the decision of the court.

It is perhaps because of this decision  that this year the Commission has decided to review its regulations concerning aid to both airlines and the financing of airport infrastructure.

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