EU Opens In-Depth Investigations Into State Aid To Romanian Air Transport Sector

05.24.2011 By Gavrila Oana

The European Commission has opened two in-depth investigations under EU state aid rules into a Romanian support scheme for investments in regional airports and to ascertain whether certain rebates and discounts granted by the Timisoara airport to some airlines distort competition.

"The Commission is particularly concerned that the agreements concluded between Timisoara airport and Wizz Air could procure the latter an unfair economic advantage over its competitors," the EC said in a press release Tuesday.

"The Commission has a duty to investigate when it believes public authorities may be granting subsidies that distort the conditions of fair competition. The rules allow subsidies to compensate for services of general interest and, under certain conditions, to improve access infrastructure or to help start up services at regional airports.

They do not allow subsidies to cover operating losses on a continued basis," said Joaquín Almunia, Commission Vice-president in charge of competition policy.

As regards the support scheme for investments in regional airports in Romania, the Commission doubts whether the public financing meets a clearly defined objective of general interest, given the apparent oversupply of airport services in Romania, the EC said, adding it needs to assess whether the upgraded infrastructure is necessary and proportional, particularly with a view to the limited activity of the airports.

The Commission's initial investigation shows that Romania's regional airports are generally loss-making and that their operating losses are covered by the state on a yearly basis.

EU rules allow for aid to start up services at regional airports or to cover for services of general economic interest but not for covering operating losses on a continued basis, the Commission added.

As regards Timisoara airport, the Commission also needs to verify whether the annual subsidies granted to the airport only serve to reduce the airport operator's current expenditures. Unless the airport is of a general economic interest purpose, subsidies are incompatible with EU rules because the airport would be given an unfair advantage with regard to its competitors, who have to operate without aid.

The EC also said it will investigate the contractual relations between Timisoara airport and airliner Wizz Air, namely a marketing agreement signed in 2008 and the non-payment of airport charges amounting to EUR2.6 million as well as additional rebates of 72 to 85% on all airport charges for large aircraft.

The Commission said it is concerned such preferential treatment may force out of the market the only competitor of Wizz Air on some routes.

The opening of the in-depth state aid investigations gives the Romanian Government and interested third parties an opportunity to comment on the measures under assessment and does not prejudge the final outcome of the investigation, the Commission concluded.