EU to Curb State Aid for Airports in Bid to Bolster Competition

The European Commission said it’s seeking to curtail investment aid for airports with more than 5 million passengers a year in a bid to lift the burden on taxpayers and ensure fairer competition.

Investment aid for such airports shouldn’t be allowed, as investments could be privately funded, according to draft guidelines published today. The measures are scheduled to take effect from early 2014, after the industry has been consulted.

“Our aim is to ensure that taxpayers’ money is well-spent and goes where it is truly needed,” Joaquin Almunia, the European Union’s antitrust chief, said in an e-mailed statement. The new rules will aim to preserve “fair competition regardless of the business model –- from flag carriers to low-cost airlines and from regional airports to major hubs.”

Ryanair Holdings Plc (RYA) has been entangled in a series of disputes with the EU over agreements it struck with small airports seeking to boost regional development with more flights and passengers. The EU in 2012 expanded a probe into government support for Belgium’s state-owned Charleroi airport to examine changes to Ryanair’s contracts on airport access and aid from the local Walloon regional government.

“A proliferation of regional airports which leads to the creation of unused or not efficiently used airport infrastructures should be avoided,” the commission said in the statement.

The regulators plan to phase out state aid to cover airports’ operational costs over a maximum of 10 years.

To contact the reporter on this story: Gaspard Sebag in Brussels at gsebag@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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