Smaller Airports Risk Shutdown as EU Clamps Down on State Aid

Airports with fewer than half a million passengers a year risk being shut down if they’re propped up by government aid, the European Union said as it published tougher rules on state support.

“Some smaller airports may close if they fail to improve efficiency and increase revenues,” the European Commission said in a summary of an impact assessment of rules published today. “No airports handling over 500,000 passengers will close.”

Regulators are aiming to limit the drip feed of government support for the 42 percent of Europe’s 440 airports that lose money, caps they say will save as much as 2.35 billion euros ($3.2 billion) for taxpayers. Several airports’ deals to attract low-cost airlines such as Ryanair Holdings Plc (RYA) are separately being probed by the EU to check if they misused public money.

The EU’s guidelines, due to take effect next month, envisage a 10-year transition to caps on aid. Airports with fewer than 3 million passengers a year will be asked to draft a business plan to show how they eventually plan to make a profit. They can receive government subsidies to cover half of anticipated losses. Airports with fewer than 700,000 passengers may receive aid to cover as much as 80 percent of projected losses.

Larger Airports

Larger airports with more than 5 million passengers a year shouldn’t get aid to cover business costs but may seek state help in certain circumstances to build infrastructure, the EU says. Airlines that plan to start up new routes can receive aid to cover 50 percent of airport charges for three years.

Fewer subsidies for air travel may lead to only “minor” increases in ticket prices of at most 3 euros per trip, according to the EU document. This may be balanced out by savings as airports become more efficient and gain new revenue from shops or restaurants. Such gains could be as high as 20.80 euros per passenger, it says.

The EU said it intends to take decisions on some 28 investigations into state aid for airports by September.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net

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

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