EC to investigate Polish public funding of former military airport Gdynia-Kosakowo Poland

4-7-2013 — /europawire.eu/ — The European Commission has opened an in-depth investigation to verify whether Polish plans to fund the conversion of the former military airport Gdynia-Kosakowo (Poland) into a civil aviation airport are in line with EU state aid rules. Gdynia-Kosakowo is only 25 kilometres from the existing uncongested airport of Gdansk. At this stage, the Commission has serious concerns that the public funding would give the beneficiary an undue economic advantage over its competitors, in particular the Gdansk airport. The opening of an investigation gives interested third parties an opportunity to submit their views; it does not prejudge the outcome of the investigation.

Joaquín Almunia, Commission Vice-President in charge of competition policy, said: “Local airports are important for the accessibility of a region and the development of local business. However, public funding should not be used to multiply infrastructure where there is no demand.”

In September 2012, Poland notified to the Commission €52 million of capital injections by the local authorities of Gdynia and Kosakowo into the company responsible for building and operating Gdynia–Kosakowo Airport. The new airport, which will use the infrastructure of the existing military airport, is to become the second airport for the Pomerania Region serving mainly general aviation traffic, charters and low cost carriers. The capital injections are aimed at covering the investment costs and operating costs at the beginning of the airport’s operation.

Poland contends that the capital injections were granted on market terms. However, at this stage, the Commission has serious doubts whether the traffic and revenue estimates foreseen in the business plan are based on realistic assumptions and can be achieved. Indeed, the uncongested Gdansk airport is only 25 kilometres away and offers lower airport charges than those foreseen at Gdynia-Kosakowo Airport. Gdansk has an annual capacity of five million passengers, but only 2.9 million have used it in 2012. The Commission will now examine whether a private player, operating under market conditions, would have carried out such an investment.

Background

Over the past 20 years, the EU airport industry has undergone fundamental changes. Whereas airports were previously mostly managed as infrastructures with a view to ensure accessibility and territorial development, they have in recent years defined commercial objectives and are competing with each other to attract air traffic. Many former military airports were converted over the last decade into civil aviation airports. This development was further supported by the emergence of low cost carriers. In 1992, over 65% of passenger seats were sold by incumbent air carriers and only 1.5% by low-cost carriers. In 2011 for the first time, low-cost airlines (42.4%) exceeded the market share of incumbent air carriers (42.2%). The trend continued in 2012 (44.8% for low-cost and 42.4% for incumbent).

Against this backdrop, the Commission’s aim is to establish more equitable conditions of competition in the aviation sector while, at the same time, allowing regional authorities to meet accessibility and transport needs.

Public investments in companies that carry out economic activities can be considered free of state aid in the meaning of EU rules when they are made on terms that a private operator would have accepted under market conditions (the market economy investor principle – MEIP). If the MEIP is not respected, the public interventions constitutes state aid in the meaning of the EU rules (Article 107 of the Treaty on the Functioning of the European Union – TFEU), because it procures an economic advantage to the beneficiary that its competitors do not have. The Commission then proceeds to assess, whether such aid can be found compatible with the common EU rules that allow certain categories of aid.

Today’s decision is part of around 60 on-going cases in the aviation sector concerning the financing of airport infrastructure and operation as well as airport/airline arrangements.

On 3 July 2013 the Commission will launch a consultation on draft new guidelines on state aid for airports and airlines.

The non-confidential version of the decision will be made available under the case number SA.35388 in the State Aid Register on the DG Competitionwebsite once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Contacts :
Antoine Colombani (+32 2 297 45 13, Twitter: @ECspokesAntoine )
Maria Madrid Pina (+32 2 295 45 30)