The European Commission clears operating aid to a Covid-19 hit airport

 

In Debrecen International Airport the European Commission approved operating aid granted by Hungary to an airport hit by the Covid-19 crisis. The aid measure notified to the Commission was aimed at covering the losses that the beneficiary, a small regional airport, would suffer over the 5-year period between 2019 and 2024. The losses forecast was based on a business plan drafted by the Hungarian authorities before the outbreak of the pandemic.

The Commission approved the on the ground that this national measure met all the conditions set out in the 2014 Aviation Guidelines for operating aid to be declared compatible with the internal market.

Of particular interest is the discussion made by the Commission about the proportionality condition in Point 125 of the Aviation Guideline. Here, the Commission  followed a flexible approach in assessing the lawfulness of operating granted to an airport whose activities were seriously impacted by the pandemic, considering in particular how the prospects of the aid beneficiary were changed by the Covid-19 outbreak.

Point 125 of the Aviation Guidelines states that for airports with less than 700,000 passengers per year the maximum permissible aid amount is 80% of the initial operating funding gap for the aided period. In that regard, the Commission observed that the business plan originally submitted by Hungary was no more reliable. This was due to the very uncertain situation regarding future passenger growth created by the Covid-19 pandemic. With the traffic virtually halted at the Debrecen airport in April 2020, which caused considerable income losses, it was then extremely difficult to produce reliable estimations of future passenger traffic and associated costs and revenues covering the relevant 2019-2024 period.

To deal with this uncertain scenario, the Commission applied Point 122 of the Aviation Guidelines. This rule provides that in exceptional circumstances where future costs and revenues are extremely uncertain the aid amount may be calculated considering the initial operating funding gap at the beginning of the transitional period. This figure is the average of the annual operating funding gaps during the 5 years before the beginning the transitional period, in this case from 2009 to 2013.

For the Commission the Covid-19 pandemic constitutes an exceptional circumstance for the purpose of Point 122. Accordingly, the amount of aid granted to the Debrecen airport could be determined on the basis of the initial operating funding gap at the beginning of the transitional period. Moreover, the Commission noted that during the 2009-2013 period the airport was still in a start-up phase with the result that traffic volumes and operating costs were much lower than today as well as the operating funding gap. All that considerably reduce the risk of overcompensation of the loss of the Debrecen airport. Therefore, the aid amount was proportionate.