Airports Council International (ACI) Europe has urged the European Commission to extend the EU State Aid Guidelines to regional airports.
The airport trade body has said this is vital to ensure these smaller airports can continue to provide connectivity, competitiveness and cohesion for Europe’s regions, but also to decarbonise and facilitate the deployment of zero-emission aircraft.
Profitability of regional airports
ACI Europe’s call is backed by a new comprehensive study into the financial viability of Europe’s regional airports conducted by Oxera.
The research shows that those airports with fewer than 500,000 passengers per year are expected to remain consistently unprofitable, while those between 500,000 and one million passengers per year are unlikely to become consistently and significantly profitable before the end of the transitional period. “While many factors matter for airports’ profitability, passenger volumes matter and not all airports are growing to achieve the economies of scale needed to break-even,” said Nicoel Robins, Partner at Oxera. “The implications are that the Commission’s Aviation State Aid Guidelines should continue to allow EU States to provide operating aid for these airports.”
State aid extension
With high fixed infrastructure and operating costs, regional airports are also often up against financial constraints. The State Aid Guidelines have allowed those airports with less than 3 million passengers per annum to receive State aid aimed at covering the operating costs deficit. However, the guidelines also put an end date initially by 2024 and later prolonged to 2027, to such operating aid. These deadlines were based on the assumption that over time airports with more than 200,000 passengers per annum would be able to cover their operating costs and become profitable by raising their user chargers, attracting new traffic and achieving more cost efficiencies.
Oxera’s study found this has not been the case, underpinning the need to extend this deadline for Sate aid beyond 2027.
Olivier Jankovec, ACI Europe’s Director General added: “the Oxera study reveals how the Covid-19 pandemic, the energy crisis and major structural changes in the aviation market have combined to further challenge the economies of smaller regional airports. This in turn, affects the connectivity they provide for their communities.
“Crucially, the study also highlights the impending impact of climate policies and particularly the EU Fit for 55 package. It is clear these policies will increase costs and reduce traffic, especially for smaller airports – making the idea of such airports breaking even a pipe dream. The disruptive and structural nature of these factors must be recognised by the aviation Sate Aid Guidelines.”
Green funding
Jankovec also recommended that the Aviation Guidelines should include a section specifically dedicated to aid for environmental protection covering investments linked to decarbonisation of airports. “Airports have embraced decarbonisation at scale and the pace of their climate action is only accelerating,” he said. “But, more will be needed to achieve full-sector decarbonisation of all airports in Europe… State aid has an important role to play in advancing aviation’s transformation into the green transport mode of choice. And the commission has a once-in-a-lifetime opportunity with the current revision to provide the necessary legal tools to make it a reality.”
