Public Law

You may be aware of recent calls in the Scottish Parliament by opposition MSPs for a successor to the Air Route Development Fund. The previous Fund, which ended in June 2007 subsidised flights from Scotland to various strategic, but not necessarily commercially viable, destinations. The Fund ended as a result of the coming into force of European Guidelines on financing of airports and start-up aid to airlines departing from regional airports. The Guidelines are described as a “highly detailed and restrictive set of rules” which essentially limit state aid to smaller airports and routes to regions with smaller passenger numbers deemed to be of “public service”. Start-up aid is prohibited for larger airports and the Guidelines restrict support to EU carriers only.

The Guidelines have proved controversial – coming under academic criticism for not going far enough in curtailing problematic state aid and raising concerns about Member States’ compliance and notification.

In April 2011 European authorities announced a review of the Guidelines, the first step being a public consultation in order to obtain feedback, comments and proposals regarding the public financing of airports and airlines. The UK response to the consultation expressed general satisfaction but did raise concerns that the current guidelines “may not be meeting their intended objectives to protect and support peripheral and development regions is in relation to start-up aid… particularly in the regions of Scotland, Northern Ireland and Wales”.

The Scottish Government submitted a separate response, bearing some similarities to the points made by the UK government but in stronger terms and raising the prospect of start-up aid for global routes. Keith Brown, in response to a parliamentary question on the subject made clear that the Scottish Government is now awaiting the European Commission’s review of responses and meantime it seems that opposition parties may need to be satisfied with his answer. It is not clear, at least to us, on what basis a new Fund could be established without some change in the Guidelines.

Government, Regulation and Competition Law
Latest posts by Government, Regulation and Competition Law (see all)