State Aid to Airlines in the Context of Covid-19: Damages, Disturbances, and Equal Treatment

Abstract

The aviation industry has been hardly hit by the pandemic, with travel restrictions, health measures, and dramatic drop in demand. A significant amount of state aid was granted to European airlines by Member States in the last year, following guidance on the relaxation of state aid rules. The state aid schemes were authorised by the Commission under both Article 107 (2)(b) TFEU and Article 107 (3)(b) TFEU. Several recent judgments of the General Court uphold the state aid measures for airlines and dismiss allegations on equal treatment and possible negative effects of competition; however, three measures were found to be inadequately justified. Nearly 30 years after the liberalisation of air transport, the European Union has succeeded to a great extent in creating an internal market. European air carriers are subject to a uniform regime with regard to their establishment and their operation, while they enjoy absolute freedom to perform intra-EU air transport services. The concept of national air carrier is no longer relevant, since it is replaced by the notion of European air carrier, in the sense of an air carrier with an operating license granted by a Member State under Regulation 1008/2008 on common rules for the operation of air services in the Community. Accordingly, state aid rules in the aviation sector were adjusted to the operation of the internal market and European Commission has been very active in safeguarding a competitive environment.1