The European Commission simplifies State aid rules for ports and airports

My name is Sorina Palan and in the next couple of minutes I want to tell you about the
Commision initiative to simplify the state aid rules for airports and ports.

Firstly I am going to tell you a short background about the GBER, secondly I will go
through the main rules aplicable to aiports and port and lastly I will say a few words
about what is next in this field.

On 17 May 2017 the Commission extended the scope of the so-called General Block
Exemption Regulation (GBER) to allow Member States to provide public support to
airports and port with prior Commission approval.

The GBER is an EU regulation that exempts certain categories of State aid from the
requirement of prior notification to the Commission, if some conditions are met. In
practice, this means that State aid measures which meet the criteria of the GBER can
be implemented by Member States directly, without prior Commission approval.

Following two public consultations in March and October 2016, the current reform aims
to facilitate investment by making it easier for governments to implement infrastructure
investments in ports and airports in an expedited manner. The updated GBER also
simplifies the rules in other areas, such as culture, multi-purpose sports arenas and
investments in the EU's outermost regions.

The overall initiative aims to reduce administrative burdens for public authorities and
other stakeholders in the context of the Commission's Regulatory Fitness and
Performance of EU Legislation (REFIT) agenda and complements other initiatives that
the Commission has taken in the last two years to modernize State aid enforcement.

Airports

According to the new rules, Member States can now make certain investments in
regional airports handling up to 3 million passengers per year without any prior review of
their plans by the Commission. According to the Commissions press release, this will
facilitate public investment in more than 420 airports across the EU (which account for
about 13% of air traffic) .

The main conditions to benefit from the exemption under the GBER are the following:
 Aid should not be granted to airports located in the catchment area of another
airport (i.e. 100 km distance or 60 minutes of travel time);
The funded infrastructure should be fully used in the future and will not be larger
than the expected demand;
The aid does not go beyond what is necessary to trigger the investment, taking
into account future revenues from the investment (i.e. aid can only cover the
"funding gap");
Only a certain percentage of the investment costs can be subsidised (depending
on the size of the airport and on whether the airport is located in a remote
region).

The GBER also allows public authorities to cover operating costs of small airports
handling up to 200,000 passengers per year. For such small airports, the GBER sets
out more flexible rules for investment aid and also allows aid to cover operating losses.
According to the Commission, small airports account for almost half of all airports in the
EU, but only 0.75% of air traffic.

While such airports can make an important contribution to the connectivity of a region
they are unlikely to distort competition in the EU Single Market. Possible State aid to
cover operating costs also have to be viewed in the light of the 2014 Aviation
Guidelines5 . According to these Guidelines, operating aid granted to airports will be
considered compatible with the internal market for a transitional period of 10 years
(starting from 4 April 2014) provided that certain conditions are met. In light of the 2014
Aviation Guidelines and the revised GBER, airports are well advised to develop a clear
strategy in order to meet all State aid requirements in the foreseeable future. Non-
compliance could put the possibility of public support, and thereby the continuity of the
airports operations, at risk.

Ports

The new simplified State aid rules apply also to government investments in ports.
Member States can now make public investments of up to 150 million in sea ports and
up to 50 million in inland ports without being subject to any prior Commission approval.
The GBER also allows public authorities to cover the costs of dredging in ports and
access waterways. The above aid thresholds cannot in any case exceed 150 million
and each projects funding ceiling will depend on i) whether the project concerns a
maritime port or an inland port and ii) whether the port is included in a core network
corridor under the TEN-T Regulation.

The main conditions to benefit from the notification exemption under the GBER rules
are as follows:
 aid can only cover the "funding gap" - the aid does not go beyond what is
necessary to trigger the investment, taking into account future revenues from the
investment (i.e.);
Only a certain percentage of the investment costs can be subsidised (depending
on the size and the nature of the investment and on whether the port is located
in a remote region);
Only investment costs are eligible for aid (with the exception of dredging, for
which both investment and maintenance costs are eligible for aid);
Concessions to third parties for the construction, upgrade, operation or rent of
port infrastructures must be awarded on a competitive, transparent,
nondiscriminatory and unconditional basis.

Similar to small airports, the GBER lays down more flexible rules for investment aid for
smaller projects in ports.

What is next?

As a result of the Regulation, about 95% of all state-aid measures are exempted from
prior approval, and this figure will probably be even higher following the extension of the
scope of the block exemption.