On 17 November 2020, the European Commission decided to close its in-depth investigation into a Spanish aid in favour of the regional airline Air Nostrum. The airline has in fact decided to renounce this State aid.
In October 2019 following a complaint, the European Commission opened an in-depth investigation into 9 million EUR aid from the Region of Valencia to Air Nostrum aiming to contribute to the costs of its fleet renewal through the acquisition of new more environmentally-friendly aircraft. For more details on this decision, we refer you to our article on the initiation of the Commission investigation.
The Commission had doubts about the Region of Valencia aid complying to the rules relating to aid for environmental protection set out in the General Block Exemption Regulation (hereinafter the “GBER”) as well as in the Guidelines on State aid for environmental protection and energy.
This framework constitutes the European legal basis allowing Member States to grant support measures which have a positive impact on the environment, while respecting a whole series of conditions. The GBER allows States to grant such aid without prior notification to the European Commission. On the other hand, the Guidelines imply the obligation for States to obtain prior validation from the European Commission of their aid projects prior them being granted.
In the present case, the Commission expressed doubts about the real incentive effect of the measure. Any aid must have an incentive effect, meaning that it must change the behaviour of the company so that it carries out an additional activity that would not otherwise be undertaken without the aid. In this case, the measure should therefore truly encourage the beneficiary to invest in a more environmentally friendly solution. However, the Commission observed that Air Nostrum had started renewing its fleet in 2017 without public aid. Therefore, the decision to invest in a new fleet would not have resulted directly from public aid.
In addition, the Commission questioned the type of leasing used by the airline. It questioned its investment nature within the meaning of the GBER.
In general, the European Commission supports this type of environmental initiative. However, it wished to ensure that in this case, public aid would not have the sole effect of the reduction of operating costs, to the detriment of competitors who would have to bear these without aid.
Following the coronavirus pandemic and its effects on the aviation sector, Air Nostrum decided to review its investment plans and renounced the aid for the renewal of its fleet. Spain accepted the renunciation and repealed the aid measure without any payment.
As a result, the Commission's investigation became without object and the Commission therefore closed its investigation.
Note in this context that the European Commission launched its Green Deal for Europe, which aims to transform the EU into a just and prosperous society with a modern economy, efficient in the use of resources and competitive. Its goal is for Europe to be the first climate neutral continent by 2050. The Commission has just completed a public consultation on competition policy, including State aid, in support of the Green Deal for Europe.
The problem of environmental protection is nothing new in the air transport sector. It is now inescapable and will entail substantial financial efforts which cannot be fully supported by the sector players alone, whose financial situation has been severely impacted by the COVID-19 crisis.