State Aid to Aviation at the Time of Covid-19: The Developing Case Law of the General Court of the European Union
Published 2 August 2021
When the Covid-19 crisis exploded, states were ready to financially support the aviation whose revenue crashed because of the travel restrictions. The European Commission has declared compatible public aid granted by the EU Member States to airlines, relying on two derogations to the general prohibition of State aid. These derogations apply to aid that remedies to a severe disturbance and aid that makes good damage resulting from exceptional circumstances. These compatibility conditions were challenged by a low-cost carrier, Ryanair, before the General Court of the EU. However, the court upheld all the substantive findings of the Commission and dismissed the appeals. Notably, the court stressed that the selective nature associated with State aid does not necessarily translate into discrimination on the grounds of nationality or a restriction of the fundamental freedoms of the internal market. Alike importantly, the court recognised that the Member States enjoy a certain margin of discretion in fashioning the aid packages for airlines. They are not obligated to compensate all the market operators that suffered damages due to an exceptional circumstance. Instead, they can legitimately decide to limit the financial public to the airliners more affected by the pandemic. Member States can also grant aid conditional upon the beneficiaries having a permanent link with them. That way, only undertakings expected to have a stronger connection with the economy of the acting Member State are eligible for aid. Under this approach, however, carriers pursuing a genuinely global strategy with a high dispersion of their operation are unlikely to qualify for public financial support.
This paper will be part of the TDM Special Issue on "Old and New Disputes in Aerospace Law". More information here www.transnational-dispute-management.com/news.asp?key=1858