[Article] Row over Cork airport debt coming to a close

dowlingm

I suspect the definition of "regional airport" is a European statistical thing, under so many million passengers and so on. What an airport calls itself is a different matter.

Schuhart

I went digging for the EU clearance of the regional airports money. I did this with a general feeling of ‘I thought this was what we had journalists for’. An utter aside, but part of the reason public debate in this country is so crap is that our journalists are collectively worthless, and seemingly incapable of producing articles that comprehensively describe issues at stake.

I take the key paragraphs to be these:

41. The criteria laid down in Article 87(1) are cumulative. Therefore, in order to determine whether the notified measures constitute State aid within the meaning of Article 87(1) of the Treaty all of the following conditions need to be fulfilled. Namely, the financial support:
- is granted by the State or through State resources,
- favours certain undertakings or the production of certain goods,
- distort or threatens to distort competition, and
- affects trade between Member States.

42. The concept of State aid applies to any advantage, granted directly or indirectly,
financed out of State resources, granted by the State itself or by any intermediary body
acting by virtue of powers conferred on it.

The Government compelling the DAA to take on the CAA debt would strike me as meeting this definition of a State aid, assuming the investment in Cork Airport would be deemed to affect trade between member states.

According to the European Commission Guidelines on airports, Cork fits into the category of ‘C’ a large regional airport – which applies to airports between 1 and 5 million. (By comparison, Dublin is category ‘A’, as is any airport with more than 10 million passengers. This puts it well outside of any consideration for a State aid.)

I’ve browsed to what I think are the most relevant paras

(39).. Thus, public financing granted to national and Community airports (categories A and will normally be considered to distort or threaten to distort competition and to affect trade between Member States. Conversely, funding granted to small regional airports (category D) is unlikely to distort competition or affect trade to an extent contrary to the common interest.

(40) However, beyond these general indications, it is not possible to establish rules covering every possible case, particularly for airports in categories C and D. For this reason any measure which may constitute State aid to an airport must be notified so that its impact on competition and trade between Member States can be examined, and, where appropriate, its compatibility.

What I take of this is:
1. Relieving Cork Airport of a portion of its debt, as proposed, is a State aid. Hence, the idea that direct support is ruled out in principle because of State aid rules is bunkum. If support is ruled out, then Cork should be finding itself meeting the whole debt.

2. Cork Airport is deemed a Category ‘C’ large regional airport for purposes of EU State aid rules. Public financing of ‘A’ and ‘B’ airports is pretty much ruled out. A reasonably open attitude is expressed to financing category ‘D’ airports. Category ‘C’ airports are left open for a case being made.

3. Many of the arguments made for the grants scheme equally apply to Cork i.e. Transport 21, Spatial Strategy, Regional Development. Only the Objective 1 status is missing, and this is not essential as the clearance states openly that some of the regional airports receiving funding are not in Objective 1 areas.

I think the key point to remember is the first one. Any special treatment means that Cork is getting a State aid that needs to be consistent with EU rules on supports for airports. Hence, in principle, those rules apply anyway. The only question is whether the State provides that assistance out of tax, or by forcing another State body (DAA) to pick up the tab.

From what I can see, all that needs to happen is for a case to be made. Its well established that the real barrier to regional development is the gap in scale between Dublin and all of the regional cities. That strikes me as potential grounds to justify support for a category 'C' airport. The fact we have no category 'B' airports sort of underlines that drop in scale once you step outside the capital.