Of Counsel Rome
"The proposal seeks to update the existing framework in light of significant developments that have taken place in recent years, challenges faced by the sector as well as the strengthening of the European Union’s decarbonisation objectives."
On 11 May, the European Commission (the “Commission”) launched a public consultation on the draft revision of the State Aid Guidelines in the aviation sector, one of the most significant recent initiatives aimed at updating the regulatory framework governing the sector.
The new guidelines intend to replace the currently applicable framework, which was adopted in 2014. Interested parties can submit their observations until 11 June 2026.
The proposal seeks to update the existing framework in light of significant developments that have taken place in recent years, challenges faced by the sector — including the COVID-19 pandemic and the energy crisis — as well as the strengthening of the European Union’s decarbonisation objectives, the progressive consolidation of the market and the growing competition from non-European carriers.
Key features of the proposed revision
1. The notion of aid: reference to the 2016 Notice
Unlike the 2014 Guidelines, the draft revision no longer includes a dedicated section addressing the assessment of the existence of State Aid within the meaning of Article 107(1) TFEU.
That assessment — particularly regarding verifying compliance with market conditions in agreements between airport operators and air carriers — is now expressly referred to the principles set out in the Commission’s 2016 Notice on the notion of State aid,¹ thereby reinforcing the distinction between the assessment of the existence of aid and the assessment of its compatibility.
2. Reduction in the scope of operating aid
One of the most significant elements of the proposal concerns the substantial reduction in the scope of operating aid for airports.
The Commission takes the view that airports with annual passenger traffic exceeding one million are, in principle, capable of covering their operating costs.
Accordingly, from April 2027, operating aid will only be permitted for airports with traffic of up to one million passengers, for a transitional period until 3 April 2032. Thereafter, such aid may only be granted to airports with fewer than 500,000 passengers per year, without prejudice to the application of horizontal measures (i.e. those not specific to the aviation sector), such as those relating to Services of General Economic Interest (“SGEI”) or measures falling within the scope of the General Block Exemption Regulation (“GBER”).²
3. Revision of the conditions for investment aid
Regarding investment aid, the draft revision limits the possibility of granting such aid to airports with annual passenger traffic of up to three million and introduces more stringent conditions for its compatibility.
The maximum aid intensity varies depending on the size of the airport:
- up to 75% for airports with fewer than one million passengers; and
- up to 50% for airports with traffic between one and three million.
Possible increases are envisaged for airports in remote regions or for investments in infrastructure with positive environmental sustainability impacts.
4. Strengthening the competitive assessment and expanding the catchment area
As regards the assessment of effects, the draft revision strengthens the economic analysis by expanding the catchment area of airports, i.e. the geographical area relevant for the competitive assessment.
Key contacts
"The Commission intends to reduce reliance on public support in the sector by, among other measures, scaling back operating and investment aid and phasing out start up aid."
This area, currently defined within a radius of 100 km or 60 minutes’ travel time, is extended to up to 150 km or 90 minutes. As a result, a greater number of potentially competing airports will be included in the assessment of the effects of aid measures, with a more rigorous approach to identifying possible distortions.
The Commission acknowledges that expanding the catchment area leads to an increased number of cases where multiple airports are in direct competition; for this reason, the draft identifies certain situations where the absence of significant negative effects may be presumed, for example where the aid does not lead to the creation of new capacity or where the airports concerned have substantially different characteristics.
5. Elimination of start-up aid for new routes
The 2014 Guidelines had introduced criteria under which start-up aid for new routes could be considered compatible with the Internal Market, on the assumption that temporary public support could facilitate the start-up phase, which is characterised by uncertain demand and high costs. The draft revision provides that such aid can no longer be considered compatible, as it is deemed to be insufficiently effective in promoting connectivity.
In the draft revision, the Commission considers that, in a now fully liberalised air transport market characterised by a plurality of business models and complex contractual arrangements between airports and airlines, market-based instruments are already available to incentivise the opening of new routes.
It should be noted that, although start-up aid has been used relatively sparingly at EU level, it has nevertheless produced significant effects in certain national contexts – including Italy – contributing to the development of connectivity for certain regional airports and peripheral areas.
In any event, Member States remain able to ensure connectivity on non-profitable but essential routes through the imposition of public service obligations and the granting of social aid.
6. Decarbonisation and reliance on horizontal instruments
The proposal does not introduce a specific framework for State Aid aimed at the decarbonisation of air transport, taking the view that such needs are already covered by the existing regulatory frameworks,³ which provide a comprehensive set of instruments capable of supporting the green transition, in particular by promoting the production and use of sustainable aviation fuels (“SAF”), investments in energy efficiency and improvements in the environmental performance of airport infrastructure.
The Commission nonetheless acknowledges that these measures — designed on a cross-sector basis for different areas of the economy — do not provide detailed guidance on how they should be applied in the aviation sector and may not be immediately clear in their sector-specific implementation. To facilitate the use of the existing measures, the Commission has envisaged the publication of dedicated guidance aimed at clarifying the coordination and practical application of State Aid rules for decarbonisation in the aviation context.
7. Increased use of ex-post evaluations
The proposed guidelines also provide for increased reliance on ex-post evaluation mechanisms aimed at assessing the effectiveness of the measures against their intended objectives, their impact on competition and trade, and the absence of undue distortive effects over time.
In particular, the Commission may require, for certain categories of aid schemes, the carrying out of an ex-post evaluation to assess the effectiveness of the measure in achieving its stated objectives, its impact on competition and trade between Member States, and the possible emergence of distortive effects contrary to the interests of the EU during its implementation.
Conclusions
Overall, the draft revision appears to be aimed at marking a shift from an approach focussed on supporting traffic development to one more centred on the control of distortions of competition and the increased responsibility of market operators, whilst nonetheless leaving open the question of whether the market alone can ensure adequate levels of connectivity, particularly in the more remote regions of the EU.
"All interested stakeholders – including airlines, airport operators and other market participants – can submit their contributions to the public consultation until 11 June 2026. "
In particular, the combination of the reduction of operating aid, the tightening of investment aid and the elimination of start-up aid reflects a policy choice to structurally reduce reliance on public support in the sector. This approach may appear to be at odds with the operational reality of certain European regional airports, which play a key role in territorial cohesion, the connectivity of peripheral areas and local economic development, whilst facing inherent difficulties in achieving financial sustainability.
Similarly, the decision not to introduce specific instruments for decarbonisation, although consistent with the aim of avoiding regulatory overlap, may not fully capture the operational specificities of the sector, where significant economic and infrastructural barriers to the deployment of low-emission technologies remain.
All interested stakeholders – including airlines, airport operators and other market participants – can submit their contributions to the public consultation until 11 June 2026. Following the conclusion of the consultation process and the adoption of the final text, the new guidelines will apply to aid measures once the Commission adopts a decision after 3 April 2027, including where the aid was notified prior to that date.
Footnotes
[1] Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union – 2016/C 262/01.
[2] Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty.
[3] The Commission refers, in particular, to the 2022 Guidelines on State aid for climate, environmental protection and energy (2022/C 80/01), to Regulation (EU) No 651/2014, as amended in 2023 to align it with the objectives of the European Green Deal, to the Framework for State aid measures in support of the Clean Industrial Deal for 2025, and to the State aid Framework for research, development and innovation.
Key contacts
Of Counsel Rome
Senior Associate Rome
Associate Milan
