The Scope of State Aid and Public Service Obligation for Airports and Air Carriers in the Light of European Law

Abstract

Public aid is the kind of advantage granted directly or indirectly for private companies from State resources. The European Commission prerogative to control the transfer of public resources by the public authorities (national or local) for the benefit of private undertakings, as a general rule, there is an obligation of notification, as provided for in article 108 (3) of the Treaty on the Functioning of the European Union (TFEU). It should be noted in the beginning that State aid given to undertakings conducting economic activity is, in principle, incompatible with the European Union’ law, as provided for in article. 107 (1) of the TFEU. There are certain situations that the granting of public funds will not constitute “public aid” within the meaning of article 107 of the TFEU and, therefore, will not violate European rules in this field. One of them are activities related to the exercise of the prerogatives of the public authority (security, safety, customs, air traffic control). The other is related to the exercise of services in general economic interest. This could be an example of public service obligation (PSO). This service can be applied in the light of the provisions of European law on two types of action on air routes, and on airport managing body. The imposition of a PSO to the specified route is the support given by the State to the outermost regions that due to their unfavourable geographical position cannot fully develop economically, and no carrier had not been interested in performing air services to that region due to the lack of cost effectiveness. Some activities at the airport may be considered as activities of general economic interest.