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Aviation: Commission updates European safety list of banned airlines

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pal-777The European Commission has updated for the 22nd time the European list of airlines subject to an operating ban or operational restrictions within the European Union, better known as the EU air safety list. On the basis of safety information from various sources and a hearing both with the Nepalese aviation authorities as well as with a number of Nepalese carriers, the Commission decided to put all airlines from Nepal on the EU air safety list.

Siim Kallas, Commission Vice-President responsible for transport, said: "The current safety situation in Nepal does not leave us any other choice than to put all of its carriers on the EU air safety list. We do hope that this ban will help the aviation authorities to improve aviation safety. I have already asked the European Aviation Safety Agency to prepare an aviation safety assistance project for Nepal. On the positive side, I am happy to note further safety progress, particularly in the Philippines, Sudan and Zambia. These countries, as well as a number of other countries where safety is gradually improving, remain for the moment on the list, but I am confident that positive decisions are in the pipeline if things keep moving in the right direction."

The new list replaces and updates the previous one, adopted in July 2013, and can be consulted on the Commission’s website.

As a consequence of the ban on Nepalese carriers, they are prevented from flying into or within the Union. Also, European operators and travel agents will need to inform European travellers, who will have a right to reimbursement if they had booked a seat on a Nepalese carrier as part of a journey to Nepal, and decide not to use it.

Consultations were also held with the civil aviation authorities of Libya. The EU Air Safety Committee noted that progress continues to be made, but agreed with the Libyan civil aviation authorities that it remains necessary to maintain the voluntary restrictions not to fly to the EU, which are applied since the Libyan revolution to all airlines licensed in Libya. The implementation of these restrictions will remain under close monitoring by the Commission and the EU Air Safety Committee.

Further technical updates to the EU air safety list were made, due to the removal of some airlines that ceased to exist and the addition of new ones recently created in a number of banned countries: Kyrgyzstan, Kazakhstan, Indonesia and Mozambique.

The Commission decision is based on the unanimous opinion of the EU Air Safety Committee, which met from 19 until 21 November 2013. The EU Air Safety Committee consists of aviation safety experts from the Commission, from each of the 28 Member States of the Union, as well as from Norway, Iceland, Switzerland, and the European Aviation Safety Agency (EASA). The Commission decision also received a positive opinion from the European Parliament and the Council of Ministers.

Background

The updated EU air safety list includes all airlines certified in 21 states, for a total of 295 airlines fully banned from EU skies: Afghanistan, Angola, Benin, Republic of the Congo, the Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Gabon (with the exception of three airlines which operate under restrictions and conditions), Indonesia (with the exception of five airlines), Kazakhstan (with the exception of one airline which operates under restrictions and conditions), Kyrgyzstan, Liberia, Mozambique, Nepal, Philippines (with the exception of one airline), Sierra Leone, Sao Tome and Principe, Sudan, Swaziland and Zambia. The list also includes 2 individual airlines: Blue Wing Airlines from Suriname and Meridian Airways from Ghana, for an overall total of 297 airlines.

Additionally, the list includes 10 airlines subject to operational restrictions and thus allowed to operate into the EU under strict conditions: Air Astana from Kazakhstan, Afrijet, Gabon Airlines, and SN2AG from Gabon, Air Koryo from the Democratic People's Republic of Korea, Airlift International from Ghana, Air Service Comores from the Comoros, Iran Air from Iran, TAAG Angolan Airlines from Angola and Air Madagascar from Madagascar.

For more information, follow Vice-President Kallas on Twitter.

Aviation/airlines

#Aviation - Statement by Commissioner Vălean on the Commission's intention to extend the slot waiver 

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Transport Commissioner Adina Vălean has issued a statement following the adoption of the Commission report on the potential extension of the Slot Regulation amendment

Commissioner Vălean said: “The report shows that air traffic levels remain low, and more importantly, they are not likely to recover in the near future. In this context, the lack of certainty over slots makes it difficult for airlines to plan their schedules, making planning difficult for airports and passengers. To address the need for certainty and responding to traffic data, I intend to extend the slot waiver for the 2020/2021 winter season, until 27 March 2021.”

The full statement is available online.

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Commission approves €62 million Romanian loan guarantee to compensate Blue Air for damage suffered due to #Coronavirus outbreak and provide the airline with urgent liquidity support

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The European Commission has approved, under EU state aid rules, a Romanian loan guarantee of up to around €62 million (approximately RON 301m) in favour of Romanian airline Blue Air. Blue Air is a private Romanian airline with bases in Romania, Italy and Cyprus. It qualified as a company in difficulty before the coronavirus outbreak, i.e. on 31 December 2019. More specifically, the company was loss making due to the extensive investments it undertook since 2016 to improve its network of routes. The airline had returned to profitability in 2019 and early 2020, but it suffered significant losses due to the coronavirus outbreak.

The measure consists of a public guarantee of up to around €62m on a loan to the airline which will be allocated as follows: (i) around €28m public guarantee to compensate Blue Air for the damage directly caused by the coronavirus outbreak between 16 March 2020 and 30 June 2020; and (ii) around €34m rescue aid in the form of a public guarantee on a loan intended to partly cover Blue Air's acute liquidity needs as a result of the high operating losses it has been experiencing following the coronavirus outbreak. Blue Air is not eligible to receive support under the Commission's State aid Temporary Framework, aimed at companies that were not already in difficulty on 31 December 2019.

The Commission therefore has assessed the measure under other State aid rules, in line with the notification by Romania. With respect to the damage compensation, the Commission assessed the measure under Article 107(2)(b), which enables the Commission to approve state aid measures granted by member states to compensate specific companies for the damages directly caused by exceptional occurrences, such as the coronavirus outbreak.

As regards the rescue aid, the Commission assessed it under the Commission's 2014 Guidelines on state aid for rescue and restructuring, which enable member states to support companies in difficulty, provided, in particular, that the public support measures are limited in time and scope and contribute to an objective of common interest. The Commission therefore concluded that the Romanian measure is in line with EU state aid rules.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The aviation sector has been severely hit by the coronavirus outbreak. This €62m Romanian loan guarantee will in part enable Romania to compensate Blue Air for the damage suffered as a result of the coronavirus outbreak. At the same time, it will provide the airline with the necessary resources to address part of its urgent and immediate liquidity needs. This will avoid disruptions for passengers and ensure regional connectivity in particular for the significant number of Romanian citizens working abroad and for many small local businesses that depend on affordable tickets offered by Blue Air on a network of routes aimed at addressing their specific needs. We continue working with member states to discuss possibilities and find workable solutions to preserve this important part of the economy in line with EU rules.”

A full press release is available online.

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Commission approves €133 million Portuguese liquidity support to #SATA airline; opens investigation into other public support measures

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The European Commission has approved, under EU state aid rules, €133 million in liquidity support to SATA Air Açores (SATA). The aid will allow the company to fulfil its public service obligations, provide essential services and ensure the connectivity of the Azores outermost region. At the same time, the Commission has opened an investigation to assess whether certain public support measures by Portugal in favour of the company are in line with EU rules on State aid to companies in difficulty.

SATA is an air transport company ultimately controlled by the Portuguese Autonomous Region of Azores. Together with another company belonging to the same group (SATA Internacional – Azores Airlines), SATA provides air transport passenger and cargo services within Azores, and from and to several national and international destinations. With respect to certain routes, it has been entrusted with a public service obligation to ensure connectivity of the islands. SATA also provides other essential services, e.g. the management and operation of five small airports in different islands of Azores.

SATA has been facing financial difficulties already before the coronavirus outbreak, i.e. on 31 December 2019. Since at least 2014, the company has been experiencing operating losses and has reported negative equity in recent years, which has been aggravated by the effects of the coronavirus outbreak. The company is currently facing urgent liquidity needs.

The Portuguese liquidity support measure

Portugal notified the Commission of its intention to grant urgent support to SATA, with the aim of providing the company with sufficient resources to address its urgent and immediate liquidity needs until the end of January 2021.

SATA is not eligible to receive support under the Commission's State aid Temporary Framework, aimed at companies that were not already in difficulty on 31 December 2019. The Commission therefore has assessed the measure under other state aid rules, namely the 2014 Guidelines on State aid for rescue and restructuring. These enable member states to grant temporary liquidity aid to providers of services of general economic interest to maintain and preserve essential services such as, for example air transport connectivity and airport management. This possibility is available also in case of aid granted  by the member state to the same company in difficulty being investigated by the Commission.

The Portuguese authorities estimated that SATA's liquidity needs for the next six months in relation to SATA's public service obligations and essential services amount to approximately €133m.

The Commission found that the individual aid to the company in the form of a public guarantee of up to approximately €133m on a temporary loan strictly relates to urgent liquidity needs linked to the provision by SATA of essential services including routes subject to public service obligations and services of general economic interest at local airports. It found that the aid is necessary to allow the company to continue providing these services.

On this basis, the Commission approved the measure under EU State aid rules.

Opening of investigation into other support measures

Separately, the Commission has decided to open an investigation to assess whether certain public support measures in favour of SATA are in line with the 2014 Guidelines on state aid for rescue and restructuring.

As of 2017, the Autonomous Region of Azores, which wholly owns SATA, approved three capital increases to partly address the company's capital shortfalls. Most of the amounts appear to have already been paid. The Portuguese authorities claim that the capital increases in question do not constitute state aid under EU rules as since the Regional Government of Azores, as the sole shareholder of SATA, acted as a private investor operating under market conditions.

The Commission will now investigate further if the capital increases constituted state aid that should have been notified to the Commission, and, if so, if the past support measures satisfy the conditions of the 2014 Guidelines on State aid for rescue and restructuring. The opening of an in-depth investigation gives Portugal and other interested parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.

Background

The Azores Autonomous Region is an archipelago composed of nine volcanic islands and 245,000 inhabitants. The Azores Region is considered as an outermost region of the European Union, located in the North Atlantic Ocean, about 1,400 km from mainland Portugal. The islands can be reached from the mainland in two to three days by sea or two hours by plane. The Region is dependent of air transport for passengers and cargo, especially during the winter season, when weather conditions often render maritime transport unavailable.

Under EU State aid rules, public interventions in favour of companies can be considered free of state aid when they are made on terms that a private operator would have accepted under market conditions (the market economy operator principle - MEOP). If this principle is not respected, the public interventions involve state aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union, because they confer an economic advantage on the beneficiary that its competitors do not have. The assessment criteria for public interventions in companies in difficulty are set out in the 2014 Guidelines on state aid for rescue and restructuring.

Under the Commission's 2014 Guidelines on state aid for rescue and restructuring, companies in financial difficulty may receive State aid provided they meet certain conditions. Aid may be granted for a period of up to six months ("rescue aid"). Beyond this period, the aid must either be reimbursed or a restructuring plan must be notified to the Commission for the aid to be approved ("restructuring aid"). The plan must ensure that the long-term viability of the company is restored without further State support, that the company contributes to an adequate level to the costs of its restructuring and that distortions of competition created by the aid are addressed through compensatory measures.

By ensuring compliance with these conditions, the Commission maintains fair and effective competition between different companies in the air transport market, like in other sectors.

Article 349 of the Treaty on the Functioning of the European Union recognises the specific constraints of the outermost regions and provides for the adoption of specific measures in EU legislation to help these regions address the major challenges they face due to their remoteness, insularity, small size, difficult topography and climate, and economic dependence on a reduced number of products.

The non-confidential version of the decision will be made available under the case number SA.58101 in the State Aid Register on the Commission's competition website once any confidentiality issues have been resolved. State aid decisions newly published in the Official Journal and on the internet are listed in the State Aid Weekly e-News.

 

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