Ruling will benefit industry and consumers

Consumers stand to benefit from greater choice of airline routes and more competitive fares, thanks to the European Commission's decision on subsidies for Charleroi airport.

The ruling established transparent rules for airport subsidies that will ensure all airports are subject to the same criteria and all airlines are entitled to equal treatment.

As a result of this decision, more low-cost airlines will be encouraged to enter the market and open up new routes between regional airports, resulting in more competition. This, in turn, will bring lower fares.

The European Commission has consistently championed competition between airlines. Indeed, it is thanks to the Commission's determined efforts to liberalise air travel in Europe that low-cost carriers can offer the routes they like at the prices they like. Only 15 years ago, air travel was basically a government-sponsored cartel.

The Commission has no intention of forcing out low-cost carriers or of allowing new dominant airlines to replace old flag carriers in a privileged position.

So how come the Commission has come in for so much criticism for its Charleroi decision? For the simple reason that some airlines do not like more competition.

But how, you may well ask, can a Commission decision that requires subsidies for Charleroi airport to be repaid possibly benefit low-cost carriers? Because the decision only requires a small proportion of the Charleroi subsidies to be repaid and allows the bulk of the subsidies to stand to attract airlines to regional airports, which need to ensure a sustainable economic development.

Above all, the decision outlines a series of criteria applicable throughout the EU concerning when subsidies to regional airports can be paid, and when financial advantages or benefits in kind - handling facilities, training grants for aircrew and ground crew, accommodation - can be passed on to airlines without any problem under EU rules.

First, terms and conditions under which subsidies are paid or benefits in kind are made available to airlines must be clearly set out and transparent. No secret deals. Secondly, the benefits of the subsidies or benefits in kind must be open to all airlines - no sweetheart or "beggar my neighbour" deals.

Thirdly, the subsidies must be related to the extent of the handicap suffered by an airport because of its geographical situation or the level of economic development in the region where it is situated. Clearly, airports in far-flung peripheral regions or in the heart of depressed areas qualify for greater subsidies.

Fourth, there are criteria established to distinguish between payments that any private market operator may make as part of a commercial relationship and payments that constitute subsidies.

Fifthly, the subsidies and benefits in kind must be related to meeting start-up costs, for example for launching new routes, and cannot be used to meet ongoing permanent operating costs forever. Sixthly, the criteria must be applied irrespective of whether an airport is publicly or privately owned.

The Commission took its decision on Charleroi after careful analysis over two years and consultation with 12 airlines, airport managers and interested parties. It took into very careful consideration the need to increase and not reduce competition. It's decision paves the way for more regional airports to qualify for subsidies meeting the established criteria, for more airlines to offer more routes and so for more people to benefit from lower air fares to a wider choice of destinations.

Ms Loyola de Palacio is vice-president of the European Commission