Regional Air Connectivity Fund - 19 routes
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Just a note on this business of "funding". These aren't PSO routes where the taxpayer is essentially footing most of the bill for operating the route. From section 2.3 (7) of the original UK notification to the European Commission (PDF):
Airport charges will typically only account for maybe 10%-15% of total operating costs of a route (less if you take discounts into account). So this Regional Air Connectivity funding has the potential to subsidise 50% of this, or say 5%, of total operating costs. Yes, it is a small help to the route economics, but not a significant one.
IMHO it's very clear that airlines have applied for routes which were in any case candidates for operation in the next year or two, on the basis that if they can get a bit of a helping hand from the taxpayer they won't refuse it.
The proposed aid to support the launch of new routes is intended to cover up to 50% of the airport charges incurred in operating the new route.
IMHO it's very clear that airlines have applied for routes which were in any case candidates for operation in the next year or two, on the basis that if they can get a bit of a helping hand from the taxpayer they won't refuse it.
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EU issues
I find it interesting, though frankly not surprising, that this UK centred discussion should be so light on the EU-rules aspect of this a-priori illegal state aid; unless it fully meets with the EU rules, that is.
Especially given quite how influential subsidies, especially by regional governments or municipalities around the EU have been in the enormous transformation of the European airline industry over the past 15 years or so.
And how inconsistently the EU has monitored still less "policed" these subsidies.
Not to mention how well some airlines have played the subsidy game to the very considerable benefit of their long term financial bottom line.
Especially given quite how influential subsidies, especially by regional governments or municipalities around the EU have been in the enormous transformation of the European airline industry over the past 15 years or so.
And how inconsistently the EU has monitored still less "policed" these subsidies.
Not to mention how well some airlines have played the subsidy game to the very considerable benefit of their long term financial bottom line.
If you read the original application documentation (admittedly, not many
contributors have), this competition does meet state aid rules.
And what is wrong with airlines playing the game?
contributors have), this competition does meet state aid rules.
And what is wrong with airlines playing the game?
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EU money: playing games
No objections whatsoever to airlines "playing the game."
As long as the rules-of-the-game are:
i) transparent
ii) enforced
iii) enforced uniformly.
Now what makes me think that the second and third condition have been "conspicuous by their absence" in the airline/ airport subsidies "game" to date ?
As long as the rules-of-the-game are:
i) transparent
ii) enforced
iii) enforced uniformly.
Now what makes me think that the second and third condition have been "conspicuous by their absence" in the airline/ airport subsidies "game" to date ?
As far as I'm aware, it isn't EU money that's available - and it's normally the threat of "state aid" investigations which reigns in the regional/local authorities.
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EU objections to state aid
These objections to the theory and practice of state aid are at the heart of the "ever closer union" and, as such, apply equally to all aid from public bodies irrespective of the specific status of the state body involved.
So that fact that the thread is about cash from the UK exchequer is neither here nor there since all such subsidy is frowned upon due to its potential for distorting "the market."
My point, as before, is triple:
i) to highlight the theory
ii) to highlight how important, despite the theory, has been state aid to the current European airline industry
iii) to highlight the inconsistency with which judgements as to acceptability of subsidies have been delivered and subsequently monitored.
So that fact that the thread is about cash from the UK exchequer is neither here nor there since all such subsidy is frowned upon due to its potential for distorting "the market."
My point, as before, is triple:
i) to highlight the theory
ii) to highlight how important, despite the theory, has been state aid to the current European airline industry
iii) to highlight the inconsistency with which judgements as to acceptability of subsidies have been delivered and subsequently monitored.
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Just a note on this business of "funding". These aren't PSO routes where the taxpayer is essentially footing most of the bill for operating the route. From section 2.3 (7) of the original UK notification to the European Commission (PDF):
Airport charges will typically only account for maybe 10%-15% of total operating costs of a route (less if you take discounts into account). So this Regional Air Connectivity funding has the potential to subsidise 50% of this, or say 5%, of total operating costs. Yes, it is a small help to the route economics, but not a significant one.
IMHO it's very clear that airlines have applied for routes which were in any case candidates for operation in the next year or two, on the basis that if they can get a bit of a helping hand from the taxpayer they won't refuse it.
Airport charges will typically only account for maybe 10%-15% of total operating costs of a route (less if you take discounts into account). So this Regional Air Connectivity funding has the potential to subsidise 50% of this, or say 5%, of total operating costs. Yes, it is a small help to the route economics, but not a significant one.
IMHO it's very clear that airlines have applied for routes which were in any case candidates for operation in the next year or two, on the basis that if they can get a bit of a helping hand from the taxpayer they won't refuse it.
It is an absolute scandalous disgrace that the public's personal money is going to be given to Private well established airline and airport companies to pay for expensive operations that cannot stand on their own two feet. If something works it does not need a 'helping hand'. Routes either work or do not work at certain points in time for very good scientific reasons involving location, competition, demand and price etc. This is what the Govt. should be spending Joe Public's hard earned on! As for the body that decides the 'criteria' for these routes - what an absolute (bad) joke.
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Basically Government UK civil aviation airport strategy (there isn't one) that has seen airports built and developed in the most ridiculous, inaccessible and unusable locations now leads to even recently developed airports completely failing as they struggle after the same passengers.
"I know we can sort this out by getting the public to pay for the routes that they will then have to pay for again."
Leave the routes alone (current) blundering Government and get on sorting out the country's airports. We need less airports. The airports that are developed need to be ideally located and ideally accessible and efficient and fully able to do the job.
There is absolutely no need for any interfering and 'helping out' of airline routes.
"I know we can sort this out by getting the public to pay for the routes that they will then have to pay for again."
Leave the routes alone (current) blundering Government and get on sorting out the country's airports. We need less airports. The airports that are developed need to be ideally located and ideally accessible and efficient and fully able to do the job.
There is absolutely no need for any interfering and 'helping out' of airline routes.
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I cannot agree with your statement. Can you offer some proof or link to your 10-15% figure? The word 'typically' simply cannot be used for two reasons. There is an absolute plethora of airline/airport deals lasting varying amounts of time and involving all kinds of sliding scale variables. Then there is the creative accounting that lumps huge amounts of operating costs into the actual deal. You simply cannot compare the operating costs into Munich or Frankfurt with the operating costs into Oban, Derry, Carlisle or Norwich etc.
It is an absolute scandalous disgrace that the public's personal money is going to be given to Private well established airline and airport companies to pay for expensive operations that cannot stand on their own two feet. If something works it does not need a 'helping hand'. Routes either work or do not work at certain points in time for very good scientific reasons involving location, competition, demand and price etc. This is what the Govt. should be spending Joe Public's hard earned on! As for the body that decides the 'criteria' for these routes - what an absolute (bad) joke.
It is an absolute scandalous disgrace that the public's personal money is going to be given to Private well established airline and airport companies to pay for expensive operations that cannot stand on their own two feet. If something works it does not need a 'helping hand'. Routes either work or do not work at certain points in time for very good scientific reasons involving location, competition, demand and price etc. This is what the Govt. should be spending Joe Public's hard earned on! As for the body that decides the 'criteria' for these routes - what an absolute (bad) joke.
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Just posed this question on the DSA thread. Would an airline be in any way obliged to go ahead with it if they were awarded the funding, or could they just file a speculative application?
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Code:
) transparent ii) enforced iii) enforced uniformly. Now what makes me think that the second and third condition have been "conspicuous by their absence" in the airline/ airport subsidies "game" to date ?
Alitalia forced restructuring twice and required external financing from the sandpit.
Olympic forced into bankruptcy and restructuring and eventual merger with Aegean.
Plenty of cases where EU competition rules HAVE been enforced right across the continent actually.
As for PSOs on island and very narrow routes to distant corners they can be legal exception situations when considered vital
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The US equivalent:
Essential Air Service
From Wikipedia, the free encyclopedia
Essential Air Service (EAS) is a U.S. government program enacted to guarantee that small communities in the United States, which, prior to deregulation, were served by certificated airlines, maintained commercial service. Its aim is to maintain a minimal level of scheduled air service to these communities that otherwise would not be profitable. This came in response to the Airline Deregulation Act, passed in 1978, which gave U.S. airlines almost total freedom to determine which markets to serve domestically and what fares to charge for that service.[1] The program is codified at 49 U.S.C. §§ 41731–41748.
Essential Air Service
From Wikipedia, the free encyclopedia
Essential Air Service (EAS) is a U.S. government program enacted to guarantee that small communities in the United States, which, prior to deregulation, were served by certificated airlines, maintained commercial service. Its aim is to maintain a minimal level of scheduled air service to these communities that otherwise would not be profitable. This came in response to the Airline Deregulation Act, passed in 1978, which gave U.S. airlines almost total freedom to determine which markets to serve domestically and what fares to charge for that service.[1] The program is codified at 49 U.S.C. §§ 41731–41748.
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Cyprus Airways
Trouble with CY was that it had poor management appointed by the government, and was run by the unions, Over paid Pilots and Cabin crew. night stops instead of return journey with the subsequent attractive expenses.
CY was in trouble before the EU but government loans, they hoped the EU would ignore. They Juggled with Eurocypria and that went down.;
Cyprus airways could not fly a kite.
CY was in trouble before the EU but government loans, they hoped the EU would ignore. They Juggled with Eurocypria and that went down.;
Cyprus airways could not fly a kite.
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Code:
Trouble with CY was that it had poor management appointed by the government, and was run by the unions, Over paid Pilots and Cabin crew. night stops instead of return journey with the subsequent attractive expenses. CY was in trouble before the EU but government loans, they hoped the EU would ignore. They Juggled with Eurocypria and that went down.; Cyprus airways could not fly a kite.
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@rutankrd
As you have previously copied, my central point was/is a three parter. That these rules should be:
i) transparent
ii) enforced
iii) enforced uniformly.
At no point have I belonged to those asserting, as you claim, "EU rules never enforced."
Leaving aside the first of the 3 points, for the moment, and repeating my last statement above, it strikes me that you see my 2nd and 3rd points as independent of one another, whereas nothing could be further from the truth.
Partial/ limited/ spasmodic/ slipshod/ politically-inspired "enforcement" of the rules (which you have highlighted, though certainly without characterising it as I have just done) is actually worse than "never enforcing" the rules, since at least in the latter case everyone is on a level, if chaotic, playing field. Whereas currently.....?
Whereas currently, as I stated above, the enforcement is, at best, politically inspired.
At best.
i) transparent
ii) enforced
iii) enforced uniformly.
At no point have I belonged to those asserting, as you claim, "EU rules never enforced."
Leaving aside the first of the 3 points, for the moment, and repeating my last statement above, it strikes me that you see my 2nd and 3rd points as independent of one another, whereas nothing could be further from the truth.
Partial/ limited/ spasmodic/ slipshod/ politically-inspired "enforcement" of the rules (which you have highlighted, though certainly without characterising it as I have just done) is actually worse than "never enforcing" the rules, since at least in the latter case everyone is on a level, if chaotic, playing field. Whereas currently.....?
Whereas currently, as I stated above, the enforcement is, at best, politically inspired.
At best.
As has been mentioned elsewhere, Links Air have lost their AOC, and presumably now no longer qualify as an airline.
Does that mean we can assume that Durham-Belfast, Norwich-Newcastle and Oxford-Edinburgh are unlikely to be considered any further for Regional Air Connectivity Fund purposes ?
Does that mean we can assume that Durham-Belfast, Norwich-Newcastle and Oxford-Edinburgh are unlikely to be considered any further for Regional Air Connectivity Fund purposes ?
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