Brussels clears aid to airlines on Malta routes
Subsidies capped at Lm25m over five years
The European Commission yesterday gave the green light to a scheme launched by the government last July subsidising a number of new air routes to and from Malta.
Ryanair, which started operating scheduled flights from Luton and Pisa at the end of last month, was the first airline to benefit from the scheme.
The Commission said it has decided to allow Malta to grant start-up aid for new air routes from Malta International Airport.
The measure will last five years, until September 2011, and allow for a total of Lm25 million in subsidies to airlines.
The primary objective of the aid was described as improving connectivity by enhancing access to air transport services which are of basic importance for the economic and social development of Malta.
The Lm25 million-package approved by the Commission will not necessarily mean the government will have to spend the whole sum. A Tourism Ministry spokesman explained that the figure is the maximum amount the government can grant.
"This is just a technical matter. It will allow us to launch other schemes in the coming years without having to seek the European Commission's clearance every time. However, we do not intend to grant so much in subsidies. The Lm25 million benchmark is just a capping of the amount."
The Commission deemed the scheme in line with Community rules, known as Community guidelines on financing of airports and start-up aids to airlines departing from regional airport.
Brussels is satisfied that the aid will be available to all operators in a transparent and non-discriminatory manner, that it is limited to five years for each new route, and that aid is limited, on average, to 40 per cent of start-up costs, including specific marketing costs.
The scheme will not finance recurring operating costs incurred by airlines, such as aircraft rental or depreciation, fuel, ground handling expenses, crew salaries or catering service costs.
The amount granted to an airline will be calculated per passenger embarking from the non-Malta airport and landing directly in Malta.
As obliged under EU state-aid rules, the government notified the Commission about the air route development scheme on September 25 although discussions between Malta's Permanent Representation in Brussels and the Commission had been going on for months in order to ensure the scheme is compatible with EU rules.