24% of Ryanair airports propped up by subsidies, fuelling rapid emissions growth, says T&E lobby – ACI Europe responds

Almost a quarter of the EU airports served by Ryanair are likely to be loss-making and propped up by taxpayers’ money which is used to subsidise airlines’ rapidly growing emissions, a new analysis finds. The report concludes that 52 of the low-cost carrier’s 214 airports are either documented to be receiving subsidies (35) or have fewer than 500,000 passengers a year (17) – a conservative estimate of the threshold for profitability.

Transport & Environment (T&E) said the European Commission should end state aid for loss-making airports in its upcoming review of state aid, like it did for coal mines earlier this decade.

Nearly half of Ryanair’s struggling airports are in France (16) and Italy (7), the report finds. They receive state aid from governments and local authorities through direct payments or tax exemptions. Paris Vatry served just 108,000 passengers in 2017 yet received €3 million in public subsidies – just under €30 per passenger.

Andrew Murphy, aviation manager at T&E, said: “This report paints a clear picture of public money subsidising Ryanair’s operating costs and inflating its bumper earnings and record-breaking emissions. With governments struggling to rein in the sector’s climate impact, the first step should be calling a halt to subsidies which are only adding more fuel to the fire.”

The report provides a conservative estimate of high-ranking polluter Ryanair’s loss-making European airports.^[1] Airports with greater passenger numbers, such as Charleroi in Belgium, are not included but may still receive millions in public subsidies every year. T&E said the European Commission needs to urgently review and tighten its state aid guidelines, which allowed this to happen, particularly in light of the sector’s rapid emissions growth.

Andrew Murphy concluded: “The European elections produced a consensus that much more needs to be done to cut aviation emissions. Ending state aid is a start but we also need to end aviation’s tax holiday and encourage the uptake of zero-emission aviation fuels.” 

Aviation CO2 emissions grew 3.9% within Europe last year – while emissions from all other industries in the emissions trading system (ETS) fell 4.1%. CO2 from flying in Europe has soared 26.3% in the last five years – far outstripping any other EU emissions source.

^[1] The report provides a snapshot of an aviation sector with rapid emissions growth fueled by state aid. Ryanair was chosen due to its status as a leading emitter in the EU emissions trading system (ETS) and its history of benefiting from state aid to its airports. However, the T&E report calls for the Commission to conduct a comprehensive assessment of all state aid received by all airports and airlines in order to determine the exact figure.

Published on July 15, 2019 – 17:51

Ryanair indirectly responds to such assertions by publishing a monthly environment report.

ACI Europe, the airport association, responds more vehemently:

STATEMENT on the T&E paper on State aid to selected airports

ACI EUROPE reacted with dismay today to the call by Transport & Environment (T&E – an environmental group) for the closure of all small regional airports across Europe unable to achieve profitability within a 5-year period. T&E made such a shocking policy recommendation as part of an ‘analysis’ of State aid to selected airports used by Ryanair. This ‘analysis’ is based on an erroneous interpretation of the current EU Guidelines on State aid for the aviation sector and a total disregard for the societal value of air connectivity.

A PIECEMEAL & UNSUBSTANTIATED ‘ANALYSIS’

The T&E paper is looking at – in their own words – a number of “airports likely to receive State aid” which are “likely to be loss-making”. It thus only provides “a snapshot of likely State aid”. Clearly, sound policymaking should not be based on a snapshot nor on presumptions as to what happens in a highly competitive market.

MISINTERPRETING EU RULES

Contrary to the picture that T&E is painting, the objective sought by the 2014 EU State aid Guidelines was certainly not to eliminate operating aid to loss-making airports – nor to force them to close down.

In fact, the Guidelines’ objectives were to preserve “good connections between the regions and the mobility of European citizens, while minimizing distortions of competition”1 in the aviation sector. As part of that, the Guidelines expressly recognise the need to allow – under strict conditions & limitations – operating aid to smaller regional airports as a result of the structural profitability issues they are facing.

Indeed these airports are handicapped by both higher costs per passenger (due to their lack of economies of scale) and lower aeronautical & commercial revenues per passenger (due to the seasonality of their traffic, less densely populated catchment areas & less affluent customer base). Today, 71% of airports smaller regional airports (handling less than 1 million passengers/annum) are loss-making.

SMALLER REGIONAL AIRPORTS VITAL FOR EUROPE’s COHESION

In addressing what amounts to market failure, the Guidelines purposely support the vital role that smaller regional airports play for regional development – in particular social & regional cohesion. These airports serve as a lifeline for their communities, enabling access to essential air services (such as air ambulance) as well as economic and social integration through air connectivity. Since 2009, these airports have seen their total air connectivity expanding by +42.1% on the back of gains of +14% in direct connectivity and +63.5% in indirect connectivity.

Calling for the closure of all small regional airports on account that they are structurally not profitable as T&E does would not only isolate but also alienate regional communities – with considerable economic, social, political negative impacts.

EFFECTIVE CLIMATE ACTION & NO-ONE LEFT BEHIND

Europe’s airports consider the Climate Emergency as an absolute priority. Building on years of active carbon management through Airport Carbon Accreditation2, Europe’s airports have committed last month to achieve Net Zero carbon emissions without offsetting for their own operations at the latest by 20503. They are also calling for the entire aviation industry to set a new long-term ambition & roadmap towards a net zero carbon emissions transport system.

Small regional airports only account for 3% of total EU air traffic. Closing down those that are unprofitable would have a negligible impact on reducing CO2 emissions but, as previously mentioned, far-reaching economic, social and political consequences. In this regard, it is worth noting that T&E does not take into account diversionary consequences – the fact that many people needing to travel would still drive longer distance to alternative airports, with consequently increased emissions from road traffic.

By considering only negative externalities, T&E follows an asymmetric and biased approach at odds with what the incoming President of the European Commission outlined yesterday for effective climate action. In her speech to the European Parliament, Mrs von der Leyen made clear that “what is good for the planet must also be good for our people and our regions” and that “we must leave nobody behind”. T&E’s call for closing down loss making regional airports clearly does not stand that test.

Brussels, 17 July 2019