EU Accepts French Measures To End Passenger Charges

by Ulrika Lomas, for LawAndTax-News.com, Brussels

30 January 2009

The European Commission has accepted the measures taken by France to put an end to the differentiation in passenger charges between domestic flights and flights from and to countries in the Schengen area.

Following a complaint from a low-cost airline, the Commission examined the rules applicable in France for setting the level of airport charges.

It concludes that the differentiation in the levels of charges between those two categories of flights constitutes existing State aid, which is incompatible with the internal market.

Meanwhile, France has adopted the measures necessary to abolish that aid.

The Commission took the view that the differentiation in passenger charges is financed by State resources and chargeable to the State. It gives an advantage to airlines operating domestic flights in France. It might distort competition and affect trade. The differentiation in passenger charges therefore constitutes State aid.

The legal basis of the differentiation in charges originates in orders adopted prior to the entry into force of the EC Treaty, and has not been called into question by the adoption of subsequent legislation. According to the Commission, this is therefore a question of existing aid.

As regards operating aid for an indeterminate period, it cannot be authorized on the basis of the guidelines of either 1994 or 1995. The aid to French airlines is therefore incompatible with the common market.

Following the Commission’s conclusions, the French authorities have informed the Commission of the measures which they have already adopted.

Accordingly, from the first half of 2008, the tariff differentiation between passenger charges for domestic flights and those for flights to countries in the Schengen area was abolished for French airports, except for Paris airports.

The rates for Paris airports will be brought into line with full effect from April 1, 2009.

Concerning flights to destinations in member states outside the Schengen area, airport operators may use differentiated tariffs only if it is justified on the grounds that the costs of infrastructure use vary according to type of flight.

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