Malta Permitted To Aid Airline Startups

by Robert Lee, for LawAndTax-News.com, London

24 November 2006

The European Commission announced on Wednesday that it will allow Malta to grant start-up aid for new air routes from Malta International Airport.

The measure will last until September 2011 and provides for a total of Lm25 million (EUR58 million) to be paid to airlines in order to finance new routes. The primary objective of the aid is to improve connectivity by enhancing access to air transport services, which are of basic importance for the economic and social development of Malta.

The measure approved by the Commission provides for public funding of new services departing from Malta International Airport. The aid is designed to help airlines wishing to establish new routes to/from the airport by meeting part of their start-up costs and route-specific marketing aid.

The Commission found that the proposed scheme is in line with the Community rules adopted in 2005 in order to favour the development of regional airports and the mobility of EU citizens, as:

  • The aid is available to all operators in a transparent and non-discriminatory manner;
  • It is limited to five years for each new route;
  • The aid is limited, in average, to 40% of start-up costs (including specific marketing costs);
  • The aid has to be paid out on the basis of a business plan.

The Maltese government hopes that the measure will encourage the private sector to invest in new air services, by sharing the risk between the airlines and the public authorities.

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