The European Commission has opened two in-depth investigations under the EU State aid rules into a Romanian support scheme for investments in regional airports. The EC wants to find out whether certain rebates and discounts granted by the Timisoara airport to some airlines have distorted competition. The focus is on the agreement between the Timisoara airport and Wizz Air low cost airline, that could have given the airline an unfair economic advantage over its competitors.

A a marketing agreement signed in 2008 between the Timisoara airport and Wizz Air and the non-payment of airport charges amounting to EUR 2.6 million as well as additional rebates of 72 to 85 percent on all airport charges for large aircraft are also being investigated. The Commission is concerned such preferential treatment may have the effect of forcing out of the market the only competitor of Wizz Air on some routes, according to an EC statement.

"The Commission has a duty to investigate when it believes public authorities may be granting subsidies that distort the conditions of fair competition. The rules allow subsidies to compensate for services of general interest and, under certain conditions, to improve access infrastructure or to help start up services at regional airports. They do not allow subsidies to cover operating losses on a continued basis,” said Joaquín Almunia, the EC Vice-president in charge of competition policy.

Another area included in the investigation was the use of public financing for clearly defined objectives of general interest, given the apparent oversupply of airport services in Romania. The investigation will also look at the upgraded infrastructure, assessing whether is was necessary and proportional, given the limited activity of the airports.

The initial investigation shows that Romania's regional airports are generally loss-making and that their operating losses are covered by the Romanian state on a yearly basis, according to an EC statement. EU rules allow for aid to start up services at regional airports or to cover for services of general economic interest. They do not allow for covering operating losses on a continued basis, according to the Commission.

In Timisoara airport's case, the Commission also needs to verify whether the annual subsidies granted to the airport only serve to reduce the airport operator's current expenditures. Without a general economic interest purpose, this would be incompatible with EU rules as it would provide an unfair competitive advantage.

editor@romania-insider.com