European sustainable transport promoter, Transport and Environment (T&E), says that new analysis shows almost a quarter of EU airports served by Ryanair “are likely to be loss-making”.
The group said the “snapshot” 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”.
The report said that “Nearly half of Ryanair’s struggling airports are in France (16) and Italy (7)”, citing annual traffic figures at Chalons Vatry airport of “just 108,000 passengers in 2017”, against public subsidies of €3 million, equating to just under €30 per passenger.
T&E called on the European Commission to end state aid for loss-making airports in its upcoming review, “like it did for coal mines earlier this decade”.
The group said that “Aid to the aviation sector is partly responsible for its rapid growth in emissions, increasing from 1.5 per cent of emissions in 1990 to 3.4 per cent of emissions in 2017 of the total EU28 greenhouse gas emissions”.
T&E highlighted revised state aid guidelines for airports and airlines introduced by the European Commission in 2014, one of the objectives of which was to “provide member states with a ten year time frame to wind down operational state aid (support for day-to-day running costs), the most distortive form of state aid, to lossmaking airports”.
T&E also said that “the Commission should require member states to draft closure plans for those airports which are, five years into the ten year period, clearly unable to ensure profitability within the timeframe envisaged by those guidelines”.
However Airports Council International Europe – an industry trade association which advances the collective interests of Europe’s airports – said that the T&E report “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”.
ACI Europe said the analysis was “piecemeal and unsubstantiated”, adding that “sound policymaking should not be based on a snapshot nor on presumptions as to what happens in a highly competitive market”.
“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,” said ACI Europe.
“In fact, the Guidelines’ objectives was to preserve ‘good connections between the regions and the mobility of European citizens, while minimizing distortions of competition’ in the aviation sector.
“As part of that, the Guidelines expressly recognise the need to allow – under strict conditions and 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 and commercial revenues per passenger (due to the seasonality of their traffic, less densely populated catchment areas and less affluent customer base).
“Today, 71 per cent of smaller regional airports (handling less than 1 million passengers/annum) are loss making.”
Commenting on the analysis 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 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.”
The full report by T&E can be downloaded here, while ACI Europe’s response can be read in its media room here.
Business Traveller has contacted Ryanair for its reponse to the report, and will publish any reply here.
