POST Online Media Lite Edition


Poland to return funding money

Staff writer |
The European Commission foundthe public funding granted by the municipalities of Gdynia and Kosakowo to Gdynia airport gives the beneficiary an undue economic advantage over its competitors and represents breach of EU state aid rules.

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These rules do not allow Member States to grant state aid in order to duplicate airport infrastructure where there is not enough demand, since this would distort competition between airports and waste taxpayers' money.

To re-establish the situation that existed on the market prior to the granting of the aid, Gdynia airport has to pay back this undue advantage amounting to EUR 21.8 million (around PLN 91.7 million). This will help alleviating the distortion of competition brought about by the state aid.

In September 2012, Poland notified to the Commission capital injections by the local authorities of Gdynia and Kosakowo into the company responsible for building and operating Gdynia–Kosakowo Airport.

The new airport, which was to use the infrastructure of the existing military airport, was to become the second airport for the Pomerania Region serving mainly general aviation traffic, charters and low cost carriers. The capital injections were aimed at covering the investment costs and operating costs at the beginning of the airport's operation.

Under EU State Aid rules, public investments in companies that carry out economic activities can be considered free of state aid when they are made on terms that a private investor would have accepted under market conditions.

However, the Commission's investigation found that the traffic and revenues projected in Gdynia's business plan were not realistic in view of the uncongested Gdansk airport, operating only around 25 kilometres away. Under these circumstances, no private player would have accepted to invest on the same conditions.

Taking into account the fact that the Gdansk airport serves the region efficiently, using only less than 60% of its capacity, the Commission concluded that the aid into Gdynia airport serves no clearly defined objective of common interest, as it only duplicates unprofitable infrastructure without satisfactory medium-term business prospects. It is therefore incompatible with common EU rules on state aid for the aviation sector (see 2005 Aviation Guidelines).

The public financing procured Gdynia airport an undue economic advantage over its competitors, in particular Gdansk airport. In order to remove this advantage and remedy the distortion of competition brought about by the aid, Gdynia airport needs to pay back PLN 91.7 million (around EUR 21.8 million).

This will re-establish the situation that existed on the market prior to the granting of the aid, thereby cancelling out or at least alleviating the distortion of competition brought about by the aid. The recovery of incompatible state aid is necessary to ensure a level-playing field in the EU Single Market.

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