The European Commission approved on 31 March 2020 the French scheme deferring the payment by airlines of certain aeronautical taxes (the civil aviation tax as well as the solidarity tax) in order to mitigate the dramatic impact the coronavirus outbreak has had on the economy. This scheme is based on Article 107 (2) (b) of the Treaty on the Functioning of the EU, which allows the Commission to declare compatible with the internal market aid schemes aimed at “making good the damages caused by natural disasters or exceptional occurrences”.
It is the first national aid scheme notified and approved by the Commission in the aviation sector, which is particularly affected by the current crisis.
It follows an earlier Commission decision of 11 March 2020 authorizing a Danish aid scheme for event organizers for events cancelled due to the outbreak.
The Commission has established that the COVID-19 outbreak qualifies as an exceptional occurrence, considering it is an extraordinary and unforeseeable event with a significant economic impact. Thus, Member States may be allowed to compensate specific companies or sectors for damages directly caused by the COVID-19. Before granting such aid, it must be notified to and formally authorised by the European Commission. Legal Flightpath – CMS Aviation also commented on the position of the UK Government in this Law-Now article.
The French aid scheme is aimed at supporting all airlines with an operating license in France. Companies without such a license will therefore not benefit from this measure but it should be noted that other Member States are in discussions with the Commission concerning their own support measures for their airlines.
The scheme provides for a deferral of payment of certain taxes (the civil aviation tax and the solidarity tax) in order to reduce the pressure on their cash flows. These taxes, which would normally be due between March and December 2020, will be postponed to after January 1st 2021 and be payable over a 24-months period.
The Commission found the French aid scheme compliant with all the conditions required to grant state aid (see our article of 19 March 2020 summarising and explaining the EU state aid conditions that must be fulfilled to notify a compensatory scheme for exceptional occurrence), as the scheme will compensate damage directly linked to the COVID-19 outbreak, will contribute to address the economic damage in France (in the airline sector) and is proportional to the said damage.
This Commission decision will certainly be followed by many others in the aviation sector, not only airlines but also other players in this industry, that have been similarly affected by this crisis, such as airport managers and ground handling companies.