Bristol Airport Limited v Welsh Ministers: The CAT's First Ruling on a Principles Assessment
On 7 April 2026, the Competition Appeal Tribunal (CAT) handed down its judgment in Bristol Airport Limited v Welsh Ministers [2026] CAT 30, dismissing Bristol Airport's challenge to a £205 million subsidy granted by the Welsh Ministers to Cardiff International Airport Limited (CIAL).
This is a significant decision for UK subsidy control law, representing the first CAT ruling on a subsidy that was expressly treated as such by the public authority and awarded following an assessment against the subsidy control principles (a "Principles Assessment") under the Subsidy Control Act 2022 (the "SCA 22"). The judgment therefore provides valuable insight into the standard that public authorities should be aiming for when preparing a Principles Assessment, and the degree of scrutiny that challengers can expect such assessments to receive.
Factual Background
The judgment relates to a decision made on 31 March 2025 to award a subsidy of £205 million from the Welsh Ministers to CIAL, a company owned by the Welsh Government. The stated purpose of the subsidy was to “address equity issues of social and economic disadvantage in South Wales by growing the economic activity associated with the airport and maximising the potential agglomeration benefits linked to the wider aviation and aerospace sectors in the region”.
The subsidy comprised two packages: Package 1 (£105.2 million) for non-passenger business development, and Package 2 (£100 million) for commercial passenger air route development, including incentive payments to airlines.
The funding was treated as a subsidy, and a Principles Assessment was carried out and referred to the Subsidy Advice Unit (“SAU”) of the Competition and Markets Authority. Following receipt of the SAU’s report on the subsidy, the Welsh Ministers commissioned further work from several advisers, which informed and were annexed to the updated Principles Assessment.
Bristol Airport challenged the decision on multiple grounds, arguing that the Welsh Ministers had not properly addressed CIAL's financial position, the subsidy control principles, or provisions relating to subsidies to air carriers. While the judgment addresses all these grounds, the most instructive aspect for public authorities is Ground 3 - Bristol's claim that the Welsh Ministers did not rationally conclude that the Subsidy complied with the principles.
Standard and Intensity of Review
As established in previous caselaw (namely in Weis v Greater Manchester Combined Authority [2025] CAT 41), the standard of review applied to decisions to award subsidies is defined by ordinary judicial review principles.
The CAT reaffirmed five key principles:
(i) ordinary judicial review principles apply;
(ii) the decision-maker must consider only relevant matters;
(iii) the decision-maker must take reasonable steps to acquaint themselves with relevant information;
(iv) a decision may be challenged as irrational on the basis that it is unreasonable; and
(v) a decision may be challenged as irrational on the basis of a demonstrable flaw in reasoning, such as reliance on irrelevant considerations, absence of evidence, or a serious logical or methodological error[1].
Importantly, the CAT emphasised that public authorities have a wider margin of discretion when making subsidy decisions. In particular, as regards questions of value for money,[2] and the balancing of public policy benefits against distortive impacts of subsidies.[3]
The Four-Step Framework for Principles Assessments
The Statutory Guidance on the Subsidy Control Regime requires that Principles Assessments are carried out in four steps. These steps, and the relevant principles, are:
- Step 1: Policy objective and alternative measures (Principles A and E)
- Step 2: Change in economic behaviour (Principles C and D)
- Step 3: Distortive effects and proportionality (Principles B and F)
- Step 4: Balancing exercise (Principle G)
Step 1: Policy Objective and Alternative Measures (Principles A and E)
Step 1 concerns whether the subsidy pursues a specific policy objective (Principle A) and whether the objective could be achieved through less distortive means (Principle E).
Bristol argued that the Welsh Ministers' true policy objective was not the stated equity rationale, but rather to preserve Cardiff Airport and to indirectly fund low-cost carriers of air routes. The CAT dismissed this: "Bristol's argument that the policy objective was something other than is set out in the Assessment is in our view unsustainable."[4] The Assessment stated the policy objective clearly, and the CAT found no reason to believe that it was anything other than as stated.
On alternative measures to subsidy, Bristol argued that options such as selling CIAL or providing a subsidised loan had been considered inadequately. The CAT held that the Welsh Ministers were not required to exhaust all other avenues, but simply to rationally form a view. On the basis of the content of the Principles Assessment, the alternatives were "considered and rejected for apparently plausible reasons".[5]
Both points demonstrate that the CAT will be reluctant to look beyond the terms of a Principles Assessment without good reason. If public authorities articulate the relevant considerations clearly within their Principles Assessment, this serves as a strong defence against challenges.
Step 2: Change in Economic Behaviour (Principle C)
Step 2 concerns whether the subsidy brings about a change in economic behaviour conducive to the policy objective (Principles C and D).
Bristol argued that the forecasted change in CIAL’s economic behaviour was unreliable - contending, among other things, that low-cost carrier activity would primarily serve outbound routes, that CIAL had historically failed to sustain new routes, and that passenger forecasts provided by CIAL lacked detail. The CAT was not persuaded that any of these amounted to the assessment being irrational.
Crucially, the CAT gave considerable weight to the fact that the Welsh Ministers had commissioned and relied upon external advice from Grant Thornton and Altair: "The Respondent commissioned advice from Altair,… The Respondent considered and relied on this in reaching the Decision. In those circumstances, it seems very difficult for Bristol to mount an argument that the Respondent has acted irrationally."[6] This provides a clear lesson: public authorities should seriously consider commissioning expert advice when preparing Principles Assessments, particularly on matters of economic analysis.
Step 3: Distortive Effects and Proportionality (Principles B and F)
Step 3 concerns proportionality (Principle B) and the minimisation of negative effects on competition (Principle F).
Bristol argued that the subsidy was disproportionate and that its distortive impact on Bristol Airport had not been properly considered. The CAT held that proportionality is a policy judgment attracting a wide margin of discretion. On distortive effects, the Assessment contained a detailed analysis of Bristol as a competitor, and the CAT concluded: "It is impossible to say that the Respondent has failed to address the negative impacts on Bristol in a sensible and rational way. It has done so in quite some detail."[7]
Step 4: The Balancing Exercise (Principle G)
Step 4 is the balancing exercise (Principle G), requiring that a subsidy's beneficial effects in terms of the policy objective outweigh its negative effects on competition, trade and investment. In a Principles Assessment, Step 4 should not contain new information, but should reflect the authority’s evaluation of the information outlined in Steps 1-3.
This approach was confirmed in this judgment, where the CAT dismissed Bristol's arguments on Principle G as essentially a repeat of those made on earlier steps. The CAT described Step 4 as “an inherently judgemental exercise which involves a multifactorial assessment, including many uncertain elements”. In that context, it is difficult to demonstrate that a decision is sufficiently unreasonable that it meets the threshold for irrationality. Bristol's criticisms demonstrated "nothing more than disagreement with the conclusions and (in some cases) the identification of fairly trivial factual points". [8]
Other Notable Points: Ailing or Insolvent Enterprises, Subsidies for Air Carriers
The judgment also clarifies the interpretation of some other provisions of the SCA 22.
Sections 19 and 20 relate to subsidies to ailing or insolvent enterprises. Bristol argued that these sections provide an exclusive regime for any subsidy to such an enterprise. The CAT rejected this, holding that the two conditions - (1) the purpose of the subsidy being rescue or restructuring, and (2) the enterprise being ailing or insolvent - are cumulative; both must be met for sections 19 and 20 to apply. A subsidy may therefore lawfully be granted to an ailing or insolvent enterprise through other routes in the SCA 22 where its purpose is not rescue or restructuring.
Notably, the CAT acknowledged that this differs from the position under EU State aid law, where any aid to an "undertaking in difficulty" must comply with the Rescuing and Restructuring Guidelines, but held that there is "no presumption that the approach of the EU to State aid will be exactly replicated in the Act."[9]
Section 28 relates to subsidies for air carriers for the operation of routes. In this case, Bristol argued that Package 2 of the subsidy would indirectly subsidise air carriers, and was in breach of section 28. The Welsh Ministers’ position was that there was no such onward subsidy: the grant agreement with CIAL required that any contracts with air carriers would comply with the commercial market operator (CMO) principle so would not be subsidies. The CAT agreed with the Welsh Ministers. Section 28 applies by reference to the identity of the beneficiary – in this case, the only beneficiary was CIAL, not any air carriers.
Conclusion
The judgment provides some reassurance to public authorities. Challengers to subsidy decisions made on the basis of a Principles Assessment must do more than simply disagree with the decision or its reasoning - they must challenge it on judicial review grounds, demonstrating that the decision is irrational or otherwise unlawful.
The CAT summarised why Bristol's challenge failed: "For the most part, the challenges fail simply because they do not in substance illustrate any irrationality but rather illustrate a difference of opinion about the weight to be given to matters which were obviously the subject of consideration by the Respondent. That is not a proper basis on which to mount a challenge in judicial review proceedings."[10]
Companies considering challenging subsidy awards should also take note. A successful challenge requires more than "a difference of opinion" about the merits of a decision. If a Principles Assessment clearly articulates the policy objective, considers alternative options, addresses potential distortive effects, and relies on expert advice where appropriate, challengers may face an uphill battle. For public authorities, the message is equally clear: a well-reasoned, comprehensive Principles Assessment, supported by expert advice on technical matters, provides a robust defence against challenge.
[1] Para. 60
[2] Para. 242
[3] Para. 253
[4] Para. 199
[5] Para. 213
[6] Para. 230
[7] Para. 247
[8] Para. 253
[9] Para. 158
[10] Para. 198
