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The Balancing Test for Operating Aid for Airports under the Aviation Guidelines 2014

The Role of Economic and Financial Analysis and Evidence

Kristina Schattat, Natalia Budzynska


Keywords: Balancing Test, Compatibility Assessment, Economic and Financial Analysis, Operating Aid, Airport, Infrastructure, Aviation Guidelines--nbsp--2014, Notification, Business Plan, Operating Funding Gap, Cost of Capital, Catchment Area

The compatibility assessment of a State aid measure is about balancing its negative effects on trade and competition in the common market with its positive effects in terms of a contribution to the achievement of well-defined objectives of common interest. One key element for the Commission’s so-called ‘balancing test’ of operating aid under the 2014 Aviation Guidelines is an ex-ante business plan ensuring that the company managing the airport will be able to cover all operational costs as of 2024 at the latest. Another key element for the assessment is the analysis of the catchment area of concerned airports. This article discusses the role of financial and economic analysis and evidence in this balancing test. The Commission Decisions published so far on this type of aid have not included many technical details about the economic and financial analysis of the Commission’s assessment. Neither has the Commission published specific guidance for the Member States on these elements. This article aims to shed light on these aspects by not only reviewing the decisional practice of the Commission but by sharing the practical experience of the authors with helping Member States to receive the Commission’s approval for granting operating aid to regional airports. Keywords: Balancing Test; Compatibility Assessment; Economic and Financial Analysis; Operating Aid; Airport; Infrastructure; Aviation Guidelines 2014; Notification; Business Plan; Operating Funding Gap; Cost of Capital; Catchment Area.

Kristina Schattat is a Senior Consultant and Natalia Budzynska is a Manager at Ernst & Young GmbH WPG in Berlin. A summary of this paper was presented at the conference 'State Aid Control: Where Law and Economics Meet', organized by Prof. Dr. Caroline Buts and Lexxion Publisher, in cooperation with the Vrije Universiteit Brussel and E.CA Economics. Brussels, 5 October 2018.


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