European Commission approves French scheme deferring payment by airlines of certain taxes to mitigate economic impact of coronavirus outbreak

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    The European Commission has found a French scheme deferring the payment by airlines of certain aeronautical taxes to be in line with EU State aid rules. The scheme aims at compensating airlines for part of the damage suffered due to the coronavirus outbreak, by temporarily reducing the pressure on their cash flows.

    Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The French scheme will partly compensate airlines for damages suffered due to the coronavirus outbreak. This is the first State aid measure notified to us by a Member State aiming to mitigate damages to the airline sector. Together with Member States we are working ensure that possible national support measures to tackle the outbreak of the virus can be put in place as quickly and effectively as possible, in line with EU rules.”

    France notified the Commission of its intention to set up a deferral payment scheme of certain aeronautical taxes to compensate damages suffered by airlines due to the coronavirus outbreak. The scheme will be accessible to airlines with an operating licence in France, and will offer them the possibility to defer the payment of certain taxes that would in principle be due between March and December 2020 to after 1 January 2021, and to pay the taxes over a period of up to 24 months. The aim of the scheme is to reduce the pressure on airlines’ cash flows.

    The Commission assessed the measure under article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors (in the form of schemes) for the damages directly caused by exceptional occurrences.

    The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the Member States to compensate for the damages linked to the outbreak are justified.

    The Commission found that the French aid scheme will compensate damages that are directly linked to the coronavirus outbreak. In this respect, the scheme will contribute to address the economic damage caused by the coronavirus in France. It also found that the measure is proportionate as the foreseen compensation does not exceed what is necessary to make good the damage.

    The Commission therefore concluded that the scheme is in line with EU State aid rules, in particular Article 107(2)(b) TFEU as it will contribute to mitigate the negative consequences of coronavirus for the airline sector in France, without unduly distorting competition in the Internal Market.