State aid: Commission opens investigation into public support for Air Nostrum’s fleet renewal in Spain

The European Commission has opened an in-depth investigation to assess whether the plan by the Spanish region of Valencia to grant €9 million of public support to regional airline Air Nostrum for the renewal of its fleet is in line with EU State aid rules. The measures are aimed at supporting the renewal of the airline’s fleet through the acquisition of additional more environmentally friendly aircraft. The 2014 General Block Exemption Regulation (“GBER”) and the Guidelines on State aid for environmental protection and energy enable Member States to support measures that have a positive impact on the environment. In order to be in line with EU State aid rules, however, these measures need to fulfil certain conditions to ensure that they have the intended positive effect on the environment. At this stage, the Commission has doubts that the total intended aid support of €9 million to Air Nostrum falls within the GBER and complies with the Guidelines on State aid for environmental protection and energy. In particular: (i) the Commission has doubts on whether the aid has an “incentive effect”; (ii) moreover, the GBER only applies to measures to support investments by the beneficiary airline. The Commission has doubts at this stage that the type of leasing used by Air Nostrum meets this condition. The Commission will now investigate further to determine whether or not these initial concerns are confirmed. The opening of an in-depth investigation provides all interested parties with an opportunity to comment on the measure. It does not prejudge in any way the outcome of the investigation.