No. 32




Purposefulness of European State Aid Rules from the Point of View of Periphery Countries: Case Study of Estonian Air

14 December 2015


RiTo No. 32, 2015

The main purpose of the European Union state aid regulations is to guarantee free and undistorted competition, therefore granting of state aid is usually disapproved. Only a few exceptions are allowed, which should ensure greater common interest and security.

Unfortunately, location in the periphery or low population density do not belong among such exceptions. Using state support to help less developed regions catch up with others is allowed in certain cases, but it has never had an important role in the European Commission’s decisions on aviation.

Although in terms of the interests of the European Union as a whole, competition policy and the state aid regulation that forms part of it have been implemented with success, the problems accompanying it have become the burden of small and peripheral countries. If we want the citizens of these countries to continue supporting integration and common regulations, the economic and legislative bases of state aid should be thoroughly considered, taking into account the different environments of countries. The economic gains of some countries should not come at the expense of others, and the governments of Member States should be motivated for cooperation, and not for confrontation, in their relations with the European Commission. The traditional role of the state to provide its citizens the services the market does not offer should also be considered. At the same time, the inclination of politicians to seek popularity among the voters by generously distributing state resources should not be forgotten either.

In practice, the harsh and uniform restrictions have most of all inflenced the aviation sector, in particular the national airlines located in the periphery of the European Union. Certainly the case of Estonian Air will provide important matter for analysis in the issues mentioned above. However, the problems in the aviation sector point at a wider problem of the competitiveness of periphery countries, where it has been possible to sustainably provide certain socially necessary services that are important for the integrated development of economy only with the support of the state. It is necessary to search for solutions for how the periphery countries could get the service they need without distorting the general situation of competitiveness shaped by large companies. Distortion of the market and wasting of taxpayers’ money should be avoided, but at the same time it is necessary to maintain strategic connections.

Full article in Estonian