EU priorities: Airline bailouts. State Aid vs Emission reduction

France has proposed a euro 7bn bailout for Air France and the Netherlands a 2 – 4bn euro bailout for KLM.

The European Commission requires DG Competition to review whether these bailouts are acceptable in terms of EU state aid rules, which are the foundation of the EU regulatory regime for the Single Market (which was and is the raison d’etre of the EU).

In my previous pieces on the Airline industry and bailouts, I’ve argued that any bailouts of airlines need to be primarily assessed in terms of the transition to a zero-carbon economy not in terms of the existing global economy. For each country, this dilemma needs to be reviewed in deciding the financial support to be provided by governments.

The same dilemma applies to the European Commission, and EU as a whole. I think this poses the question as to which policy issue should decide the approval of any bailouts proposed by EU governments for the airlines? Should the primary focus be the roadmap to emission reduction driving this decision, or should it be the state aid rules which protect the purity of the Single Market.

As it struggled for relevance in the 14th and 15th centuries, the medieval papacy entertained disputes about how many angels could dance on a pin head. The EC and EU is in danger of focussing on single market dogma in the face of the climate crisis. Of looking backwards in focusing on the single market and state aid for airline bailouts. The bigger question is in terms of climate change, which policy on airline bailouts is appropriate? Surely emission reduction is more important?

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