The EU Commission issues new guidelines on airports and airlines bringing about improvements, but also adopting a too permissive approach in certain aspects

The New Guidelines on State Aid to Airports and Airlines: Problematic Issues (part 2)* Last week I reviewed the main provisions of the new Guidelines on State Aid to Airports and Airlines. This week I focus on three issues which are either not well explained or too ambiguous, leaving too much room for creative interpretation. [1] Investment funding gap The new Guidelines, like the other new rules, stress that aid must have an incentive effect and be proportional. For both investment and operating aid to airports, the incentive effect can be demonstrated in two ways: either on the basis of a counterfactual scenario that shows what would happen without the aid, or by demonstrating a “funding gap”. A funding gap is the difference between the discounted costs [investment and operating]