The European Commission has set out a timeline for revising its state aid guidelines for airlines. The move follows concerns raised by Cyprus after philenews reported on a possible cut to public funding for carriers.
Philenews revealed that the Commission is considering restricting state aid to airlines, prompting concern in Nicosia over the potential impact on the island’s air connectivity. The Ministry of Transport responded immediately, saying the country’s connectivity remained strong and secure.
The Commission said the public consultation on the draft revised guidelines closed on June 11 and it was currently reviewing the feedback received. Adoption of the revised guidelines was scheduled for the first quarter of 2027, it said.
A Commission spokesperson said start-up aid for airlines had been used “minimally” since 2014, and a supporting Commission study found that airlines had launched many new routes since then without relying on it. The Commission is examining whether start-up aid could still serve as an effective tool for improving connectivity to EU regions, including remote areas and islands, the spokesperson said.
In today’s fully liberalised aviation market, airlines should “bear their own operating costs and take on the risk of opening new, potentially profitable routes,” the spokesperson said. For routes critical to public service obligations (PSOs), however, state aid rules already provide flexibility to prevent disruption to connections and allow for emergency public service arrangements to maintain them, the spokesperson added. The Commission said it paid particular attention to the connectivity needs of islands within the EU.
What Commission sources say about Cyprus
Beyond the official statement, Commission sources speaking on background gave further details specific to Cyprus, partly easing concerns over any immediate impact on the island’s air links.
Cyprus has not used the start-up aid tool since the current aviation guidelines were introduced in 2014, according to the Commission. There have been no regular state aid decisions concerning Larnaca and Paphos airports, the sources said, with the sole exception of the emergency support measures approved to address the impact of the Covid-19 pandemic.
Cyprus has already successfully established a Public Service Obligation (PSO) regime for the Larnaca-Brussels-Larnaca route, which the Commission described as vital. The establishment of such routes is governed by EU Regulation 1008/2008, the sources said, and this option would remain fully available after the adoption of the new guidelines in 2027.
Cyprus submits six proposals
The issue brought to light by philenews concerns the Commission’s effort to limit the flow of public money to airlines, requiring carriers to bear the full cost of their operations. For Cyprus, however, air connectivity is not a luxury but the functional equivalent of the road and rail networks linking the rest of Europe.
The Republic of Cyprus took part in the public consultation ahead of the June 11 deadline, submitting six specific proposals through the Ministry of Transport aimed at protecting its interests. The Ministry of Transport said the existing incentives granted in cooperation with Hermes, the company managing the airports, were based on purely commercial market terms as a private investment, and therefore did not constitute state aid and were not threatened by the new European framework.
Cyprus’s six proposals are as follows.
The government wants Larnaca and Paphos airports treated as territorial cohesion infrastructure, arguing that the Commission already recognises Cyprus as a “remote region” and should state more clearly that its airports serve the same cohesion function as motorways in other countries, so they can access state support when genuinely needed.
Cyprus is proposing that incentives for new routes be preserved for island states in a targeted way, covering winter routes and new tourism markets, with the aim of increasing off-season flights and reducing dependence on specific markets.
The government is seeking fair treatment based on the country’s size, requesting that a “passengers per resident” criterion be added, arguing that an airport handling nine million passengers in a country of 900,000 residents cannot be assessed the same way as an airport in a major European city.
Cyprus wants more time to adjust to green targets, requesting that the transition period for aid to island states be extended to 2035 to allow airports to adapt to new environmental requirements such as sustainable fuels and electrification, without a sharp rise in costs being passed on to passengers.
The government is asking that no artificial “proximity” be assumed between Cypriot airports and those of other countries. It argues that since Cyprus has no road or rail link to another member state, rules examining competition between neighbouring airports make no sense in its case, and it is seeking an explicit exemption.
Cyprus is also asking for support for flights for Cypriot residents, requesting that it be made easier to subsidise tickets for students, workers and professionals travelling to and from Europe, aiming to reduce costs for those who must travel regularly.
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