France’s plan to defer some aeronautical taxes for airlines as part of a coronavirus relief measure has been approved by the European Commission.
The plan, which the commission said is in line with EU state aid rules, is designed to compensate airlines for any damages incurred from the novel coronavirus outbreak by allowing them to temporarily free up their cash flows, according to a March 31 commission release.
Under the plan, all airlines with an operating license in France will have the option to defer payment of some taxes due between March and December 2020 to after January 1, 2021. Qualifying airlines will be allowed to pay those taxes over a period of no more than 24 months.
“This is the first State aid measure notified to us by a Member State aiming to mitigate damages to the airline sector. Together with Member States we are working [to] ensure that possible national support measures to tackle the outbreak of the virus can be put in place as quickly and effectively as possible, in line with EU rules,” Margrethe Vestager, commission executive vice president in charge of competition policy, said in the release.
The commission noted that article 107(2)(b) of the Treaty on the Functioning of the European Union allows it to approve state aid measures granted by member states to compensate specific companies or sectors for damages caused by exceptional circumstances. The commission said the coronavirus outbreak is an “extraordinary, unforeseeable event having a significant economic impact” and therefore justifies “exceptional interventions” from member states to mitigate ensuing damages. It said France’s plan is in line with state aid rules because the compensation does not exceed what airlines would need to rectify the economic damages from the coronavirus outbreak and retains competition in the internal market.
The commission recently supplemented the state aid rules with the adoption of a temporary framework for providing various types of aid to businesses and industries in the EU affected by the coronavirus crisis. The framework was adopted by the commission March 19 and will be in place through December unless the commission determines an extension is needed.
The state aid temporary framework allows member states to provide companies with direct grants, select tax advantages, and advance payments of up to €800,000 to address urgent liquidity needs. The commission is also allowing aid in the forms of guarantee schemes to support bank loans taken out by businesses; subsidized interest rates for private and public loans to companies; safeguards for banks; and short-term export credit insurance.