The Effect of COVID-Related EU State Aid on the Level Playing Field for Airlines

Luis Martín-Domingo and Juan Carlos Martín
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Luis Martín-Domingo: Faculty of Aviation, Ozyegin University, 34794 Istanbul, Turkey
Juan Carlos Martín: Institute of Tourism and Sustainable Economic Development, Universidad de Las Palmas de Gran Canaria, 35017 Las Palmas de Gran Canaria, Spain

Sustainability, 2022, vol. 14, issue 4, 1-14

Abstract: State aid for airlines around the world has been a common practice during the COVID-19 pandemic, as the air transport was one of the sectors most heavily affected. This study analyzes 27 cases of state aid to EU airlines between 1 March 2020 and 30 September 2021 with a total amount of €31 billion. The information was obtained from the area of competition of the European Commission (EC), which is the entity responsible for final approval. Results indicate that the largest EU economies (Germany and France), as well as some Northern European countries, are supporting national airlines more extensively. Airlines with a weaker financial performance before the pandemic were more likely to receive state aid. Government involvement in the airline industry during the recent health crisis will have an important influence on the level playing field (LPF) for airlines. It is still unclear how this will evolve in the future, but it seems that some airlines now resemble the public flag companies of the past.

Keywords: COVID-19; EU state aids; airlines; airline ownership; competition (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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