Scottish Local Authority Aid for Airports (SC10300)

Legal Context

In terms of Section 20 of the Local Government in Scotland Act 2003 (http://www.opsi.gov.uk/legislation/scotland/acts2003/asp_20030001_en_1), Scottish Local Authorities may provide aid for the development of airports.

Objective of the Scheme

The objective of the scheme is to permit Scottish local authorities to support the development of airports.

Eligible Costs, Aid Intensities and Limits

The airport shall be open to all potential users. In the case of physical limitation of capacity, the allocation shall take place on the basis of pertinent, objective, transparent and non-discriminatory criteria.

The aid shall not be granted for the relocation of existing airports or for the creation of a new passenger airport, including the conversion of an existing airfield into a passenger airport.

Investment aid shall not be granted to an airport located within 100 kilometres or 60 minutes travelling time by car, bus, train or high-speed train from an existing airport from which scheduled air services.  This shall not apply where the investment aid is granted to an airport situated within 100 kilometres from existing airports from which scheduled air services, are operated, provided the route between each of these other existing airports and the airport receiving the aid necessarily involves either a total travelling time by maritime transportation of at least 90 minutes or air transportation.

The investment aid shall not be granted to airports with average annual passenger traffic of more than three million passengers during the two financial years preceding the year in which aid is actually granted. The investment aid shall not be expected to result in the airport increasing its average annual traffic to above three million passengers within two financial years following the granting of the aid.

The aid shall not be granted to airports with average annual freight traffic of more than 200,000 tonnes during the two financial years preceding the year in which aid is actually granted. The aid shall not be expected to result in the airport increasing its average annual freight traffic to above 200,000 tonnes within two financial years following the granting of the aid

The eligible costs shall be the costs relating to the investments in airport infrastructure, including planning costs.

The investment aid amount shall not exceed the difference between the eligible costs and the operating profit of the investment. The operating profit shall be deducted from the eligible costs ex ante, on the basis of reasonable projections, or through a claw-back mechanism.

The aid intensity for investment aid amount shall not exceed:

(a) 50 % of eligible costs for airports with an average annual passenger traffic of one to three million passengers during the two financial years preceding the year in which aid is actually granted;

(b) 75 % of the eligible costs for airports with average annual passenger traffic of up to one million passengers during the two financial years preceding the year in which aid is actually granted.

Operating aid shall not be granted to airports with average annual passenger traffic of more than 200,000 passengers during the two financial years preceding the year in which aid is actually granted.

Operating aid shall not be paid out in respect of any calendar year during which the annual passenger traffic of the airport exceeds 200,000 passengers.

The amount of operating aid shall not exceed what is necessary to cover the operating losses and a reasonable profit over the relevant period. The aid shall be granted either in the form of periodic instalments fixed ex ante, which shall not be increased during the period for which the aid is granted, or in the form of amounts defined ex post based on the observed operating losses.

The granting of the operating aid shall not be made conditional upon the conclusion of arrangements with specific airlines relating to airport charges, marketing payments or other financial aspects of the airlines' operations at the airport concerned.

Definitions

“Airport” means an entity or group of entities performing the economic activity of providing airport services to airlines

“Airport services” means services provided to airlines by an airport or any of its subsidiaries, to ensure the handling of aircraft, from landing to take-off, and of passengers and freight, so as to enable airlines to provide air transport services, including the provision of ground handling services and the provision of centralised ground handling infrastructure

“Airport infrastructure” means infrastructure and equipment for the provision of airport services by the airport to airlines and the various service providers, including runways, terminals, aprons, taxiways, centralised ground handling infrastructure and any other facilities that directly support the airport services, excluding infrastructure and equipment which is primarily necessary for pursuing non- aeronautical activities

“Non-aeronautical activities” means commercial services to airlines or other users of the airport, including ancillary services to passengers, freight forwarders or other service providers, renting out of offices and shops, car parking and hotels.

Budget

The estimated budget of the scheme is £25m over 5 years.

Duration

The scheme will operate from 1st January 2021 to 31st December 2025.

(ML / June 2021)