Former Prime Minister Alfred Sant said that within the European Commission there still does not exist sufficient awareness of how peripheral islands and regions are affected by the very fact of their isolation or small size, and that a policy that is based on the principles of unrestricted free trade denies their need for special treatment to remedy their isolation.
At present, Dr Sant said, the same question is arising in the area of European rail transport, where similar problems exist. Dr. Sant said that the operations of small airlines like AIRMALTA and Cyprus Airways do not affect the competitive situation in the EU. The fact that Cyprus Airways only carried 12% of air traffic towards Cyprus is such a small volume that it certainly could not have affected the competitive situation in the EU. Dr. Sant said that it was not sensible to let Cyprus Airways die and give the flight concessions it held to other companies which have wider interests than those of Cyprus. ‘Similar arguments apply, in my view, to Air Malta.’ said Dr. Sant. the Maltese Head of Delegation of the S&D at the European Parliament gave his comments after the European Commission told him in a written reply that even without Cyprus Airways, Cyprus should remain connected to many international hubs.
Dr Sant had asked the EC whether it should consider adopting more flexible methods when evaluating state aid and support to air and sea transport links comparable to those of Cyprus Airlines in the interests of ensuring that ongoing economic activity in peripheral island markets is maintained or even enhanced.
Replying to Dr Sant’s question, Margrethe Vestage EU Competition Commissioner said the Commission concluded its three formal investigations concerning the State aid provided to Cyprus Airways by issuing a final decision on 9 January 2015. The Commission said it found that the aid provided to Cyprus Airways gave the company an undue advantage over its competitors in breach of EU State aid rules for rescue and restructuring aid. Cyprus Airways therefore needs to pay back all incompatible aid received.
The EC said rescue and restructuring aid is particularly distortive and requires close scrutiny and strict conditionality. It is thus not appropriate for ensuring transport links to and from peripheral islands. Member States wishing to ensure operation of air transport routes considered vital for economic and social development may use the possibility to establish public service obligations meeting the requirements of the EU's air services regulation.
As regards the consequences of the negative decision for Cyprus' connectivity, the Commission said Cyprus Airways' share of air traffic to/from Cyprus has been relatively limited in recent years (around 12% in 2014). Several other airline companies operate to/from Cyprus. Therefore, even without Cyprus Airways, Cyprus should remain connected to many international hubs