The changes being promoted by the European Commission in the aviation sector do not affect Cyprus’s existing incentive scheme, according to the Commissioner for State Aid, Stella Michaelidou.
“The existing incentive scheme in Cyprus for the aviation sector is governed by different state aid rules,” she explained in statements, adding that “the incentives granted were not based on the EU guidelines that are currently being revised.”
She clarified that the EU’s aim is not to abolish state aid, but to introduce modifications in combination with adjustments to the general block exemption regulations for airport aid, as the aviation sector becomes more liberalised, with the broader objective of reducing distortions in competition.
Regarding the proposed changes, she noted that the relevant authorities have already been informed. The 2014 airport guidelines are set to expire in the first quarter of 2027, and consultations are already under way.
“Proposals from the competent authority are expected by 11 June. Depending on the progress of consultations, if any outcome affects Cyprus, the relevant authority will take the necessary decision. The EU may also decide to hold teleconferences so that member states’ views can be heard before finalising the regulations,” she added.
The Commissioner also assured that she remains in close contact with the relevant authorities, providing guidance to ensure the interests of the Republic of Cyprus are safeguarded and that compliance with EU regulations is maintained.
In essence, she noted, the changes mainly concern investment and operating aid, with passenger traffic as a key parameter.
The changes
Under the proposed changes, operating aid will be permitted for airports with fewer than one million passengers per year. Airports with higher traffic levels are expected to cover their own operational costs.
The EU also proposes block exemption rules for operating aid at airports handling up to 500,000 passengers annually and considers it justified to allow operating aid for airports with up to one million passengers for a transitional five‑year period.
At the same time, investment aid will be allowed for airports with up to three million passengers per year, compared to up to five million under the 2014 guidelines, and will be subject to environmental conditions where new capacity is created.
The proposals also include a revision and simplification of the assessment of potentially distortive effects of state aid on nearby airports.
Startup aid for the launch of new routes will no longer be permitted. Such aid was rarely used under the 2014 aviation guidelines.
Karousos raises concerns
It is noted that DISY vice‑president Yiannis Karousos, in a written statement, warned that the proposed changes could effectively lead to the termination of state aid in aviation, including incentive schemes for developing new air connections and supporting airports.
He said the government must clarify whether it has submitted its position, what interventions have been made in Brussels, whether exemptions have been sought for island states such as Cyprus and whether there is a strategy to safeguard support for new routes.
“Cyprus cannot passively observe European decisions that directly affect the future of its tourism and economy. If the ability to provide incentives for new air connections is lost, the consequences will be serious – fewer flight options, reduced access to new markets, loss of competitiveness and, ultimately, a blow to tourism development,” he stressed.
