The impact of EU rules on state aid in the airline sector : the case of Cyprus and Malta

Abstract

The importance of aviation and airlines to island states is quite significant, due to the fact that air transport is the main source of connectivity with the rest of the world. In the competitive world we live in today, airlines have to contend with each other to attract passengers to make use of their services, due to the fact that the market has grown substantially, and the customers can benefit from a vast choice.

Air travel has developed rapidly, which could lead to the impairment of some airlines. This study will portray how two island Member States had to provide their national flag carriers with financial aid, with the intention of making them a viable option again. This study will show how the European Union imposes strict rules on governmental intervention and how a government has to go through a whole process to be able to provide aid to the respective firm or company. Moreover, this study will show how State aid can either contribute to a successful transition, from a firm in difficulty to become a competitive player, or to further deterioration.