The Canary Islands tourism board, Promotur Turismo Canarias, has officially released a new route incentive package that initially plans to establish six new routes from the Canary Islands to markets across Europe and North America. The formal launch of the project this month follows the European Commission ruling in April this year that the scheme aimed at providing start-up aid to airlines launching new routes to the Canary Islands is in line with EU state aid rules.
This is the first start-up aid scheme that the Commission has assessed under its new guidelines on state aid to airports and airlines which came into force on April 4, 2014. The guidelines have simplified the rules on public support granted by Member States for the start-up of new air transport routes. The scheme allows the granting of aid up to 50 per cent of the costs (so-called "aid intensity") for a maximum duration of three years, in line with the guidelines.
This scheme provides a good example of state aid which is useful for the development of remote regions while keeping distortions of competition to a minimum. After the original incentive period airlines are required to submit business plans to demonstrate how the new routes will become profitable after the aid has expired.
In the Canary Islands package the Commission concluded that the project will boost the economic development of the region, in line with EU objectives, without unduly distorting competition in the Single Market. “The scheme aims both to support the further development of the tourism sector in the Canary Islands, and to improve connections with this remote region. It is also expected to create jobs,” it said in a statement.
The scheme will allow the Canary Islands regional government to subsidise up to half of the airport charges paid by airlines for the operation of new routes to the islands for a period of up to three years. However, the new routes must be genuinely new routes to destinations not currently connected to the Canary Islands and the destinations do not necessarily have to be inside the EU.
“The scheme will allow the region to achieve a greater geographical diversification of its tourism sector, and rely less on its traditional markets,” the Commission added in its statement. The aid will be granted to airlines following a call for proposals with a total budget of up to €10 million until the end of 2017.
“During last two months we have been preparing public tenders for interesting new routes to the Canary Islands. Now is the time to call for proposals,” María Guardiet de Vera, directora de investigación y conectividad, Promotur Turismo Canarias told The HUB.
The first proposals cover six routes: Lanzarote – Lyon; Fuerteventura – Paris; Gran Canaria – Rome; La Palma – Leipzig; Tenerife – New York and La Gomera – London. The stand out route is the Transatlantic link to the US and the proposal calls for a weekly offering from the start of the summer 2015 schedule offering a minimum of 6,200 one-way seats during that and subsequent summer 2016 season to meet the terms of the aid package.
The others also call for at least a weekly offering with 9,360 annual one-way seats requested on Lanzarote – Lyon, Fuerteventura – Paris (Beauvais, Charles De Gaulle or Orly) and Gran Canaria – Rome (Ciampino or Fiumicino) from winter 2014/2015, while the La Palma – Leipzig incentive package requires 3,780 annual one-way seats from winter 2014/2015. The La Gomera – London tender, which calls for flights from either City, Gatwick, Luton or Stansted airports, will start from winter 2015/2016 and requires at least 5,200 annual one-way seats to meet the terms of the incentive package.
Together the six proposed new air services offer incentives of €659,182 to airlines opening the routes with the La Gomera – London tender providing the largest single incentive of €145,825. La Gomera is the second-smallest of the seven main islands of the Canary Islands but historically has had very little connectivity due to the limited facilities at its airport. Binter Canarias currently provide the only scheduled flight with a link to Tenerife with the 5,000ft runway a major issue for establishing international air links.
You can find out more about the incentive packages on offer here.