By Helen Massy-Beresford
The European Commission (EC) has signed off on a French state aid plan for Air France-KLM that will force Air France to cut most domestic short-haul routes within France.
The EC approved the French state’s €7 billion ($7.7 billion) funding package to help Air France-KLM withstand the COVID-19 crisis, saying it complies with EU state aid rules. The EC praised France’s move to link the funding to environmental targets—CO2 reductions that will be achieved by eliminating most domestic flights of 1.25 hours or less.
France, which owns 14.3% of the airline group, has pledged state guarantees and a shareholder loan totaling €7 billion to help Air France-KLM weather the coronavirus crisis that has brought the aviation industry to a virtual standstill. The Netherlands has also promised €2-4 billion in funding for the group, in which it holds a 14% stake.
EC executive VP-competition policy Margrethe Vestager said: “This €7 billion French guarantee and shareholder loan will provide Air France with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak.” She also noted that the aviation sector is important in terms of jobs and connectivity.
“France has also announced plans for certain green policy choices as regards Air France. Good. Member States are free to design measures in line with their policy objectives and EU rules,” Vestager said.
France has said Air France must make environmental efforts in return for the financing and that it wants the carrier to become the world’s most environmentally respectful airline. French economy minister Bruno Le Maire said April 30 that Air France must drastically reduce its emissions, partly by cutting domestic flights, saying its support for the airline was “not a blank check.”
France wants Air France to cut its CO2 emissions per passenger kilometer by 50% by 2030 compared with 2005 levels and to reduce the volume of its CO2 emissions from flights within metropolitan France by 50% by the end of 2024, Le Maire said.
Photo credit: Nigel Howarth / Aviation Week