Contradictions in the texts approved by the European Commission (EC) with proposals from the air carriers became a reason for scandal and disruption of a workshop to discuss the mechanisms for the distribution of state aid to airlines. The event took place on 22 March, at the Transport Department building and was attended by representatives of the Bulgarian Aviation Industry Association (BAIA) and the Association of Bulgarian Airlines (ABA). On behalf of the domestic air carriers Bulgaria Air, GullivAir, European Air Charter, Fly2Sky, Holiday Europe, Electra Airways, ALK, Holiday Europe and AvioStart took part.
We remind you that on 17 March the EC officially approved the state aid scheme for Bulgarian airlines, but it has not yet been officially published. According to preliminary information from the MLS, the EC has defined two types of support, in both cases the support will be in the form of direct grants. The first type of support provides support for the uncovered fixed costs of air carriers whose turnover between March 2020 and December 2021 has decreased by at least 30% compared to the same period in 2019. The second type of support consists of a limited amount of support for companies that have seen a decrease in turnover in 2020 of less than 30% compared to the same period in 2019. The problem with the second type of funding is that there are few companies that have taken steps towards expanding their fleet in early 2020, related to commitments and contracts entered into in 2019 (the process of negotiation, approval by the CAA and the actual entry of a new aircraft in the Air Operator Certificate of the air carriers can take more than a year).
The scheme will be open to air carriers of any size holding a Bulgarian passenger operating licence. The aim of the measure is to address the liquidity needs of these companies and help them to continue their operations during and after the pandemic.
The most serious bone of contention, however, remains the infamous text voted by the 46th National Assembly that the funds are to be made available for the repayment of public debts, bank debts and aircraft operating lease obligations currently due as of 31 December 2019. It was this text that caused the meeting to be interrupted, because for months BAIA representatives have been trying to get the text repealed, or at least revised so that the funds fulfil their original purpose in accordance with the will of the European
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The two associations agree that helping companies with current liabilities at the end of 2019 not only has nothing to do with the effect the coronavirus crisis has had on aviation, but also hurts many airlines that were in relatively good financial shape in the strong pre-wedding 2019 but have put all their available reserves into surviving the next 24 months. The airlines are adamant that they want the state support to only affect the crisis period, namely from 16 March 2020 onwards. In this regard, Fly2Sky commented:
“We are extremely disappointed. It is clear from the Council of Ministers (CoM) Decree prepared by the Ministry that the department has not complied with any of the criteria for the allocation of state aid that we have proposed. It is also very important to note that the allocations were voted in September 2021. At that time, we received assurances from the MLS that the scheme would be sent to the EC for approval immediately. However, it subsequently emerged that this only happened in early February 2022. We wonder what necessitated the wait?”
Air carriers are worried that as the start of the 2022 spring-summer season approaches, the distribution of state aid is being delayed. Although flight volumes are gradually recovering, this is happening at a very slow pace and these funds are life-saving for most domestic airlines. It also reminded that finances are needed to maintain the aircraft, cover possible penalties, insurance and other running costs, which are constantly increasing.
The final notification is yet to be published on the EC’s official website. However, BAIA is adamant that it will defend its rights to the last and will appeal for fair and transparent distribution of state funds.