Air France Airport Slots Emerge as Flashpoint in State Aid Talks
(Bloomberg) -- France and the Netherlands appear to be readying for a clash with the European Commission over a fresh aid package to debt-laden carrier Air France-KLM.
Dutch Finance Minister Wopke Hoekstra warned lawmakers on Wednesday he couldn’t rule out the possibility that the airline will be asked by European regulators to give up airport slots in exchange for approval for more state aid.
His comments to a parliamentary committee followed stronger wording from his French counterpart, Bruno Le Maire, who suggested the country would oppose any requirement for Air France to relinquish slots at Paris-Orly airport.
“The point is not to weaken Air France, it’s to strengthen Air France,” Le Maire told France Info TV Tuesday. “When we took a decision to support Air France at the beginning, it’s not to give it up in the end.”
A tussle over landing rights at Orly would come amid crucial talks between France and the Netherlands, which together hold a combined 28% of the company, and are considering more financial help to the airline. The states have already provided a 10.4 billion-euro lifeline in the form of direct loans and guarantees to keep the carrier afloat during the pandemic. Air France-KLM has said it needs fresh equity.
Read more: Air France-KLM Targets May Deadline for New Equity Deal
French newspaper La Tribune first reported on the possible quid pro quo on the state aid, saying the number of slots Air France would be asked to give up by the EU would be comparable to those rival Deutsche Lufthansa had to give up in Germany for its own bailout. A spokesman for the French finance ministry declined to comment.
“I’ll keep our discussions with the European Commission confidential because I don’t want to create troubles on the market for the national airline,” Le Maire said in the radio interview. The commission “knows we are committed to supporting Air France.”
Giving up slots at Orly would come as a setback to Air France because the airport is closer to the city center than Paris-Charles de Gaulle and is part of the carrier’s strategy to expand through its low-cost arm Transavia.
While Air France-KLM is considered a strategic asset by the French government, which has vowed to allocate more public funds to help it survive, a new aid package is still under discussion with the Dutch government. Elections in the Netherlands next month have made the talks more politically charged.
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