State Aids in the Airline Sector: A Comparative Review of Iberia and Aer Lingus 

• Author: Dr Raj Chari
• Blue Paper #13 PDF (256 KB)

Blue Paper Abstract

The inevitable privatization of Aer Lingus poses many questions. Should state aids be given toward the company before its sale? To whom should the company be sold? How transparent, efficient and accountable should the policy-making process be? This paper seeks to contribute to the debate on these questions by offering a comparative analysis of the process of granting states aids to Iberia Airlines and Aer Lingus within the broad context of the privatisation of Iberia and the potential privatisation of Aer Lingus.

The paper examines the domestic-level actors involved in the granting of state aids to Iberia and Aer Lingus in the 1990s and the supranational actors involved in the approval of such aids. In particular, the paper analyses how the aids given to Iberia were linked to a broader strategy on the part of the state to sell the company and examines aspects of the privatisation process not hitherto elaborated in the literature. It offers a theoretical classification of these developments at both levels of European governance in terms of key theoretical models of policy-making and closes with a number of policy recommendations for future privatisation of Aer Lingus drawing on the experience of Iberia.

The paper recommends that the sale of Aer Lingus should proceed only with the involvement of solid financial and industrial partners; it considers the possibility of granting a state aid injection; and suggests that if efficiency is the main goal of the privatisation process, then the privatisation decision-making process should be centred on a number of specific key actors.

About the Author

Dr Raj Chari is a Lecturer in Political Science at Trinity College Dublin. He was a BESS Faculty Visiting Research Fellow at the Policy Institute during the academic year 2002-2003.

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