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So the news comes in that the German government may have illegally subsidised Leipzig-Halle airport. The European Commission is investigating whether loans and capital injections used to finance new infrastructure at DHL’s hub are in line with EU state aid rules. The Commission has expressed concern that the finance may give the airport an unfair advantage over its competitors.
And it won’t have done much harm to DHL, or Lufthansa, as co-owner of AeroLogic, which also enjoys the airport’s facilities.
The Middle Eastern carriers must be silently – or, these days as they get increasingly vocal, (and a lot more fun) not-so-silently – laughing. Who is enjoying protectionism and state support now, in a rather public way?
Germany says that new airport infrastructure was not economically viable and is needed for safety and security. If no private investor would come forward, it argued, it is not economic activity.
The Commission is not so sure. And with DHL’s hub there, it does seem questionable whether the airport, which last year saw 663,000 tonnes of cargo, and this year gained a 17% rise in volumes the first two months, should enjoy 100% public funding for its investments. It’s not as if its major customers are unable to help – and they will inevitably benefit.
But, from the perspective of an economically stricken and increasingly impoverished land, (where there is neither hope nor glory), it’s hard not to feel some envy for a government supporting its industries.
It may be unfair in a globalised world, but look at Lufthansa and DHL (and I’m not saying they are supported by the state in any way). They are two very successful companies. They have tentacles covering the world, they have taken over numerous businesses in much of Europe. Why wouldn’t the German government want to boost its own industries? Is it so wrong to help domestic companies to flourish?
The mantra in Europe and the US is that state subsidies are bad. But if you look eastwards towards Asia, where many industries enjoy state support and economies are growing, it’s the modus operandi. And the US has been known to help its industries in times of strife.
It is worth asking whether Europe, whose carriers may not survive the influx of more efficient, younger airlines from elsewhere in the world, should in fact look to aid, rather than penalise, its industries.
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