As ever, the significant part of the story behind United Airlines’ decision to end the Belfast-New York route – despite an “irregular” three year NI Executive £9 million rescue deal – lies, not in the headline, but in the details.
The first point to make, given the positioning of some parties on the UK’s withdrawal from the EU, is that the airline’s decision comes after the European Commission blocked the rescue package under state aid rules. AS the BBC report notes
…Belfast International Airport said the flight is going because the European Commission blocked the funding package on state aid grounds.
The airport’s managing director Graham Keddie tweeted that he was “absolutely spitting” about the decision which he blamed on “useless, faceless EU bureaucrats”.
In a statement he added that the decision would be a “body blow” to Northern Ireland Executive ministers “who use it to promote Northern Ireland to would-be investors from the United States”.
“To block a support package for an airline that delivers direct access to the United States is almost beyond comprehension,” Mr Keddie said.
“This is a bad day for the executive and a bad day for Northern Ireland, which is still finding its feet after a generation lost to conflict. The United service was well supported and only recently carried its millionth passenger.
“We have worked tirelessly to safeguard the service, but Brussels took a different view, believing the support package gave United an unfair advantage over services from elsewhere.
“The EU decision-making process is abysmal, biased and unfair and has resulted in the loss of this service.
But this shouldn’t have been a surprise. Newton Emerson was quick to point out the potential problem back on 3 September in the Irish News
The European Commission’s tax ruling against Apple and the Irish government could have major long-term implications for Northern Ireland but it raises one interesting question right away. Would Stormont’s £3 million a year subsidy to the New York air route pass a ‘state aid’ inspection by Brussels? Europe’s state aid rules for aviation were rationalised in 2014 into a single set of guidelines, which only permit an airline to be subsidised for up to three years to develop a new route. Stormont appears to have complied with the first requirement – it has only budgeted for three years of payments to Continental. However, the New York route is not new and the guidelines are unusually clear that this disqualifies any grant. Is the executive hoping Brexit makes this academic before Europe notices? [added emphasis]
Indeed. Whether they were hoping for a quick Brexit or not, the NI Executive’s decision to go ahead with the £9 million grant was certainly irregular. As the NI Auditor General told the Assembly’s Public Accounts Committee in September. From a BBC report on 15 September
Fresh details were provided by the NI Auditor General, Kieran Donnelly, when he appeared in front of the Public Accounts Committee on Wednesday.
Mr Donnelly said there was no precedent for the bail-out which could now be scrutinised by Europe under state-aid rules.
United Airlines – which recently received its first payment – will not permit any monitoring of the financial assistance of $4m (£3m) a year.
The NI Auditor General said Economy minister Simon Hamilton issued a ministerial direction for the bail-out, which was endorsed by First Minister Arlene Foster and Deputy First Minister Martin McGuinness, “under emergency procedure.”
Mr Donnelly said the direction was made after the department’s permanent secretary raised issues about value for money and irregularity.
Mr Donnelly said he was monitoring the situation.
The PAC is to write to the Executive Office to establish “the political rationale” for the aid decision. [added emphasis]
According to the NI Economy Minister, the DUP’s Simon Hamilton in the previous BBC report
Economy Minister Simon Hamilton said the executive did the right thing by trying to save the route.
“There was a risk to the flight and we stepped in to save it,” Mr Hamilton said.
“Faced with the same circumstances again, I would make the same decisions. All public money has been recouped with interest and we retained the route for a longer period.”
He said it was “deeply regrettable that unelected bureaucrats in Brussels have effectively scuppered this important flight for Northern Ireland”.
[Where’s Marlene? – Ed] Perhaps they are unavailable for comment…
And, from the same BBC report, a pertinent question
Ulster Unionist economy spokesman Steve Aiken said the withdrawal of the service was an “international embarrassment”.
“We need to know what checks were made with the European Union over state aid and who took the decision that it was not an issue?” he said.
[Or were they hoping that Brexit made it academic before Europe noticed? – Ed] Indeed.