This dissertation deals with the complex issue of state aid given from a member state in the EU to an airline company, who is in competition with other airline companies in the EU. The purpose is to discover the socioeconomic consequences on the common market and infer what elements can make state aid to ailing airline companies in line with the common interest. After deducting some basic knowledge about the market structure in the airline business and after defining the relevant market, the thesis continues with an analysis of the fundamental concepts needed to set out a frame work for the discussion of the final results. It is found that the capital injection made by the Scandinavian states jointly in to the case study company, would be considered state aid in the meaning of the EU-Treaty, and that the case study company can be considered as an ailing airline company. It is also found that there is no definitive answer to when such state aids to ailing airline companies is in the common interest, but the answer relies on an estimation made by the Commission, where it has to make a tradeoff between the benefits and drawbacks from the state aid. Economically there are very few cases in which the consequences of state aids are positive for the community. Only when the deadweight loss is greater without state aid than it is with the state aid, then it is socioeconomically rational to allow the state aid. By using the Bertrand-Edgeworth model to describe the conduct in the marked, it is possible to show that on the Copenhagen-Stockholm route, it will not be advisable to give state aid because it generated a big deadweight loss. On the Copenhagen-London route the result found with the model was the opposite. Therefore there are no definitive bases for concluding that state aid to ailing airline companies always will fall short of, letting the free market power roam freely.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||153|