United Ends Belfast Flights After Subsidy Falls Through
Joe Cortez November 07, 2016
Flights to Northern Ireland will end in January 2017 on news of EU blocking airline incentive package
United Airlines will remove a destination from their international map after a promised subsidy to keep the flight alive was removed by the European Commission. BBC News reports that the Chicago-based carrier will end direct flights to Northern Ireland’s Belfast International Airport (BFS) from Newark Liberty International Airport (EWR) on January 9, 2017.
According to a statement made by the airline to BBC News, the flight is getting cancelled after poor financial performance. However, lawmakers in Northern Ireland claim the flight is being cancelled after the European Commission vetoed an $11.2 million subsidy package to United for operating the flight. Financial Times reports that the subsidy to United was a joint operation between BFS and Northern Ireland Executive, the administrative wing of the Northern Ireland government. The Executive would contribute two-thirds of the subsidy package, while the airport would cover the remaining third.
Commissioners at the European Commission state the attempt to subsidize a direct flight from the United States to Northern Ireland violated European Union laws. In situations where multiple airlines fly into an airport, offering a subsidy to one airline may be a violation of competition laws.
“The commission received a complaint alleging that the measure was in breach of EU rules and looked into the matter,” the European Commission said in a statement to Financial Times. “Today’s announcement [by United Airlines] allows the commission to close the case.”
Lawmakers in Northern Ireland and officers for the airport claimed the ending of the route was a political move against members of the Democratic Unionist party. Those who supported the flight claim that the loss of a dedicated United flight will cost the area jobs and business opportunities.
“This is a vital link for business and losing it will be a body blow to Executive Ministers who use it to promote Northern Ireland to would-be investors from the United States,” a spokesperson for BFS told The Irish News. “The adverse impact is all the greater, coming as it does ahead of the crucial decision to make Northern Ireland more competitive with reduced Corporation Tax designed to stimulate inward investment.”
When the flight ends, BEF will have no direct flights coming from the United States. United said that they will contact flyers with plans to fly direct to BEF to help rebook their flights.
[Photo: iStock]
It is not uncommon for airlines to receive subsidies from local government in the target city wishing to stimulate service. What the ME carriers receive are not really comparable to this. A better comparison would be if the US Government was outright funding US airlines to keep them operating. If this was the case, there would not be any of the many chapter 7 bankruptcies over the years. There may not have even been deregulation in 1978. And even the money they received in the wake of 9/11 was a loan and it was all paid back, with interest.
So UA is OK with operating a flight if they are given a subsidy but not OK for ME carriers to allegedly do so?