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23. 02. 12. - 15:58

Funding of KLU under close scrutiny

Carinthia’s busiest aerodrome may soon have to do without any subsidies.

The European Commission (EC) announced yesterday (Weds) it started examining the funding policy of German provinces and the Austrian province of Carinthia. The authority’s competition regulation watchdogs want to find out whether airports which had not been subsidised by provincial governments and city halls suffered a disadvantage in comparison to their competitors which benefited from political institution’s financial support.

Klagenfurt Airport (KLU) is in sixth place in Austria as far as passenger figures are concerned. The aerodrome has received considerable sums by the provincial government, Klagenfurt city hall but also by the Republic of Austria over the years. Several budget carriers are operating at KLU which is challenged by the busier Graz Airport (GRZ) and some airports in bordering Slovenia and northern Italy.

Air Berlin, Germany’s leading low-cost airline, stopped offering connections to KLU in 2011. The decision to withdraw from Carinthia followed announcements of the carrier’s board to reform its flight schedule in a bid to slash costs and reduce debts. Air Berlin – which recently took over its Austrian partner FlyNiki in full – registered 35 million passengers last year.

The future of the loss-making aviation company, which is based in Berlin, seems secured after booming United Arab Emirates (UAE) flag carrier Etihad Airways decided in December to increase its share in Air Berlin from three per cent to 29.2 per cent. Air Berlin is currently headed by former Deutsche Bahn (DB) CEO Hartmut Mehdorn. What was initially considered as a short-term solution in crisis times might develop into a substantial decision. Mehdorn took over from Joachim Hunold last September.

KLU registered 375,000 passengers last year, down from 427,000 passengers in 2010. Vienna International Airport (VIA or VIE) is clearly ahead of all domestic rivals with over 21.1 million passengers in 2011 after almost 19.7 million the year before. The airport, which is situated a few kilometres south-east of the capital, managed to become one of the most important hubs in Europe for connections to destinations in Eastern Europe (EE). However, VIA is feeling the pressure as M. R. Stefanik Airport (BTS) near Bratislava, Slovakia, Prague Ruzyne International Airport (PRG) in the Czech Republic and Munich’s Franz Josef Strauss International Airport (MUC) are performing strongly too.

It is unclear whether Carinthia’s political bodies could be fined for inappropriately high subsidisation of KLU or whether the EC will only order them to stop funding the airport. The EC’s investigations could take months, according to juridical experts and aviation industry analysts.

KLU is located in an economically weak area – in contrast to VIA considering the thousands of companies with headquarters in the capital, the city’s many museums, hotels and shops. Carinthia is challenged by declining population figures as its youth relocate to Graz, Vienna and abroad where they benefit from better educational and professional offers.

Several Carinthian top-tier lawmakers are accused of being entangled in corruption and abuse of office scandals while the province’s government, which is formed by the Carinthian Freedom Party (FPK) and the People’s Party (ÖVP), struggles to reduce the per capita debt ratio. The region, which can trust in a solid winter tourism industry, sustained a decline of the gross regional product (GRP) by 4.7 per cent from 2008 to 2009 when companies across the country reduced their workforce levels as a reaction to a decline in assignments.

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