Serbia denies Adria state aid claims
The Serbian government has rejected a complaint lodged against Air Serbia by Adria Airways over what the Slovenian carrier alleges are unfair state aid practices. The Serbian Prime Minister, Ana Brnabić, said on Tuesday, "Serbia fully respects the [European Union] Stabilisation and Association Agreement which forbids state aid. If someone wants to question that, they can, but I am certain Serbia will win". Last November, Ms Brnabić noted, “The government of Serbia will maintain its strong support for Air Serbia. This support will be in line with European Union regulations, as it has been so far, however, no one can prevent us or limit our support for Air Serbia”.
Adria Airways filed a complaint against Air Serbia with relevant European institutions over what it sees as illegal state aid provided by the Serbian government to its national carrier. “Adria Airways is concerned over the aid the Republic of Serbia has illegally granted to Air Serbia and believes such behaviour to be unlawful as it goes against free market principles”, the Slovenian carrier’s legal representative in Serbia, Dragan Gajin, said last month. Adria expressed its concerns to the Serbian Commission for Control of State Aid but received no reply, prompting it to take the matter further with European institutions. However, Mr Gajin has come under fire himself since he acted as a legal advisor to the conclusion of the transaction agreement between the Serbian government and Etihad Airways over the latter's takeover of Jat Airways. As a result, the lawyer could potentially be in a conflict of interest.
Adria Airways has refused to comment publically on its concerns over Air Serbia other than to confirm it has taken action within the EU. The European Commission itself has told EX-YU Aviation News it is not authorised to deal with such matters since it does not have direct enforcement possibilities in candidate countries. The Commission said it stands ready to provide any support or guidance to the Serbian state aid authority in the implementation of state aid control. According to the European Union, a company which receives government support gains an advantage over its competitors. Therefore, the EU generally prohibits state aid unless it is justified by reasons of general economic development. There are exceptions to the rules as aid worth less than 200.000 euros over three years is exempt.
Air Serbia has been listed as one of several companies which will receive subsidies from the state budget this year, however, the country's Finance Minister, Siniša Mali, noted this is in relation to debt accumulated by the airline's predecessor Jat Airways. "We did not have 380 million dollars to pay off Jat's debt straight away. Instead, we will be making payments over a ten-year period. We process the loan as debt repayments either through Air Serbia or directly. However, none of the money goes into Air Serbia itself", Mr Mali, who previously headed the company's Supervisory Board, said.
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