Judgment

Judgment of the Tribunal on the application by Bristol Airport Limited under section 70(1) of the Subsidy Control Act 2022 (SCA 2022) for review of the Welsh Minister’s decision to grant a £205 million subsidy to Cardiff International Airport Limited (CIAL). 

The appeal was brought on four grounds, with the Appellant challenging: (1) the Respondent’s inquiry into, and conclusion on, whether CIAL was “ailing or insolvent”; (2) the proper construction of sections 19 and 20 of the SCA 2022; (3) the Respondent’s compliance with the statutory subsidy control principles; and (4) the Respondent’s alleged failure to apply section 28 of the SCA 2022 in relation to subsidies to air carriers. 

On Ground 1, the Tribunal held that the Respondent had considered the question expressly and had rationally concluded that CIAL was not ailing or insolvent, principally because the Extended Standby Credit Facility (ESCF) provided liquidity support and ensured CIAL remained a going concern. The Tribunal rejected Bristol’s argument that the ESCF should be disregarded, and found no irrationality in the Respondent’s inquiry or conclusion. Ground 1 therefore failed. 

On Ground 2, the Tribunal rejected the Appellant’s interpretation of sections 19 and 20 SCA 2022. It held that the sections apply only where the purpose of the subsidy is to rescue or restructure an ailing or insolvent enterprise. They do not create a blanket prohibition on subsidies to such enterprises for other purposes. As the Tribunal had found that (i) CIAL was not ailing or insolvent; and (ii) the purpose of the Subsidy was not rescue or restructuring but to pursue an equity-based policy objective, sections 19 and 20 were simply not engaged. Ground 2 therefore failed. 

Bristol advanced an extensive set of challenges on ground 3. The Tribunal held that none met the high threshold of irrationality. As to those: 

• Principle A: the Respondent clearly identified an equity‑based objective of increasing regional economic activity associated with the airport. The Tribunal rejected the argument that the true objective was simply to preserve CIAL’s existence.
• Principle E: the Respondent had considered and rationally rejected alternative options (e.g. divestment or further commercial borrowing). Its assessment was not irrational.
• Principle C: the Respondent had taken into account expert advice and had rationally concluded that the subsidy would enable CIAL to undertake activities, such as new route development, that it would not otherwise pursue.
• Principles B and F: the Tribunal found that the Respondent had undertaken a detailed and rational assessment of competitive impacts, including on Bristol Airport, and that Bristol’s criticisms amounted to disagreement rather than irrationality.
• Principle G: the Tribunal held that the Respondent had conducted the balancing exercise required and that Bristol had shown no irrationality.

For those reasons, Ground 3 also failed. 

Finally, in relation to Ground 4, the Tribunal held that section 28 SCA 2022 only applies where a subsidy is given directly to an air carrier. Here, the subsidy was granted to CIAL, not to airlines, and the Tribunal accepted that any later payments by CIAL to airlines were required to be on CMO-compliant terms, meaning they would not themselves be subsidies. There was therefore no requirement for the Respondent to apply section 28, and Ground 4 failed. 

For all of those reasons, the Tribunal held that none of the four grounds of challenge were made out. Accordingly, the appeal failed and the application for a declaration, quashing order and recovery order was dismissed.