French Polynesian Court Voids €15mn State Aid to Air Moana

A court in French Polynesia has ruled to void €15 million in state aid granted to Air Moana, delivering a significant legal and financial setback for the regional carrier and underscoring the growing scrutiny surrounding public funding of airlines in competitive markets.

The decision centres on the legality of financial support provided to Air Moana, which operates inter-island services across French Polynesia. According to the ruling, the aid package did not meet the required legal or competitive standards, prompting the court to annul the funding and reopen debate over how governments can support essential air services without distorting market competition.

Air connectivity is critical in French Polynesia, where vast ocean distances make aviation the primary mode of transport between islands. Regional airlines play a vital role in maintaining social and economic cohesion, supporting tourism, healthcare access, and local commerce. However, the court’s decision highlights the delicate balance authorities must strike between safeguarding connectivity and complying with competition and state-aid regulations.

The annulled €15 million was intended to support Air Moana’s operations and financial stability as it sought to establish itself in a challenging operating environment characterised by high costs, limited economies of scale, and fluctuating demand. Legal challengers argued that the aid unfairly advantaged the carrier and failed to meet transparency or proportionality requirements.

For Air Moana, the ruling introduces uncertainty over future funding and strategic planning. Regional airlines typically operate on thin margins, and the loss of anticipated public support could affect fleet planning, route development, and staffing decisions. Industry observers note that smaller carriers are particularly vulnerable to sudden shifts in regulatory or financial frameworks.

The case also has broader implications for aviation policy in overseas territories and island economies. Governments often justify airline subsidies on the grounds of public service obligations, especially where routes are not commercially viable but socially essential. Courts, however, increasingly require clear justification, robust oversight, and alignment with competition principles.

From a regulatory perspective, the ruling reinforces the importance of designing aid mechanisms that are legally defensible and aligned with established competition rules. Authorities may now need to reassess how future support is structured, potentially shifting towards transparent public service contracts, route-specific subsidies, or competitive tendering processes.

The decision may also influence investor and lender confidence in regional aviation projects. Legal uncertainty around state support can raise financing costs and deter long-term investment, particularly in markets where airlines rely on some form of public backing to ensure network sustainability.

For passengers and local communities, the outcome could have indirect consequences. Any reduction in airline capacity or service frequency would disproportionately affect remote islands that depend on reliable air links. Policymakers are therefore expected to explore alternative mechanisms to preserve connectivity while remaining compliant with legal requirements.

As air transport continues to face regulatory, financial, and competitive pressures globally, the Air Moana ruling serves as a reminder that state support for airlines is increasingly subject to judicial review. The case is likely to be closely watched by aviation stakeholders across the Pacific and beyond as governments reconsider how best to support regional air services within evolving legal frameworks.