Permission for Take Off: £205m Cardiff Airport Subsidy Authorised by the CAT

This week saw the Competition Appeal Tribunal (“CAT”) hand down judgment in the case of Bristol Airport Limited v Welsh Ministers [2026] CAT 30. It’s a subsidy control case of particular interest, as it is the first to interrogate the level of detail required from the assessment of a subsidy against the subsidy control principles.

Background

The case was brought by Bristol Airport in response to the allegedly unlawful grant of a subsidy by the Welsh Government to Cardiff Airport Limited (“Cardiff Airport”). The subsidy has a value of up to £205 million and is to be administered over a 10-year period. The subsidy was part of the Welsh Government’s long-term strategy for Cardiff Airport, aiming to support the growth of the economy linked to the airport, as well as developing air services.

The subsidy packages consisted of:

• Package 1: for non-passenger business development and enhancement (£105.2m).
• Package 2: for commercial air passenger route development (£100m).

Below is a timeline of events:

• 22 July 2024 – The long-term strategy for Cardiff Airport set out by the Welsh Government suggested a support package of up to £206m over a 10-year period.
• 15 August 2024 – In accordance with the subsidy control requirements, the Welsh Government referred the proposed subsidy to the Subsidy Advice Unit (“SAU”) at the Competition and Markets Authority (“CMA”).
• 2 October 2024 – The SAU published its report. We summarised the SAU’s report – which was highly critical – in a previous article.
• April 2025 – The Welsh Government approved the subsidy package to Cardiff Airport and by July 2025 had awarded £20m of the £205m subsidy.
• 20 June 2025 – The case was registered with the CAT by Bristol Airport.
• 9 February 2026 – The hearing started.
• 7 April 2026 – The decision of the CAT was handed down.

Grounds of Appeal

Under section 70 of the Subsidy Control Act 2022 (“SCA”), interested parties aggrieved by the making of a subsidy decision by a public authority may apply to the CAT for review of that decision.

Bristol Airport’s appeal was premised on the following grounds:

• The Welsh Government failed to undertake sufficient inquiry to determine Cardiff Airport was an “ailing or insolvent” enterprise under section 24 of the SCA (“Ground 1”).
• The Welsh Government irrationally concluded that Cardiff Airport was not ailing or insolvent (“Ground 2”).
• The Welsh Government failed to properly assess the subsidy against the subsidy control principles (“Ground 3”).
• The Welsh Government failed to lawfully apply the provisions of section 28 of the Act (relating to subsidies for air carriers) (“Ground 4”).

The CAT’s judgment focused on three key parts of the SCA: the “ailing or insolvent” provisions, the subsidy control principles, and the section 28 air carrier prohibition. Public authorities should note the judgment, and in particular the key takeaways referenced below, when making subsidy decisions.

The Judgment – Key Takeaways for Public Authorities

Grounds 1 and 2

Sections 19 and 20 of the SCA prohibit rescuing and restructuring subsidies to ailing or insolvent enterprises unless certain requirements are met.

The CAT’s judgment affirmed that, in order for the prohibitions of sections 19 and 20 to be engaged, both of the following have to be true:

1. the purpose of the subsidy is to rescue or restructure an enterprise; AND
2. the enterprise is ailing or insolvent.

That is to say that sections 19 and 20 do not apply to ALL subsidies to ailing or insolvent enterprises. The purpose is key in determining whether the prohibitions are engaged.

Accordingly, once it was established that the purpose of the Welsh Government’s intervention was not to rescue or restructure Cardiff Airport, the need to consider sections 19 and 20 fell away. Whether or not Cardiff Airport was ailing or insolvent was therefore immaterial (save that a beneficiary’s financial position can be relevant for the purposes of the subsidy control principles assessment).

Ground 3

Section 12 of the SCA requires public authorities to ensure the consistency of a subsidy with the subsidy control principles before award. Bristol Airport argued that the Welsh Government’s subsidy was inconsistent with those principles.

The CAT disagreed, finding that the Welsh Government had not acted irrationally in carrying out the principles assessment. In this regard, the CAT appeared to erect a high threshold for a subsidy control challenge to succeed on grounds of irrationality. The CAT addressed the following principles:

• Principle A (policy objective): Bristol Airport argued that the Welsh Government’s policy objective – as stated in its principles assessment – was incorrect. That is to say that the principles assessment written down was wrong or misleading and served to conceal the Welsh Government’s true objective, ensuring the survival of Cardiff Airport for political reasons. The CAT took a dim view of this submission, supporting the credibility of the Welsh Government’s policy objective. The CAT’s view mirrored that of the SAU (the SAU finding in 2024 that the policy objective was set out in “clear terms”).
• Principle E (least distortive means): Bristol Airport argued that the Welsh Government had not adequately considered alternative levers. The CAT found no evidence to support this submission and concluded that the Welsh Government had not acted irrationally in its consideration of alternative policy instruments. The Welsh Government’s analysis and reasoning was sufficient.
•  Principle C (change in economic behaviour): Bristol Airport criticised the assessment of this principle on a number of grounds. However, the CAT recognised that the Welsh Government had taken expert advice into account and been rational in its conclusion that the subsidy would result in a change in economic behaviour.
•  Principles B and F (proportionality and minimising negative effects): Aside from repeating arguments already made, Bristol Airport’s submission on this point focused on value for money and the Welsh Government’s consideration (or lack thereof) of distortive effects on Bristol Airport. On value for money, the CAT found that public authorities have “a wide margin of discretion” when determining whether a subsidy is disproportionate compared to the size of the beneficiary’s business. On distortion, the Welsh Government’s assessment clearly took account of Bristol Airport’s business. The Welsh Government had therefore not acted irrationally.
•  Principle G (beneficial effects to outweigh negative effects): The CAT dismissed Bristol Airport’s appeal in respect of Principle G, finding that the submission repeated various previous arguments made. The CAT concluded that the Welsh Government had not acted irrationally when carrying out the balancing exercise; Bristol Airport simply disagreed with the conclusion reached. The CAT appeared to erect a particularly high threshold in respect of Principle G, noting that it “is an inherently judgmental exercise”.

In summary, the CAT was of the view that none of the submissions under Ground 3 came “anywhere close” to reaching the bar required for an irrationality finding. Bristol Airport failed to show that no reasonable authority in the Welsh Government’s position would have found the subsidy to be consistent with the principles.

Ground 4

Section 28 of the SCA prohibits subsidies to air carriers for the operation of a route unless certain conditions are met.

The CAT concluded that section 28 only applies to subsidies made to an air carrier. Here, the subsidy was given to Cardiff Airport directly, not to an air carrier. As such, the Welsh Government was not bound by section 28.

General observations

1. The CAT helpfully summarised the applicable principles of judicial review as established in the recent Weis [1] Importantly for the purposes of this judgment, the CAT reaffirmed that it will review subsidy decisions on the basis of ordinary judicial review principles. The rationality threshold formed a significant part of the CAT’s judgment in this case (as illustrated above).
2. A significant part of the CAT’s judgment focused on statutory interpretation. The CAT clarified, drawing on well-established case law, that the primary tool for interpreting statute is the legislation itself (in this case the SCA). External aids – for instance the statutory guidance and Hansard records – provide only a secondary role. This is a clear reminder to practitioners and public authorities that the SCA itself is the starting point when interpreting subsidy control rules.
3. There was some confusion at the hearing as to whether the decision in question gave rise to a standalone subsidy or a subsidy scheme. The difference between the two has been an area of legal uncertainty since the CAT’s judgment in Durham v Durham [2]. The CAT passed up the opportunity to provide certainty in this area by way of obiter observations. Nonetheless, for the purposes of this case, the parties eventually agreed that the decision in question was a subsidy (not a scheme).
4. There has been a growing sense that the State aid regime can be of use in interpreting the SCA (the CAT relied heavily on State aid principles in the recent Gambling Commission [3] judgment). The Cardiff Airport judgment is a reminder of the limitations on the usefulness of the State aid regime as a comparator. Namely, State aid principles will not be of use where there are differences between the domestic and European regimes. One such difference was highlighted here, in respect of the SCA’s “ailing and insolvent” provisions and the EU’s “undertaking in difficulty” rules. Public authorities should be careful when relying on State aid principles to ensure that there are no areas of purposeful difference between the two regimes.
5. The CAT only allowed itself to review Hansard records insofar as doing so could identify the mischief at which the relevant legislation is aimed. So while the CAT did consider and address parliamentary debates on relevant topics, it afforded limited weight to the same in its judgment. This is worth bearing in mind when using parliamentary records as a tool to interpret the SCA.

Discussion

Irrationality

The key takeaway from the CAT’s judgment relates to the threshold for a successful subsidy control challenge. The CAT repeatedly drew on well-established principles surrounding alleged irrationality of a public authority to erect a high threshold for Bristol Airport to overcome. It failed to do so on all grounds.

The CAT ultimately concluded that the parties had a “difference of opinion” in respect of the subsidy. The fact that Bristol Airport has a different opinion as to the subsidy does not mean that the Welsh Government acted irrationally. The CAT in particular emphasised the high threshold with regard to the principle B assessment for proportionality (in respect of which public authorities should have “a wide margin of discretion”) and the principle G balancing exercise (which is “an inherently judgmental exercise”).

The CAT has ultimately erected a high threshold for subsidy control challengers to overcome. This will be welcome news for public authorities, but adds further fuel to the fire of arguments that the domestic regime is unfit for purpose. It will be interesting to see to what extent this judgment shapes the CMA’s statutory review under section 65 SCA into “the effectiveness and impact on competition and investment in the UK of the UK’s Subsidy Control Act” (due to report in Summer 2026).

Vindication for the SAU?

The CAT’s judgment should be of particular interest to public authorities going through – or who are soon to go through – the SAU referral process. As summarised in our previous article on this case, the Welsh Government was heavily criticised by the SAU in 2024. The SAU’s report found that the Welsh Government’s original assessment considered the subsidy control principles “at a high level” only. However, it seems that the Welsh Government has since reflected on the SAU’s advice. In particular, the Welsh Government sought further advice from Altair Advisory (aviation advisers) and Grant Thornton to address weaknesses identified by the SAU.

This is potentially a sign of the SAU process working: a public authority produced a flawed principles assessment; weaknesses were identified by the SAU; recommendations for improvement were made; the public authority acted on such recommendations; and the CAT upheld the robustness of the revised principles assessment.

Perhaps there’s hope for the UK’s subsidy control regime after all.

Beatrice Wood and Oliver Slater are Associates and Sophie Read is a Paralegal at Sharpe Pritchard LLP.

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[1] Weis v Greater Manchester Combined Authority [2025] CAT 41

[2] Durham Company Limited v Durham County Council [2023] CAT 50

[3] The New Lottery Company Ltd and Others v The Gambling Commission [2026] CAT 14