Brussels, 11 February 2014
- Update1 –
State aid: Commission orders Poland to recover incompatible state aid from Gdynia airport
The European Commission found that the public funding granted by the municipalities of Gdynia and Kosakowo to Gdynia airport gives the beneficiary an undue economic advantage over its competitors, in particular the Gdansk airport, in breach of EU state aid rules. These rules do not allow Member States to grant state aid in order to duplicate airport infrastructure where there is not enough demand, since this would distort competition between airports and waste taxpayers' money. To re-establish the situation that existed on the market prior to the granting of the aid, Gdynia airport has to pay back this undue advantage amounting to EUR 21.8 million (around PLN 91.7 million). This will help alleviating the distortion of competition brought about by the state aid.
In September 2012, Poland notified to the Commission capital injections by the local authorities of Gdynia and Kosakowo into the company responsible for building and operating Gdynia–Kosakowo Airport. The new airport, which was to use the infrastructure of the existing military airport, was to become the second airport for the Pomerania Region serving mainly general aviation traffic, charters and low cost carriers. The capital injections were aimed at covering the investment costs and operating costs at the beginning of the airport's operation.
Under EU State Aid rules, public investments in companies that carry out economic activities can be considered free of state aid when they are made on terms that a private investor would have accepted under market conditions. However, the Commission's investigation found that the traffic and revenues projected in Gdynia's business plan were not realistic in view of the uncongested Gdansk airport, operating only around 25 kilometres away. Under these circumstances, no private player would have accepted to invest on the same conditions.
Taking into account the fact that the Gdansk airport serves the region efficiently, using only less than 60% of its capacity, the Commission concluded that the aid into Gdynia airport serves no clearly defined objective of common interest, as it only duplicates unprofitable infrastructure without satisfactory medium-term business prospects. It is therefore incompatible with common EU rules on state aid for the aviation sector (see 2005 Aviation Guidelines).
The public financing procured Gdynia airport an undue economic advantage over its competitors, in particular Gdansk airport. In order to remove this advantage and remedy the distortion of competition brought about by the aid, Gdynia airport needs to pay back PLN 91.7 million (around EUR 21.8 million). This will re-establish the situation that existed on the market prior to the granting of the aid, thereby cancelling out or at least alleviating the distortion of competition brought about by the aid. The recovery of incompatible state aid is necessary to ensure a level-playing field in the EU Single Market.
Over the past 20 years, the EU airport industry has undergone fundamental changes. Whereas airports were previously mostly managed as infrastructures with a view to ensure accessibility and territorial development, they have in recent years defined commercial objectives and are competing with each other to attract air traffic. Many former military airports were converted over the last decade into civil aviation airports. This development was further supported by the emergence of low cost carriers. In 1992, over 65% of passenger seats were sold by incumbent air carriers and only 1.5% by low-cost carriers. In 2011 for the first time, low-cost airlines (42.4%) exceeded the market share of incumbent air carriers (42.2%). The trend continued in 2012 (44.8% for low-cost and 42.4% for incumbent). In certain regions, the density of regional airports in certain regions of the EU has led to substantial overcapacity of airport infrastructure relative to passenger demand and airline needs.
Against this backdrop, the state aid control carried out by the Commission aims to preserve equitable conditions of competition in the aviation sector while, at the same time, allowing regional authorities to meet accessibility and transport needs, where necessary.
This decision is based on the guidelines on state aid in the aviation sector currently in force (the 2005 Aviation Guidelines). The Commission plans to adopt new guidelines on state aid for airports and airlines soon, which will replace the existing ones. The substance of the decision on Gdynia airport would not have changed if the new guidelines that the Commission envisages to adopt had already been in force.
The non-confidential version of the decision will be made available under the case number SA.35388 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.
On 26 February 2015, the Commission revoked its negative decision of 11 February 2014 and adopted a new negative aid decision. In the re-adopted decision the main conclusion of the Commission's assessment remains that the measures in favour of Gdynia-Kosakowo Airport constitute incompatible State aid, which needs to be recovered. The Commission has revised a technical aspect of its original decision, defining the exact scope of public funds that constitute incompatible state aid. In particular, the Commission has concluded that financial resources allocated to the airport operator that were used to finance expenditure falling within the public policy remit (i.e. expenditure to pay for buildings and equipment for the fire brigade, customs, airport security guards, police and border guards) should not be covered. Thus, the amount to be recovered from the airport operator is reduced by the amount spent on buildings and equipment relating to the public policy remit.