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European Commission

MEMO

Brussels, 1 October 2014

State Aid: Commission decisions on public financing of airports and airlines in Germany, Belgium, Italy and Sweden – further details

(See also IP/14/1065)

The European Commission took seven decisions under EU state aid rules on 1 October 2014 with regard to public aid measures to airports and airlines. The decisions concern three airports in Germany (Frankfurt Hahn, Saarbrücken and Zweibrücken), an airport in Belgium (Charleroi), an airport in Italy (Alghero) and an airport in Sweden (Västerås). Moreover, the Commission opened an in-depth investigation concerning financial support granted to certain airlines flying from Bruxelles-National airport (Zaventem) in Belgium. Since the beginning of 2014, the Commission had already finalised its assessment in seventeen other cases concerning operating and investment aid measures to airlines and airports.1

Public interventions in companies carrying out economic activities can be considered free of state aid within the meaning of EU rules when they are carried out on terms that a private player, operating in a market economy, would have accepted (the market economy operator principle – MEOP). If the MEOP is complied with, the measure confers no advantage to the company and therefore involves no state aid.

If the MEOP is not complied with, the measure involves state aid and the Commission then examines whether it can be found compatible with the EU's Single Market. This means that the Commission checks whether the measure complies with common EU rules that allow granting aid for projects furthering goals of common interest, such as EU transport or cohesion policy objectives, under certain conditions.

The assessment criteria for public interventions in airports and airlines are set out in the Commission's Aviation Guidelines, adopted in February 2014 (see IP/14/172, MEMO/14/121 and, for more details, policy brief. These rules aim to ensure good connections between regions and meeting the transport needs of European citizens, while establishing a level playing field among airports and airlines in the Single Market.

1) Frankfurt-Hahn 1 – Germany

In 2008 (IP/08/956) the Commission initiated an in-depth investigation into several financing measures (such as profit and loss transfer agreements, capital increases, direct grants, etc.) implemented by Fraport AG (until 31 December 2008 the parent company of Frankfurt Hahn airport and operator of Frankfurt Main airport), Land Rheinland-Pfalz and Land Hessen in favour of Frankfurt Hahn airport and the agreements with Ryanair concluded in 1999, 2002 and 2005 as well as the schedule of airport charges introduced in 2001 and 2006.

The in-depth investigation revealed that a number of direct grants, the 2001 and 2004 profit and loss transfer agreements as well as the 2004 capital increase by Fraport AG do not constitute state aid, because they were either implemented before the Aéroports de Paris General Court judgment2 or are not imputable to the state. The other financing measures in favour of the airport (such as the 2004 capital increase by Land Rheinland-Pfalz and Land Hessen, direct grants etc.) constitute state aid, but this aid is compatible with EU rules as it complies with the 2005 Aviation Guidelines and 2014 Aviation Guidelines, taking into account the importance of the airport for the development and accessibility of the Hunsrück region and the decongestion of Frankfurt Main airport.

As to the agreements with Ryanair concluded in 1999, 2002 and 2005 the investigation has shown that those agreements were reasonably expected to be incrementally profit generating when they were entered into. Moreover the schedule of airport charges introduce in 2001 and 2006 was expected to contribute to the incremental profitability of the airport operator. Since the terms of the agreement would have been accepted by a market player, they do not involve any state aid in the meaning of EU rules.

Frankfurt-Hahn airport is a regional airport in Rheinland-Pfalz, Germany, which serves currently around 2.6 million passengers and 450 000 tonnes freight). Since 1999 the airport has experience significant growth, which was however impacted by the financial and economic crisis. Until end of 2008, Fraport AG was the majority shareholder of the airport. In 2009 the Land Rheinland-Pfalz became the majority shareholder of the airport operator, following the exit of Fraport AG. The airport is also owned by Land Hessen (17.5%).

The non-confidential version of this decision will be made available under the case number SA.21121 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

2) Frankfurt Hahn 2 – Germany

Following an in-depth investigation into the financing of Frankfurt Hahn airport between 2009 and 2011 opened in 2011 (IP/11/874), the Commission has found that loans amounting to around €47 million were granted to the airport by the publicly owned Investitions- und Strukturbank on market terms and did not constitute state aid. However, with regard to the loans amounting to around €6.8 million granted by the same publicly owned bank, the underlying 100% State guarantee and the loans provided by the cash-pool of the Land Rheinland-Pfalz constitute state aid, but this aid is compatible with EU rules, given in particular the importance of the airport for regional development, connectivity of the region and decongestion of Frankfurt Main airport.

The non-confidential version of this decision will be made available under the case number SA.32833 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

3) Saarbrücken – Germany

Following an in-depth investigation initiated in 2012 (IP/12/156), the Commission has authorised aid to Saarbrücken airport. It has also found that discounts on airport charges and the marketing agreement with Air Berlin did not involve state aid.

Saarbrücken airport received investment and operating aid in the form of annual capital injections, the transfer of land and comfort letters. The Commission assessed the aid granted in the years 2000-2012 and approved the investment and operating aid in favour of the airport. Given the proximity of Zweibrücken airport (40 kilometres by road), the Commission assessed, in particular, whether there was duplication of unprofitable infrastructure. The Commission found that it was not Saarbrücken which duplicated Zweibrücken, but rather the opposite.

As to the airlines using the airport, in 2007, Saarbrücken airport introduced discounts on airport charges in its schedule of charges. In 2011, the airport concluded a marketing agreement with Air Berlin. The investigation showed that the schedule of charges and the marketing agreement with Air Berlin were made on terms that a private market operator would have accepted, in particular as they could be expected to be incrementally profit generating when they were entered into. Therefore, these measures did not involve any state aid.

Saarbrücken airport is a regional airport in Saarland, Germany, which serves around
400 000 passengers per year. Saarbrücken airport has been operating for decades – inaugurated in 1928, it was closed after the outbreak of the war in 1939, but resumed operation in 1966. Saarbrücken airport is located near Zweibrücken airport (40 kilometres by road).

The non-confidential version of this decision will be made available under the case number SA.26190 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

4) Zweibrücken – Germany

After an in-depth investigation opened in 2012 (see IP/12/156), the Commission has found that State aid received by Zweibrücken airport and by airlines using the airport in the period 2000-2009 was incompatible with EU rules.

Zweibrücken Airport received State aid in the form of public investment grants and annual capital injections, for a total amount of approximately 47 million euros. Considering that Zweibrücken is located only approximately 40 kilometres by road (and approximately 20 km by air) from Saarbrücken airport, which had been in operation for decades and provided sufficient airport capacity to the region, the Commission found that Zweibrücken airport merely duplicated Saarbrücken airport. As a result, the State aid granted to Zweibrücken airport cannot be considered to contribute to any objective of common interest and is therefore incompatible with EU state aid rules, on the basis of the 2005 Aviation Guidelines and 2014 Aviation Guidelines.

The Commission also found airport services and marketing agreements concluded with Germanwings (a subsidiary of Deutsche Lufthansa), TUIFly and Ryanair could not, when they were entered into, be expected to generate more revenues than additional costs. As no market economy operator would have concluded such incrementally loss-making agreements, they amount to State aid to the airlines. The Commission further found that the State aid granted through these agreements was not compatible with EU rules. The amounts of incompatible state aid are estimated to be approximately 1.2 million euros for Germanwings, 200 000 euros for TUIFLY and 500 000 euros for Ryanair.

Having found that both Zweibrücken airport and various airlines using the airport received incompatible State aid, that State aid now has to be recovered from the beneficiaries by Germany.

The non-confidential version of this decision will be made available under the case number SA.27339 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

5) Charleroi – Belgium

After an in-depth investigation opened in 2002 (see IP/02/1854) and extended in 2012 (see IP/12/265), the Commission found that a number of measures granted by Belgium to Brussels South Charleroi Airport (BSCA), the operator of Charleroi airport, under the form of a concession fee which was too low compared to what a private operator would have required, constituted State aid within the meaning of EU rules. Those State aid measures have been incompatible with the internal market since the entry into force of the new 2014 Aviation Guidelines. The Commission has therefore required Belgium to put an end to those aid measures by increasing the concession fee paid by BSCA to the level of what a private operator would have required in return of those measures. Secondly, the Commission has required Belgium to recover the payments made pursuant to those aid measures since the adoption of the new guidelines on 4 April 2014. At the date of the decision, the recovery amount (without interest) is around 6 million euros. This amount will continue to increase as long as Belgium has not put an end to those aid measures.

A number of other measures in favour of BSCA were found either not to constitute State aid, or to constitute state aid which can be authorised because it is compatible with EU rules.

The Commission also assessed a number of agreements entered into by BSCA with Ryanair, the main airline at Charleroi airport. The Commission found that none of those agreements involved State aid within the meaning of the EU rules. This is because either the measures were not imputable to the State or because, when granting the measures, the Walloon region and BSCA behaved like a market economy operator. The Commission has applied the market economy operator principle in line with the principles drawn by the General Court when it annulled the 2004 decision of the Commission concerning Charleroi airport (see IP/04/157).

Charleroi is a Belgian airport which has dramatically developed since 2000 in particular thanks to the investments carried out by the Walloon Region and to the implementation of a Ryanair airline basis: the traffic has increased from 255 000 passengers in 2000 to nearly 6.8 million in 2013. The aid measures for BSCA have had a positive impact on the development of the Walloon Region, but at the same time have distorted competition with other airport operators, notably Bruxelles-National. This is the reason why the Commission requires Belgium to put an end to those aid measures.

The non-confidential version of this decision will be made available under the case numbers SA.14093 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

6) Alghero – Italy

After an in-depth investigation (see IP/07/1309) extended in 2012 (see IP/12/698), the Commission has approved state aid granted by Italy to the operator of Alghero airport, So.Ge.A.AL, in the form of capital injections, and aid to finance infrastructure upgrades in the period 2000 – 2010, since it is compatible with EU rules.

The Commission assessed under the 2014 Aviation Guidelines past operating aid granted to the airport. The Commission found that the aid was limited to the minimum necessary to ensure the economic viability of the airport and did not give rise to undue distortions of competition. The aid was found to contribute to the achievement of an objective of common interest of improving accessibility, connectivity and regional development of Sardinia, the region where the airport is located.

The investigation also found that the aid to finance infrastructure and equipment at Alghero airport complied with both the 2005 Aviation Guidelines and the 2014 aviation guidelines because it furthered the connectivity of the Sardinian region without unduly distorting competition in the Single Market.

The Commission has also investigated the agreements concluded by So.Ge.A.AL with airlines operating at Alghero in the period 2000–2010. The Commission found that agreements concluded between So.Ge.A.AL and Ryanair/AMS, Alitalia, Volare, bmibaby, Air Italy and Air Vallée could have been reasonably expected to improve the financial situation of the airport when they were entered into and therefore did not give the carriers any undue economic advantage over their competitors. However, the Commission found that the agreement concluded by So.Ge.A.AL with Germanwings in 2007 and the agreement concluded with Meridiana in 2010 involved small amounts of State aid to those airlines. The Commission found that this aid constituted operating aid to the airlines which could not be declared compatible with EU rules. The beneficiaries need to pay it back.

Alghero airport had around 1.5 million passengers in 2013. Based on a complaint, in September 2007 the Commission opened an in-depth investigation to assess the compatibility with EU state aid rules of measures in favour of the airport operator, as well as of the agreements signed by the operator of Alghero airport with Ryanair (see IP/07/1309). In 2012 the Commission extended the investigation to include additional measures, in particular several agreements entered into by So.Ge.A.AL with Ryanair and other airlines (see IP/12/698).

The non-confidential version of this decision will be made available under the case number SA.23098 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

7) Västerås - Sweden

After an in-depth investigation (see IP/12/44) opened in 2012 the Commission has approved aid granted by Sweden to the operator of Västerås Airport (VFAB) in the form of capital injections from its public shareholders (principally the City of Västerås) and under national scheme for aid to regional airports. The aid was granted over the period 2000 -2010.

The Commission assessed the past aid as operating aid under the 2014 Aviation Guidelines. The Commission found that the aid was limited to the minimum necessary to ensure the economic viability of the airport and did not give rise to undue distortions of competition. The aid was found to contribute to the achievement of an objective of common interest of improving accessibility, connectivity and regional development of the region where the airport is located.

The Commission has also investigated a series of agreements concluded by the airport operator VFAB with Ryanair (including its marketing subsidiary AMS) concerning the use of Västerås airport in the period 2001 – 2011. The Commission found that agreements concluded between VFAB and Ryanair/AMS could have been reasonably expected to improve the financial situation of the airport when they were entered into and therefore did not give Ryanair any undue economic advantage over their competitors. These contracts consequently do not entail any State aid to Ryanair/AMS.

Västerås airport had around 163 000 passengers in 2013. Based on a complaint, in 2012 the Commission opened an in-depth investigation to assess the compatibility with EU state aid rules of measures in favour of the airport operator, as well as of the agreements signed by the operator of Vasteras airport with Ryanair (see IP/12/44).

The non-confidential version of this decision will be made available under the case number SA.18857 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

8) Measures granted to certain airlines operating at Bruxelles-National Airport (Zaventem) - Belgium

The Commission has opened an in-depth investigation as regards the subsidy granted by Belgium to the operator of Bruxelles-National Airport with the obligation for this operator to pass on the subsidy to the airlines which have carried more than 400 000 passengers departing from Brussels-National in 2012. The subsidy amounts to €19 million annually and has been granted for three years (2013, 2014 and 2015). According to the information available to the Commission at this stage, the largest part of this subsidy would go to Brussels Airlines. Jetairfly and Thomas Cook may also benefit from the subsidy to a lesser extent.

The Commission will examine whether this measure constitutes state aid within the meaning of the EU rules for the airlines which will benefit from this measure. If this is the case, the Commission will examine whether this is aid is compatible with the internal market. If the Commission found that this measure gave rise to aid which is incompatible with the internal market, the Commission will require Belgium to recover the amounts which have been paid as a result of this measure.

Besides, after having examined the comments submitted by Belgium following the opening of the in-depth investigation, the Commission may adopt a decision requiring Belgium to suspend the aid until the Commission has taken a decision on the compatibility of the aid with the internal market.

Bruxelles-National airport is located in Zaventem close to Brussels. Its traffic exceeded 19 million passengers in 2013. The main airline operating in Bruxelles-National is Brussels Airlines.

The non-confidential version of this decision will be made available under the case number SA.38105 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

1 :

2 :

In 2000, in its "Aéroports de Paris" judgment, the EU General Court stated that the operation of an airport, including the provision of airport services to airlines and service providers within airports, is an economic activity (case T-128/98). Before this judgment, public authorities could legitimately consider that financing measures in favour of airports did not constitute state aid in the meaning of the EU rules.


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