State aid and Airports – A practitioner’s view Ulrich Soltész, 24th October 2008, Global Competition Law Centre College of Europe, Bruges. Airports and State aid – two aspects:. State. Financial support for regional airports
Financial support for regional airports
… granted by public authorities in order to promote regional development - beneficiary is the operator of the airport itself
State aid to airlines (Ryanair typecases)
… granting of aid to low-cost carriers by providing incentives to create new routes or new schedules from regional airports (e.g. reduced landing fees)
Older decisions: prohibition of discriminatory landing fees (Manchester airport)
New approach: Reduction of landing fees, aid for the launch of new air routes, contributions to commercial activities, initial incentives, provision of offices, reductions of ground handling fees, etc. can constitute state aid which could be compatible under Article 87(3)(c) EC subject to detailed conditions
(Ryanair/Charleroi and Community guidelines on financing of airports and start-up aid to airlines departing from regional airports, OJ 2005 C 312/1)
Can start-up aid can lead to synergies ("anchor effect"), in particular follow-up investments, i.e. private investor test would be fulfilled?
… does the airport operator itself benefit from these effects?
… and, can the airport operator cover its own costs?
Imputability test (Stardust) sometimes difficult, since operating companies often act independently (CFI, T-68/03 – Olympic Airways) – New guidelines largely ignore this point
Exception: routes departing from airports in outermost regions and bound for neighbouring third countries
Very tight rules: 12 (!) conditions to be fulfilled
Massive caseload (Dortmund, Frankfurt-Hahn, Berlin-Schoenefeld, Bratislava, Aarhus, Alghero, Tampere, Luebeck, Grosseto, Pau-Béarn, etc.)
Hardly feasible in practise – Fee schedules and agreements subject to constant change
Creates enormous administrative burden on airlines, airports, national authorities and the Commission
Overregulation thwarts regulation?
State Infrastructure investments: the construction and enlargement of infrastructure projects (such as airports ...) represents a general measure of economic policy which cannot be controlled by the Commission under the treaty rules on State aids.
Guidelines on the application of Article 92, 93 EC to State aids in the aviation sector, OJ 1994 C 350/5, see also Manchester Airport (1999), Airport Elba I (1999), Italian Airports (2001), Airport Elba II (2004)
Airport Antwerp (2005): Public financing constitutes State aid, but is compatible under Article 87(3)(c) EC
German aid scheme for airports (2005): Aid scheme for the construction and development of regional airports constitutes state aid, but compatible under Article 87(3)(c) EC
New guidelines 2005: Airport operators carry out economic activity, even when investing in airport infrastructure, therefore public financing of airport infrastructure may constitute State aid (private investor test), see f.e. Leipzig/Halle
Airport operators carry out economic activity when investing in airport infrastructure (?)
Historically, most civil airports across the EU developed under public ownership … .
Cranfield University, Competition between Airports and the application of State aid rules, 2002
… the Commission is not aware of any case of an ex nihilo creation of a private airport without the involvement of public funds. The process of transfer to the private sector has normally taken the form of privatisation or a progressive opening-up of capital. … infrastructure financing and maintenance is still mainly ensured by public funds …“
Commission, 12.2.2004, OJ 2004 L 137/1, para. 351 – Ryanair/Charleroi
Airport operators carry out economic activity when investing in airport infrastructure (?) (cont’d)