The European Commission has today approved under EU State aid rules several French aid measures granted between 2001 and 2012 in favour of the French airports of Beauvais and La Rochelle. However, in the case of La Rochelle airport, the Commission found that Ryanair and Jet2 had received State aid incompatible with EU rules. France must now recover from Ryanair and Jet2 the unlawful State aid amounting to approximately EUR 8.4 million and EUR 81,000 respectively.
Beauvais Airport
On 30 May 2012 the Commission opened an in-depth investigation to assess whether financial arrangements between the French public authorities and Beauvais airport, as well as rebates and marketing agreements concluded between this airport and its customer airlines, were in line with EU State aid rules.
Between 2001 and 2012, the French regional and local authorities granted investment subsidies (in the form of three investment programmes for the modernisation and construction of infrastructure at Beauvais airport) and operating subsidies (in the form of direct grants, cash advances and partial coverage of the cost of promoting tourism) to the operators of Beauvais airport. The Commission assessed the measures under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU) and the Commission’s Guidelines on State aid to airports and airlines.
The Commission considered that part of these subsidies – one of the three investment programmes, the operating subsidies, part of the cash advances and partial coverage of the cost of implementing a tourism development plan – did not constitute State aid, particularly in so far as this expenditure related to non-economic activities (for example airport security) and therefore did not fall within the scope of EU law on State aid.
The other part of the subsidies – i.e. the other two investment programmes and part of the cash advances – did constitute State aid, but the Commission concluded that these measures were compatible with the rules on State aid to airports and airlines. In its assessment, the Commission took into account, inter alia, the fact that the aid was particularly necessary and proportionate to facilitate the economic development of Beauvais airport, and did not significantly distort competition with other airports in the Union, including the neighbouring Paris airports of Roissy and Orly.
Finally, the Commission considered that none of the airport services agreements concluded between Beauvais airport and a dozen or so airlines constituted State aid, since the contractual conditions did not go beyond what a profit-driven airport operator would have been prepared to offer in the same circumstances as the operators of Beauvais airport.
La Rochelle Airport
On 8 February 2012 the Commission opened an in-depth investigation to assess whether financial arrangements between the French public authorities and the airport of La Rochelle, as well as rebates and marketing agreements concluded between this airport and some of the airlines using it, were in line with EU State aid rules.
Between 2001 and 2012, the French regional and local authorities concluded several financial agreements with La Rochelle airport. The Commission assessed the measures under Article 107(3)(c) TFEU and the Commission’s Guidelines on State aid to airports and airlines.
The Commission took the view that some of these measures did not constitute State aid. As regards the alleged under-invoicing of the services provided by the general section of the Chamber of Commerce and Industry (CCI) of La Rochelle to its airport service from 2006 to 2012, and the alleged over-invoicing of the services provided by La Rochelle airport to the public manager of Rochefort airport, the Commission concluded that this expenditure did not confer an economic advantage on La Rochelle airport because it was based on market prices. As regards the subsidies granted by the French State to cover the ‘sovereign’ tasks of La Rochelle airport, the Commission considered that they were linked to the exercise of non-economic activities (for example activities relating to the security of the airport) and therefore did not fall within the scope of EU law on State aid.
The other measures — the repayable advances granted by the general section of the La Rochelle CCI to the airport, the under-invoicing of the services provided by the general section of the La Rochelle CCI to the airport between 2001 and 2005, the financial contributions granted by the French local authorities towards promotion campaigns, and the equipment subsidies granted by the French local authorities – did indeed constitute State aid, but the Commission considered them to be compatible with the rules applicable to State aid to airports and airlines. In its assessment, the Commission took into account, inter alia, the fact that the aid was particularly necessary and proportionate to facilitate the economic development of La Rochelle airport, and did not significantly distort competition with other airports in the Union, including the neighbouring airports of Angoulême, Rochefort and Niort.
However, the Commission considered that several airport services agreements and marketing services agreements concluded by La Rochelle airport between 2003 and 2010 with Ryanair and Jet2 did constitute incompatible State aid. The Commission’s investigation showed that these agreements conferred an unjustified economic advantage on Ryanair and Jet2 over their competitors, in that a profit-driven airport operator would never have agreed to grant similar conditions to those airlines in the same circumstances. As this aid is considered incompatible, France must now recover the unlawful State aid from Ryanair and Jet2 amounting to approximately EUR 8.4 million and EUR 81 000 respectively.
Background
In the aviation sector, the Commission’s Guidelines on State aid to airports and airlines reflect the fact that, subject to certain conditions, public subsidies can be used by regional airports or regional authorities to attract price-sensitive airlines. Such subsidies can typically take the form of low airport charges, discounts to airport charges, success fees or payments for marketing services.
Regional public airports can offer attractive conditions to airlines in order to stimulate their traffic. However, in principle, such conditions must not go beyond what a profit-driven operator would be prepared to offer under the same circumstances (the market economy operator principle). If this principle is respected, the conditions do not involve State aid to the airlines and are not subject to ex ante review by the Commission. Conversely, if this principle is not respected, the conditions involve State aid and the Commission must then examine whether this can be found compatible with EU State aid rules.
As a matter of principle, EU State aid rules require that incompatible State aid is recovered in order to remove the distortion of competition created by the aid. There are no fines under EU State aid rules and recovery does not penalise the company in question. It simply restores a level playing field with respect to competitors.
The non-confidential version of the decisions will be published in the State aid register on the DG Competition website under the case numbers SA.33960 (Beauvais airport) and SA.26494 (La Rochelle airport) 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.
