The European Commission clears investment and operating aid to the Saarbrücken Airport

In the Saarbrücken Airport case[1], the Commission has approved a package of investment aid and operating aid the Germany authorities granted to the manager of the Saarbrücken Airport (FHS). The Commission found that the public aid to FHS fulfilled the compatibility conditions set out by the 2014 Aviation Guidelines[2] for investment aid and operating aid. Hence, the national measures under scrutiny were found to be compatible with the internal market.

The facts of the case
The entire equity capital of FHS was owned by Saarland through a wholly owned subsidiary. In November 2016, Germany notified the Commission a set of investment aid and operating aid in favour of FHS. The investment aid was aimed to fund a renovation and conversion works at the airport. The aim of operating aid was to cover the losses suffered from FHS in the operation of the airport.

The decision of the ICA
In the view of the Commission, the public aid granted by Saarland to FHS constituted State aid within the meaning of Article 107 because the national measures satisfied all the cumulative conditions for the application of that provision.
Next, the Commission went on by ascertaining whether the aid in question met the compatibility conditions for investment aid and operating aid set out by the 2014 Aviation Guidelines. The compatibility conditions can be summarized as follows: a) contribution to a well-defined objective of common interest; b) need for State intervention; c) appropriateness of the aid measure; d) incentive effect; d) proportionality of the aid; e) avoidance of undue effects on competition and trade between Member States; g) transparency of aid.

a) Contribution to a well-defined objective of common interest
The Commission observed that the region surrounding the aided airport is internationally oriented attracting several business and leisure passengers. Therefore, the airport contributes to the economic development of this region. Moreover, the investment aid did not fund the creation of new or additional capacity to increase traffic volumes. Neither did the aid contribute to the duplication of unprofitable airports that, obviously, do not constitute a common objective interest. Indeed, the closest airport to the recipient is the Metz-Nancy-Lorraine Airport. According to the Commission, the relevant catchment area comprises an area within a 100 km travelling distance or at 60 minutes travelling time from the airport. Being at 96 km or 61 minutes from the Saarbrücken Airport, the Metz-Nancy-Lorraine Airport was at the very border line of the catchment area of the aided airport. However, the Saarbrücken Airport and the Metz-Nancy-Lorraine Airport do not mutually compete because they follow  different business models and offer a different range of destinations. .

b) Need for State intervention
The annual passenger traffic of the Saarbrücken Airport was about 470,000, thereby  falling within the ‘B’ category for the purpose of the 2014 Aviation Guidelines. The ‘B’ category includes airports with an annual passenger traffic between 200,000 and 1 million and such airports are usually unable to cover their capital costs and operating costs. Consistently with the principles of the 2014 Aviation Guidelines, the Commission accepted the arguments submitted by Germany according to which the aided airport could not attract private investors and cover its operating costs. Hence, both investment aid and operating aid met this compatibility condition.

c) Appropriateness of the aid measure
With regard to the investment aid, the Commission accepted that a public grant corresponding to 75% of the planned investment was an appropriate measure. Without public support, FHS would have not achieved the breaking even point by 2024. Also operating aid satisfied the appropriateness compatibility condition. Crucially, the ex-ante business plans produced by Germany did not show that FHS would be profitable in the medium term. This factor was taken by the Commission as evidence of the operating aid being appropriate.

d) Incentive effect
Whether a funding gap exists is an important circumstance in the application of this compatibility condition. The Commission took the view that the investment project is not economically attractive in its own. Accordingly, FHS would not implement it in absence of public support. Also operating aid met this compatibility condition due to the FHS inability to cover its operating losses in future. Absent the aid, the airport would have to reduce its activities. In light of the above, also this compatibility condition was met the national measures in question.

e) Proportionality of the aid.
The investment aid and operating aid to FHS were found to be proportional because they are below the maximum permissible aid intensity determined by the 2014 Aviation Guidelines for airports having the size of the recipient. The investment aid is lower that 75% of the eligible costs and, in any event, does not exceed the capital cost funding gap as determined on the basis of an ex ante business plan drafted by the German authorities. Concerning operating aid, Germany confirmed that the financial aid to FHS was below the 80% threshold of the initial operating funding gap of the airport during the first 5 years of the 10-year transitional period in the 2014 Aviation Guidelines. Germany also submitted that the airport would cover its operating costs at the end of the transitional period.

f) No distortion of competition and trade
When ascertaining compliance with this compatibility condition, the Commission attaches much relevance to the question whether the aid under scrutiny favoured the duplication of unviable airport facilities, especially when there are other airports in the catchment area as the aided airport. Investment aid and operating aid to FHS, however, did not give rise to such risk. As seen above in relation to the common interest objectives compatibility condition, there are no other competing airports in the catchment area of the aided airport. Consequently, the aid will not negatively affect competition and trade in the internal market.
For the reasons considered above, the Commission reached the conclusion that the investment aid and the operating aid granted to the Saarbrücken Airport satisfied all the compatibility conditions in the 2014 Aviation Guidelines. Hence, the Commission declared the financial support to the airport to be compatible with the internal market.

Final remarks
The Commission has cleared most of the investment aid and operating aid to airports reviewed since the enactment of the 2014 Aviation Guidelines. It can be said that the more relevant factor in the decisional practice of the Commission to apply the compatibility conditions to airport aid seems to be the duplication of unviable airport facilities. This is well reflected by the fact that the only two cases where the Commission found that the investment aid and operating aid did not meet the compatibility conditions in the 2014 Aviation Guidelines was exactly because the aid duplicated unviable airport facilities[3]. Given that there were no other airports in the catchment area of the Saarbrücken Airport, the aid was not meant to fund or maintain in operation unviable airport facilities, which paved the way for the Commission’s clearance decision.






[1] European Commission, Case SA.44058 (2016/N)- Germany Saarbrücken Airport.
[2] Commission guidelines on State aid to airport and airlines, OJ C 99, 04.04.2014, p. 3.
[3] European Commission, Case SA.35388, Gdynia Korsakowa Airport; Commission, Case SA.27339.
Zweibrucken Airport.

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