The European Commission approves operating aid to the Rostock Airport


The European Commission has recently approved operating aid granted by Germany to the manager of the Rostock airport (FRLG) on the basis of the compatibility conditions for operating aid in the 2014 Aviation Guidelines (Decision of 10.08.2018, case SA.49709- Germany-Rostock Airport).
The notified national measures examined by the Commission was a non-repayable grant paid out in instalments covering the initial funding gap of the airport for the January 2018-April 2019 period. The Commission was of the view that the financial aid granted to FRLG amounted to State aid within the meaning of Article 107 TFEU and went on ascertaining whether the measure was compatible with the internal market meeting the compatibility conditions in the 2014 Aviation Guidelines.
a)The condition of contribution to a well-defined objective of common interest
Within the catchment area of the beneficiary (a travelling distance of 100 km or a travelling time of 60 minutes) there was no other airports offering scheduled flights or with a business model similar to that of the Rostock airport. Thence, there is no duplication of unprofitable airports within that catchment area and the Commission considered that the aid in question pursued a common interest objective.
b)The condition of the need for State intervention
The business plan submitted by Germany showed that the Rostock airport will have 300,000 passengers in 2018 and no more than 700,000 passengers in 2019. Under the 2014 Aviation Guidelines, the beneficiary was then a small airport that may unable to cover its operating costs to a substantial extent. Indeed, the business plan indicated an operating funding gap of € 2,606 million calculated on the base of the expected revenue determined in the form of EBITDA. The revenues will insufficient to cover the costs.
c)The condition of appropriateness of the aid measure
German authorities determined the aid amount ex-ante as fixed sum covering the operating funding gap and did not consider any ex-post increase of the aid amount. The aid amount is limited to 80% of the initial funding gap. Therefore, the aid was considered to be appropriate to reach the desired objective of common interest.
d)The condition of incentive effect
As indicated by the evidence submitted by Germany, without the aid, the airport would be unable to operate and, accordingly, would have to reduce its activity being unable to contribute to local accessibility and regional development.
e)The condition of proportionality of aid
Germany confirmed that the aid amount will be limited to the maximum aid intensity of 80% of the operating funding gap. The business strategy submitted by Germany indicates that the beneficiary will cover its operating costs by the end of the 10-year transitional period.
f)The condition of avoidance of undue negative effects on competition and trade
Because there was no other competing airport within the catchment area of the Rostock airport, the Commission took the position that the aid in question would have very limited effects on competition and trade between Member States.
g)The condition of transparency of aid and cumulation
Germany said that it complies with the relevant transparency and cumulation requirements.

Conclusion
Rostock Airport confirms that for operating aid to airports to be declared compatible with the internal market under the 2014 Aviation Guidelines, submitting a business plan with the funding gap, calculated on the basis of EBITDA, is of relevancy. Also, the rule of no-duplication of unprofitable airports is relevant to assess the competition impact of notified aid and whether the aid meets a common interest objective.
  





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