Operating aid to the Erfurt-Weimer Airport approved by the European Commission



Applying its 2014 Aviation Guidelines, the European Commission ruled that operating aid granted by the German authorities to the airport of Erfurt-Weimer is compatible with the internal market (Decision of 27.06.2018, case SA.46945- Germany Erfurt-Weimer Airport).
The notified national measures consisted of operating aid to the owner of the airport, FEG, aimed to ensure the existing capacity of the airport and sustainably secure its functioning. The aid was combined with the FEG’s new business strategy to develop higher traffic more dependent on charter flights and less on low cost carriers. The Commission considered the public support to FEG as State aid within the meaning of Article 107 TFEU and then considered whether it met the compatibility conditions in the 2014 Aviation Guidelines.
a)The condition of contribution to a well-defined objective of common interest
There was no other airport within the catchment area of the beneficiary (a travelling distance of 100 km or a travelling time of 60 minutes). Accordingly, the notified measure did not result in the duplication of unprofitable airports which is incompatible with the pursuance of a common interest objective.
b)The condition of the need for State intervention
The financial data submitted by Germany showed that the inability of the Erfurt airport to cover its operating costs in spite of its efficiency-driven strategy. With an annual volume of approximately 250,000-300,000 passengers, under the 2014 Aviation Guidelines the beneficiary may unable to cover its operating costs to a substantial extent.
c)The condition of appropriateness of the aid measure
On the basis of an ex ante business plan the German authorities determined the aid amount as fixed sum covering the operating funding gap and did not consider any ex-post increase of the aid amount. Because its financial situation FEG was unlikely to obtain and repay loans, there would be no other less distortive policy instruments than public aid to reach the same objective.
d)The condition of incentive effect
The business plan submitted by Germany indicated that, in spite of a steady moderate growth, the Erfurt airport would be unable to cover its operating costs until 2024. The important consequence is that, without the aid, the airport would be unable to maintain its flight traffic volume and would have to reduce its economic activity.
e)The condition of proportionality of aid
For airport aid to be proportionate, it must be limited to the minimum necessary. 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 would cover its operating costs by the end of the 10-year transitional period in 2024.
f)The condition of avoidance of undue negative effects on competition and trade
As said before, there was no other competing airport with spare capacity within the catchment area of the Erfurt airport. Therefore, 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
Consistently with its decisional practice, Erfurt Airport confirms the relevance of a sound business plan and of the rule of the no-duplication of unprofitable airports to obtain regulatory approval for operating aid to airports.
  





Comments

Post a Comment

Popular posts from this blog

Aspen: The Italian Competition Authority fines a generic manufacturer of drugs for excessive pricing

By the decision made on 29 September 2016 in Aspen [i] , the Italian Competition Authority (ICA) has imposed a fine of more than EUR 5 million on the Aspen group (Aspen), a South African manufacturer of generic drugs. Aspen violated Article 102 TFEU by imposing excessive prices for the supply of the so-called ‘Cosmos drugs’. These drugs included Leukeran, Alkeran, Purinethol and Tioguanine, which included the active principles of chlorambucil, melphalan, mercaptopurine and tioguanine, respectively. All these drugs were used to treat cancer pathologies and included in a wider package of pharmaceutical products, whose marketing rights had been purchased by Aspen from the originator GlaxoSmithKline (GSK) in 2009. Aspen had a dominant position in the relevant product markets for the commercialization of anti-cancer drugs manufactured using the active principles of alkeran, leukeran, purinethol and tioguanine. It had the only one market authorization for the sale of drugs and potential ...
Read more

Geographical allocation of turnover in aviation mergers: What the European Commission recently hold

The European Merger Control Regulation (ECMR) stipulates that only concentrations with a European dimension fall within the regulatory jurisdiction of the European Commission to review. A concentration is presumed to have such a dimension when it meets the financial threshold in Article 1 of the ECMR. To this end, it is necessary to calculate the turnover generated by the merging parties within the Community or in one or more member states. However, the geographical allocation of the turnover required by Article 1 for the purpose to establish the Commission’s jurisdiction can be a tricky issue in case of mergers between undertakings with a cross-border activity such airliners. In fact, the activities of airlines span several countries as they typically operate flights and sell tickets in many national markets. Recently, the Commission has dealt with the issue at length in the Ryanair/Aer Lingus case. It identified three possible methodologies for geographical allocation of turnover: -...
Read more

The European Commission unconditionally clears the Facebook/WhatsApp merger

By a Phase I decision the Commission unconditionally approved the Facebook $ 19 billion acquisition of WhatsApp ( Case No COMP/M.7217,Facebook/WhatsApp) . The Commission was required by the parties to review the transaction by means of a reasoned submission filed on the basis of Article 4(5) of the EU Merger Regulation. Indeed, the merger was not a concentration with EU dimension within the meaning of Article 1 EUMR falling within the Commission jurisdiction, since the EU turnover of WhatsApp in 2013 failed to met the financial thresholds in that provision. The Commission identified three relevant product markets affected by the concentration. It restrained the first relevant market, the market for consumer communication services, to the communication apps for smartphones, because WhatsApp was available only for this device. Following its approach in Microsoft/Skype (Case M.6281), upheld by the General Court in the case T-79/12, Cisco Systems and Messagenet v Commission, the Com...
Read more