Commission Decision (EU) 2024/3021of 9 September 2024on the measures SA.43260 (2018/C) implemented by Germany in favour of Flughafen Frankfurt-Hahn GmbH and Ryanair DAC(notified under document C(2024) 6468)(Only the German text is authentic)(Text with EEA relevance)

(280) The marketing services have benefited Ryanair more than they have promoted the Land Rhineland-Palatinate and its surrounding area. The marketing services provided by Ryanair could not promote the Land Rhineland-Palatinate and its surrounding area effectively, and therefore the choice of Ryanair was not sufficiently justified in economic terms; Ryanair’s marketing services did not have the alleged effect; and even if the agreements at issue did have an effect, they benefited Ryanair more than anyone else.

(281) As indicated above, the Commission doubts that the marketing agreements concluded with Ryanair had a positive effect for the Land. Assuming that these marketing campaigns did have the effect of encouraging customers of Ryanair to purchase flight tickets to Rhineland-Palatinate, that effect would primarily have benefited Ryanair, and would have been the fruit of an effort to promote its services that Ryanair could have been expected to have taken on itself.

(282) The Commission found in the Montpellier decision that Ryanair achieves its load factor objectives through its pricing policy (yield management). Ryanair’s yield management aims to encourage Ryanair’s potential customers to choose a specific destination at a price that is ideal for Ryanair. A key element of Ryanair’s yield management is to determine the maximum price that passengers are prepared to pay for their plane ticket while ensuring optimal loading of the aircraft in order to maximise Ryanair’s revenues and capture the European market

See Commission Decision (EU) 2020/1671, recital 294.

. For Ryanair, there is a huge difference between high-season prices and low-season prices. This means that passengers travelling in high season are more profitable for Ryanair than passengers travelling in low season.

(283) The promotion of destinations that allow Ryanair to obtain a high-season price will be in Ryanair’s interest too. Therefore, if the marketing campaign has an impact, it Ryanair will benefit directly.

(284) In addition, a marketing campaign could help to attract passengers who would not have been persuaded by the price alone, or who would not have envisaged travelling with Ryanair to Rhineland-Palatinate if they had not been exposed to a marketing campaign. Passengers who are attracted through marketing campaigns consequently reduce the pressure on Ryanair to attract passengers solely through its pricing policy in order to achieve its load factor objectives.

5.1.2.3.3.3.2.

Ryanair’s practice observed in other cases

(285) The Commission also notes that the use of marketing agreements as a justification for payments to Ryanair in order to maintain Ryanair at a given regional airport is not unprecedented. In particular, the Commission’s formal investigation in Case SA.33961, concerning Nîmes airport, showed that, in a situation where the load factor of a particular route had significantly decreased, Ryanair put pressure on the public entities concerned to purchase additional marketing services by threatening to stop operating the route if the financial contribution was not increased on a one-off basis

See Commission Decision (EU) 2016/633 of 23 July 2014 on State aid SA.33961 (2012/C) (ex 2012/NN) implemented by France in favour of Nîmes-Uzès-Le Vigan Chamber of Commerce and Industry, Veolia Transport Aéroport de Nîmes, Ryanair Limited and Airport Marketing Services Limited (OJ L 113, 27.4.2016, p. 32), recitals 102, 547 and 548.

. With regard to Altenburg-Nobitz airport, the Commission’s formal investigation in Case SA.26500

Commission Decision (EU) 2016/287 of 15 October 2014 on State aid SA.26500 – 2012/C (ex 2011/NN, ex CP 227/2008) implemented by Germany for Flugplatz Altenburg-Nobitz GmbH and Ryanair Ltd (OJ L 59, 4.3.2016, p. 22).

found that, after the airport operator refused to pay a sum demanded by Ryanair as marketing fees for the 2011 summer schedule, Ryanair stopped operating at the airport in March 2011

See judgment of the General Court of 13 December 2018, Ryanair and AMS v Commission, T-165/16, ECLI:EU:T:2018:952, paragraph 258.

. Most recently, in case SA.47867, regarding Montpellier airport

See Commission Decision (EU) 2020/1671, recital 245.

, the Commission considered that the marketing agreements with a local association where disguised subsidies to promote Ryanair’s flight routes. This conclusion was later confirmed by the General Court

See judgment of the General Court of 14 June 2023, Ryanair and Airport Marketing Services v Commission, T-79/21, ECLI:EU:T:2023:334, paragraphs 161 to 310.

.

5.1.2.3.3.3.3.

For the sake of completeness: conclusion on the advantage conferred to Ryanair

(286) The Commission concludes from the aforementioned evidence that the purchase of the marketing services by the Land Rhineland-Palatinate from Ryanair merely justifies the payments made to Ryanair for its flight operations, but does not provide a financial gain to the Land Rhineland-Palatinate in its role as economic operator and does not correspond to a genuine purchase of services for the promotion of tourism. The 2005 and 2017 marketing agreements therefore also for that reason conferred an advantage to Ryanair.

5.1.2.3.4.

Selectivity

(287) The marketing agreements were concluded with Ryanair, following individual negotiations, and moreover without any prior public tender as far as the Commission is aware. Therefore, any economic advantage involved in those agreements would be selective

See paragraph 126 of the Notice on the notion of State aid and judgment of the Court of Justice of 4 June 2015, Commission v MOL, Case C-15/14 P, ECLI:EU:C:2015:362, paragraphs 60 et seq.

.

5.1.2.3.5.

Distortion of competition and effect on trade

(288) As airlines compete with each-other in intra-Union trade and Ryanair is an airline active across the Union, the Commission considers on a preliminary basis that the any economic advantage involved in the agreements in question is liable to distort competition and to have an effect on intra-Union trade.

5.1.2.3.6.

Conclusion

(289) The Commission concludes that the marketing agreements in question constitute State aid to Ryanair within the meaning of Article 107(1) TFEU.

5.1.2.4.

The 2013, 2015 and 2016 airport service agreements between FFHG and Ryanair

(290) Concerning the 2013, 2015 and 2016 airport service agreements between FFHG and Ryanair, the Commission considers it appropriate to start its assessment with the application of the market economy operator principle to assess whether the 2013, 2015 and 2016 airport service agreements conferred an advantage to Ryanair.

(291) In that regard, it is important to keep in mind that prior to the conclusion of those agreements, the relationship between Ryanair and the airport has been governed by the 2002 and the 2005 airport service agreements. Concerning those agreements, the Commission found in the Hahn I Decision that they complied with the market economy operator principle and therefore did not constitute State aid.

(292) In addition, it is important to keep in mind that the airport charges paid by Ryanair under the 2013 and 2015 airport service agreements correspond to the airport charges that are included in the general airport charges scheme that applies to Frankfurt-Hahn. The general schedules of charges of 2002 and 2006 were assessed by the Commission in the Hahn I Decision and the Commission concluded that they did not constitute State aid.

(293) The 2002 airport service agreement was initially set to apply until 13 February 2017, with an option for prolongation until 13 February 2022, and the 2005 airport service agreement was initially set to apply until 2027.

(294) Therefore, the 2013, 2015 and 2016 airport service agreements have to be assessed against that base line, because Ryanair was entitled, in principle, to continue operating at Frankfurt-Hahn airport on the basis of the market-conform conditions agreed with FFHG in the 2002 and 2005 airport service agreements until 2022 and 2027, respectively. As long as the subsequent airport service agreements merely correspond to the existing agreements (the 2002 and 2005 airport service agreements), which would normally continue to run, the economic positions of Ryanair and FFHG are not changed by the conclusion of the airport service agreements of 2013, 2015 and 2016.

5.1.2.4.1.

The 2013 Side Letter agreement

(295) The 2013 Side Letter agreement is a side letter to the standard ground handling agreement. As underlined by Germany and Ryanair in their observations after the opening decision, the 2013 Side Letter agreement does not deviate from the schedule of airport charges, but confirms its applicability and merely updates the ground handling rules applicable to Ryanair to general developments in the aviation industry.

(296) As the 2013 Side Letter agreement does not modify in a substantial manner the previously applicable rules, and the previously applicable rules comply with the market economy operator principle (as determined by the Commission in the Hahn I Decision), the Commission concludes that the 2013 Side Letter agreement does not confer any advantage to Ryanair and therefore does not constitute State aid.

5.1.2.4.2.

The 2015 Annotation

(297) As described in recital 41, the 2015 Annotation prolongs the 2013 Side Letter agreement by three years until 2017. In addition, it includes amendments concerning the provision of a ramp vehicle / maintenance van and the provision of administrative office and storage space for spare parts.

(298) The mere provision of a ramp vehicle / maintenance van and of administrative office and storage space do not go beyond a commercial gesture towards the main client of the airport. They are not capable of altering the Commission’s finding in the Hahn I Decision that the payments made by Ryanair to FFHG for airport services comply with the market economy operator principle.

(299) As the 2015 Annotation does not modify in a substantial manner the previously applicable rules, and the previously applicable rules comply with the market economy operator principle, the Commission concludes that the 2015 Annotation does not confer any advantage to Ryanair and therefore does not constitute State aid.

5.1.2.4.3.

The 2016 Side Letter No 2

(300) The 2016 Side Letter No 2 contains two modifications concerning the airport charges to be paid by Ryanair: (a) a reduced airport charge of EUR […] per passenger applies as of […] passenger per year. Previously, based on the general schedule of charges of 2006, it applied only as of […] passenger per year; and (b) a new marketing support system, whereby no airport charges at all will be applied to any passenger above the previous year’s departing passengers number. The duration of the agreement is until 31 March 2022.

(301) Germany has replied to the doubts raised by the Commission in the opening decision, and repeated by Lufthansa in its submission concerning the date of the PwC study. In particular, in line with the explanations provided by FFHG in its comments on the opening decision, Germany has clarified that the PwC study has not been commissioned 2 days prior to the conclusion of the agreement, but rather has been in preparation and discussed with FFHG over a longer period of time, and hence its findings were known to the management of FFHG when concluding the agreement.

(302) The Commission also needs to correct the preliminary finding in the opening decision (recital 288) that the counterfactual would be a progressive decline in Ryanair's passenger numbers over the following years.

(303) As Germany explained in detail, the context of the conclusion of the 2016 Side Letter No 2 was the planned privatisation of the airport. Ryanair insisted to obtain a 5-year airport service agreement and threatened otherwise to immediately leave the airport. Based on the information transmitted by Germany, the Commission finds that that threat must have seemed credible to the airport. The credibility of this threat is indeed confirmed both by Lufthansa, which relies several times on the fact that Ryanair could easily leave the airport, and the Oxera report submitted by Ryanair. Contrary to what the Commission had considered in the opening decision (recital 288), the assumption in the PwC study that, in the counterfactual scenario, Ryanair would immediately cease all activity at FFHG as of 2016 is therefore considered realistic.

(304) Germany also clarified that the cost and revenue forecasts referred to in the PwC study were available to FFHG before the agreement was signed and were used by FFHG to assess the opportunity to conclude the agreement.

(305) The PwC study assumes that, under the baseline scenario, FFHG could expect a constant number of passengers carried by Ryanair of [2–3] million per year from 2017 to 2021. In the opening decision (recital 287), the Commission considered that scenario quite optimistic. However, these assumptions were based on the internal planning documents of FFHG, which FFHG made available to PwC, as confirmed in the observations of Germany on the opening decision. Therefore, in the absence of credible indications to the contrary, the Commission accepts those scenarios.

(306) The PwC study compares a scenario where Ryanair remains at the airport with the scenario where Ryanair leaves the airport. If finds that the Ryanair contract generates an additional yearly free cashflow of EUR [4–5 million] in 2017, which gradually increases to reach EUR [4,5–5,5 million] in 2021. Despite certain weaknesses of the study, in particular the lack of a variation of Ryanair’s numbers of passengers in sensitivity checks, the Commission ultimately considers that a market economy operator could have based its decision on such a study.

(307) The study showed that the 2016 Side Letter No 2 had a capital value of EUR [20–25] million, which is the result of aggregating the free cash flows and discounting them with [5–10] % per year.

(308) This result is also not put into question by the AT Kearney expert opinion which had a different purpose. It analyses the profitability of FFHG as a whole. However, the relevant question for applying the market economy operator principle to the 2016 Side Letter No 2 is whether, absent that agreement, FFHG would be worse off. That is the case, because it would have between EUR [4–5] and [4,5–5,5] million less of free cashflow per year.

(309) For those reasons, the Commission concludes that the 2016 Side Letter No 2 complies with the market economy operator test. The 2016 Side Letter No 2 therefore does not confer an advantage to Ryanair and does not constitute State aid.

5.2.

Compatibility of the aid

(310) In this section, the Commission will assess the compatibility of the measures that have been found to constitute State aid:

(a) State aid to FFHG as a result of the 2016 withdrawal of the Housing plot from the 2014 land sale agreement;

(b) training aid to Ryanair;

(c) marketing support to Ryanair.

5.2.1.

Regarding the aid measure to FFHG

(311) The only measure to FFHG under investigation for which the Commission concludes that it constitutes aid is the double sale by FFHG of a plot of land (recital 200).

(312) The Commission has set out in the opening decision (recitals 326-330), why, if the exercise of the withdrawal right by FFHG at zero EUR constitutes State aid, it has doubts as to its compatibility with the internal market, and reminded Germany that the burden of proof for showing compatibility is on Germany.

(313) Germany has not invoked any ground of compatibility of the aid, but limited its argumentation to claiming that this measure does not entail aid to FFHG.

(314) Therefore, the Commission concludes that the aid of EUR 1,25 million for the sale of the plot of land housing is incompatible with the internal market. Germany has to recover it from its beneficiary.

5.2.2.

Regarding the aid measures to Ryanair

5.2.2.1.

The training aid to Ryanair

(315) It must first be examined whether the training aid fulfils the conditions for a block exemption and, if not, whether the condition laid down in Article 107(2) and (3) TFEU are met.

5.2.2.1.1.

General Block Exemption Regulation

(316) In the opening decision, the Commission took the preliminary view that the training aid might fulfil the condition laid down in Article 31 GBER, but that further information was required to take a definitive view. However, despite the Commission’s request for further information, it did not receive any from Germany or the interested parties.

(317) Germany and Ryanair argued that they could not provide further documents as their obligation to preserve the requested documents had expired under the applicable national law.

(318) The Court of Justice has ruled that it is up to the Member State to invoke possible grounds of compatibility, and to demonstrate that the compatibility conditions for are met

See judgment of the Court of Justice of 28 April 1993, Italy v Commission, C-364/90, ECLI:EU:C:1993:157, paragraph 20.

. Member States and interested parties are aware of the 10 years limitation period of Article 17 of Regulation (EU) 2015/1589. They therefore may not invoke an allegedly shorter national limitation period governing their obligation to retain documents to escape that burden of proof.

(319) The Commission has no information about the exact costs funded by the training aid and therefore cannot assess whether the costs were eligible under the GBER. Pursuant to Article 31(3) GBER, eligible costs would have been (a) the trainers’ personnel costs for the hours during which the trainers participate in the training; (b) the trainers’ and trainees’ operating costs directly related to the training project; (c) the costs of advisory services related to the training project; (d) the trainees’ personnel costs and general indirect costs for the hours during which the trainees participate in the training.

(320) Moreover, Germany has not submitted information regarding the nature and the content of the training that would allow the Commission to determine that the training, or part of it, was not of the sort which undertakings carry out to comply with national mandatory standards on training (Article 31(2) GBER).

(321) Also, Germany provided no information showing that the maximum aid intensities laid down in Article 31(4) GBER have been respected.

(322) In the absence of these information the Commission considers that Germany has not shown that the training aid fulfils the condition under Article 31 GBER.

5.2.2.1.2.

Article 107(3) TFEU

(324) According to the case-law of the Court, the Commission is obliged to exercise its discretion to assess a State aid measure not complying with the conditions set out in the GBER under Article 107(3) TFEU. In doing so, it can draw on the experience gained in previous cases, as summarised in the criteria set out in the GBER

See judgment of the General Court of 14 July 2011, Freistaat Sachsen (Germany) v European Commission, T-357/02 RENV, ECLI:EU:T:2011:376, paragraphs 42 to 48.

, and on the Commission Communication

Communication from the Commission – Criteria for the analysis of the compatibility of State aid for training subject to individual notification (OJ C 188, 11.8.2009, p. 1), point 3: This guidance is intended to make the Commission’s reasoning transparent and to create predictability and legal certainty. Pursuant to Article 6(1)(g) of Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General block exemption Regulation) […] any individual training aid, whether granted ad hoc or on the basis of a scheme, will be subject to this guidance when its grant equivalent exceeds EUR 2 million per training project..

setting out criteria for the compatibility assessment of training aid subject to individual notification (the Communication) as from 2009.

(325) In the present case, the exemptions under Article 107(3), points (a), (b) and (d) do not apply

Article 107(3), point (a) TFEU concerns aid granted to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment. This exemption concerns only those regions where the economic situation is extremely unfavourable in relation to the EU as a whole, which is not the case of Rhineland-Palatinate.

Article 107(3), point (b) TFEU concerns aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State. A labour market policy limited to the region of Rhineland-Palatinate is not an important project of common European interest.

Finally, the aid does not promote culture and heritage conservation in virtue of Article 107(3), point (d) TFEU.

.

(326) To be compatible with the internal market pursuant to Article 107(3), point (c) TFEU, the aid must meet two conditions, the first being that it must be intended to facilitate the development of certain economic activities or of certain economic areas and the second being that it must not adversely affect trading conditions to an extent contrary to the common interest

See judgment of the Court of Justice of 22 September 2020, Republic of Austria v Commission and Others, C-594/18 P, ECLI:EU:C:2020:742, paragraphs 18-20.

.

(327) As a preliminary point, the Commission observes that it has adopted, in 2009, the Communication. Where the Commission adopts guidelines, it is in principle bound by those guidelines for the purpose of exercising its discretion. However, where Member States invoke particular reasons why the Commission should depart from its guidelines, the Commission is obliged to examine those arguments and exercise its discretion taking into account those arguments

See judgment of the Court of Justice of 19 July 2016, Kotnik and Others, C-526/14, ECLI:EU:C:2016:570, paragraphs 37 to 41.

.

(328) In the present case, the aid has been granted prior to the adoption of the Communication. Germany and interested parties have not specifically commented on compliance of the aid with the Communication. For those reasons, the Commission considers it appropriate to base its assessment directly under Article 107(3), point (c) TFEU, taking inspiration from the principles set out in the Communication.

(329) Firstly, the aid must aim to facilitate the development of economic activity. Germany stated that the training aid is based on a labour market policy of the Land Rhineland-Palatinate. The aim of aid is to qualify people so that they can access the labour market, specifically in the air transport sector. On the one hand, training potential employees is an investment in the economic development of the air transport sector. On the other hand, the increase in employment in the region has a direct impact on the economy of the region, as it affects consumption and investment. Therefore, the first condition is fulfilled.

(330) Secondly, the training aid must not adversely affect trading conditions to an extent contrary to the common interest.

(331) According to points 9, 10, 12 and 16 of the Communication, training aid is presumed not to adversely affect trading conditions to an extent contrary to the common interest, when (a) there is a market failure justifying the aid; (b) the aid is not the only policy instrument available to Member States to encourage training; (c) the training aid has an incentive effect and was necessary; and finally (d) the aid is proportionate.

(332) The Communication indicates that first of all, training aid should only be granted in a situation of market failure. In this assessment, the nature of the training, as well as the transferability of the skills acquired during the training shall play a role. The more general the training, and the more transferrable the skills, the more likely it is that the training will provide positive externalities. Furthermore, inclusion of disabled or disadvantaged workers increases the positive externalities of the training.

(333) The aid was part of a labour market policy that consisted in the programmes Qualification of pilots for a position as captain or first officer in the cockpit 2001/2002, Flight attendant qualification 2001/2002, Qualification of pilots for a position as captain or first officer in the cockpit 2002/2003 and Flight attendant qualification 2002/2003.

(334) The nature of the training is quite specific. The training enables the trainees to work only as a flight attendant or a flight captain/first officer. As regards the transferability of the skills acquired, the training was only provided by Ryanair and Germany and Ryanair have not produced evidence to dispute that 80-90 % of the personnel in question was employed by Ryanair after the training, as it was claimed by the complainant. It can be assumed that the skills learned in the training are transferable to work in other airlines, so that even if this claim by the complainant is correct, the personnel may choose not to stay with Ryanair. It is however not known whether the training was certified, meaning that other airlines could actually employ a person who had undergone this training. Germany only indicated that the trainings in question were aimed at unemployed persons and persons threatened by unemployment. It did not specify whether the training targeted disabled or disadvantaged workers who would not have received such an opportunity in the labour market.

(335) Based on the information in the file, airlines have different policies as to whether they pay for the training of pilots and flight attendants themselves (as is the case for traditional airlines), or whether the applicants for positions have to pay themselves for their training. But under both models, the market normally provides for the training, and there is no need for State intervention or State financing of the training.

(336) For those reasons, the Commission considers that Germany has not demonstrated the existence of a market failure, and concludes that, in general, the market provides for the training in question, without the need for the State to intervene by granting training aid.

(337) In any event, in order to show the necessity and incentive effect of the aid, it must be demonstrated that, by comparison to the situation without aid, that the training offered by the undertaking in question was improved in terms of size, quality, scope or targeted participants. The Commission did not receive any information on the effect the training had on unemployment in the region, as well as the general economic situation in Rhineland-Palatinate. Germany did not submit any counterfactual analysis, comparing the levels of intended training with aid and without aid. In fact, Germany could not demonstrate that the persons undergoing the training were in fact employed afterwards. The Commission therefore does not know if the training as flight attendant or flight captain was necessary to decrease unemployment. Germany has failed to demonstrate how the training aid has incentivised the airline industry to employ more staff. The Commission can therefore not assess the necessity and the incentive effect of the training aid.

(338) In order to be proportionate, the aid must be limited to the minimum necessary to achieve the objective pursued. Since it has already been established that there is no evidence of a market failure and that as a result, there is no need for policy measures to promote training, that the aid was not necessary and did not have an incentive effect, there is no need to assess whether the aid amount was kept to the minimum in order to achieve the objective of the aid. The training aid is therefore not compatible with the internal market under Article 107(3), point (c) TFEU, interpreted in light of the criteria set out in the Communication.

(339) The training aid to Ryanair was hence incompatible State aid.

5.2.2.2.

The 2005 and 2017 marketing agreements between the Land Rhineland-Palatinate and Ryanair

(340) The marketing agreements constitute operating aid to Ryanair, mitigating the operating costs that it should normally bear to operate flights from/to Frankfurt-Hahn airport.

(341) According to the case-law of the Court of Justice, it is up to the Member State to invoke possible grounds of compatibility, and to demonstrate that the conditions for such compatibility are met

See judgment of the Court of 28 April 1993, Italy v Commission, C-364/90, ECLI:EU:C:1993:157, paragraph 20.

.

(342) Germany does not consider that the 2005 and 2017 marketing agreements with Ryanair constitute State aid within the meaning of Article 107(1) TFEU, and so it has brought forward no arguments as to the compatibility of these agreements with the internal market.

(343) The compatibility of the aid has to be assessed at the date on which it was granted

See recital 85 of the 2005 Aviation Guidelines and recital 174 of the 2014 Aviation Guidelines.

. For the 2005 marketing agreement, this was 4 November 2005, i.e. before the entry into force on 9 December 2005 of the 2005 Aviation Guidelines. For the 2017 this was 20 October 2017. The 2014 Aviation Guidelines apply to the 2017 marketing agreement.

(344) As concerns the 2005 marketing agreement, the Commission follows the same approach it has taken in previous decisions where it had to assess the compatibility of aid granted before the entry into force of the current 2014 Aviation Guidelines and the 2005 Aviation Guidelines

See for example Commission Decision (EU) 2015/1227 of 23 July 2014 in State aid case SA.22614 (C 53/07) implemented by France in favour of the Chamber of Commerce and Industry of Pau-Béarn, Ryanair, Airport Marketing Services and Transavia (OJ L 201, 30.7.2015, p. 109, ELI: http://data.europa.eu/eli/dec/2015/1227/oj), recitals 452 to 470; Decision (EU) 2016/633, recitals 511 to 531.

.

(345) Before the 2005 Aviation Guidelines were adopted, the Commission had adopted the 1994 Aviation Guidelines

Communication from the Commission – Application of Articles 92 and 93 of the EC Treaty and Article 61 of the EEA Agreement to State aid in the aviation sector (OJ C 350, 10.12.1994, p. 5).

. However, the 1994 Aviation Guidelines did not specifically provide compatibility conditions for operating aid aimed at promoting air traffic from regional airports. In line with the approach taken in previous decisions, the Commission must therefore assess the compatibility of the aid in question directly on the basis of Article 107(3), point (c) TFEU.

(346) In this respect, it should be noted that the Commission’s assessment of this type of State aid has been refined over time, although some points have remained unchanged. These points stem from the general principles governing the compatibility of aid in accordance with the aforementioned provision of the TFEU.

(347) Accordingly, in the decision on Manchester airport of June 1999

See Commission Decision of 14 June 1999 in State aid case NN 109/98 United Kingdom, Manchester Airport (OJ C 65, 13.3.2004, p. 5).

, the Commission found that reductions in airport charges granted in a non-discriminatory and time-limited manner as measures aimed at promoting new routes were compatible with State aid rules.

(348) Subsequently, in its decision of February 2004 on Charleroi airport

Commission Decision 2004/393/EC of 12 February 2004 concerning advantages granted by the Walloon Region and Brussels South Charleroi Airport to the airline Ryanair in connection with its establishment at Charleroi (OJ L 137, 30.4.2004, p. 1, ELI: http://data.europa.eu/eli/dec/2004/393/oj) (Charleroi decision). This decision was annulled by the Court of First Instance’s judgment in case Ryanair v Commission, T-196/04, ECLI:EU:T:2008:585. However, it shows how the Commission’s assessment of the aid in question has developed.

, the Commission explained that operational aid measures intended to help the launch of new airlines or strengthen certain frequencies may be a necessary tool for the development of small regional airports. The measures may indeed persuade the interested companies to take the risk of investing in new routes. However, in order to declare such aid

compatible on the basis of Article 87(3)(c) of the Treaty, it should be determined whether this aid is necessary and in proportion to the objective sought, and whether it affects trade to an extent that is contrary to the common interest. The Commission therefore identified certain conditions to be met in order for this operating aid to be declared compatible, in particular the following

A similar assessment has been made by the Commission in other recent cases. See for example Decision (EU) 2015/1227, recitals 452 to 470; Decision (EU) 2016/633, recitals 511 to 531.

.

(a) The aid must contribute to the objective of Community interest of developing a regional airport through a net increase in traffic on new routes

See recitals 283 to 297 of the Charleroi decision.

.

(b) The aid must be necessary in the sense that it is not granted for a route already operated by the same or another airline or a similar route

See recitals 288 to 309 of the Charleroi decision.

.

(c) The aid must have an incentive effect in the sense that it must help to develop an activity that, after a certain period, is likely to become profitable, which implies that the aid is limited in time

See recitals 311 to 317 of the Charleroi decision.

.

(d) The aid must be proportionate, i.e. the amount must be linked to the net development of traffic

See recitals 318 to 325 of the Charleroi decision.

.

(e) The aid must have been granted transparently and without discrimination and must not be combined with other types of aid.

(349) The 2005 Aviation Guidelines and the 2014 Aviation Guidelines precisely define these compatibility principles, but it remains the case that operating aid granted to airlines may be declared compatible by the Commission where it contributes to the development of smaller airports through a net increase in traffic on new routes, where the aid is necessary (i.e. it is not granted for a route already operated by the same or another airline or for a similar route), where it is limited in time, where the route for which the aid is granted is likely to become profitable, where the amount is linked to the net development of traffic, where the aid is granted transparently and without discrimination, and where it is not combined with any other type of aid

See Decision (EU) 2015/1227, recital 457; Decision (EU) 2016/633, recital 516.

.

(350) In conclusion, the Commission takes the view that, in this case, the compatibility of the 2005 marketing agreement should be assessed in the light of the aforementioned general principles.

(351) The compatibility of the 2017 marketing agreement should be assessed on the basis of the 2014 Aviation Guidelines that also reflect these general principles. According to recitals 138 to 155 of the 2014 Aviation Guidelines, start-up aid to airlines needs to meet the following conditions:

(a) contribution to a well-defined objective of common interest, i.e. increase of mobility of the Union's citizens or facilitation of regional development of remote regions;

(b) need for State intervention;

(c) appropriateness of State aid as policy instrument;

(d) existence of incentive effect;

(e) proportionality of the aid amount;

(f) avoidance of undue negative effects on competition and trade.

(g) the requirements regarding transparency, non-accumulation of aid and non-discrimination, which follow from recitals 133, 159 and 161 to 163 of the 2014 Aviation Guidelines.

(352) Germany and Ryanair did not submit how the operating aid granted to Ryanair through the 2005 and 2017 marketing agreements would contribute to a well-defined objective of common interest. The Commission has rebutted above (recitals 266 to 288) the argument that the Land’s intention had been to promote tourism or the economic development in the region.

(353) In any event, even if the purchase of marketing services pursued an objective of common interest, which was not the case, Germany and Ryanair have not submitted any argument to show that the aid complies granted through the 2005 and 2017 marketing agreements with the other requirements set out above.

(354) Therefore, the Commission concludes that Germany and Ryanair have not demonstrated that there was a need for State intervention, and that the aid to Ryanair was appropriate to encourage economic development in the region. Germany and Ryanair equally failed to demonstrate that the amount of aid was proportionate, and could avoid undue negative effects on competition and trade. Finally, Germany and Ryanair have not demonstrated that the requirements regarding transparency, non-accumulation of aid and non-discrimination of the 2014 Aviation Guidelines were fulfilled.

(355) The aid granted by the 2005 and 2017 marketing agreements therefore constitutes unlawful and incompatible State aid.

1. RECOVERY

(356) According to the Treaty on the Functioning of the European Union and the established case-law of the Union Courts, the Commission is competent to decide that the Member State concerned shall alter or abolish aid when it has found that it is incompatible with the internal market

Judgment of the Court of Justice of 12 July 1973, Commission v Germany, C-70/72, ECLI:EU:C:1973:87, paragraph 13.

. The Union Courts have also consistently held that the obligation on a Member State to abolish aid regarded by the Commission as being incompatible with the internal market is designed to re-establish the previously existing situation

Judgment of the Court of Justice of 21 March 1990, Belgium v Commission, C-142/87, ECLI:EU:C:1990:125, paragraph 66.

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(357) In this context, the Union Courts have established that this objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the internal market, and the situation prior to the payment of the aid is restored

Judgment of the Court of Justice of 17 June 1999, Belgium v Commission, C-75/97, ECLI:EU:C:1999:311, paragraphs 64 and 65.

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(358) In line with the case-law, Article 16(1) of Regulation (EU) No 2015/1589 states that where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary.

(359) Thus, given that the State aid to FFHG as a result of the 2016 withdrawal of the housing plot from 2014 land sale agreement, as well as the training aid and the marketing agreement of 2005 and of 2017 to Ryanair were implemented in breach of Article 108(3) TFEU, and are to be considered as unlawful and incompatible aid, they shall be recovered in order to re-establish the situation that existed on the internal market prior to their granting. Recovery shall cover the time from the date when the aid was put at the disposal of the beneficiaries until effective recovery. The amount to be recovered shall bear interest from the date when the State aid was put at the disposal of the beneficiaries until effective recovery.

(360) Pursuant to Article 17(1) Regulation (EU) 2015/1589 the powers of the Commission to recover aid shall be subject to a limitation period of 10 years and pursuant to paragraph 2, first sentence, [t]he limitation period shall begin on the day on which the unlawful aid is awarded to the beneficiary either as individual aid or as aid under an aid scheme..

(361) As regards the training aid to Ryanair, Germany stated that EUR 1880197,11 was granted to HCM from 2001 to 2003. Germany presented evidence of at least two cheque payments of EUR 220427,64 and EUR 639146,04 to Ryanair through a und o Gettman. These payments were made from HCM’s account on 17 January 2003. According to Germany, the aid was fully paid out before the end of 2003. The Commission considers therefore that the aid was awarded in 2003.

(362) Article 17(2) of Regulation (EU) 2015/1589 says: Any action taken by the Commission or by a Member State, acting at the request of the Commission, with regard to the unlawful aid shall interrupt the limitation period. Each interruption shall start time running afresh. The limitation period shall be suspended for as long as the decision of the Commission is the subject of proceedings pending before the Court of Justice of the European Union..

(363) The Commission's notification to a Member State that a complaint has been lodged is an act interrupting the limitation period within the meaning of Article 17(2) of Regulation (EU) 2015/1589.

(364) As a matter of fact, Lufthansa submitted a formal complaint on 4 March 2011 which was forwarded to Germany on 18 March 2011. In the course of the assessment of this complaint, the Commission asked specific factual questions on the training aid to which Germany replied on 14 June 2011.

(365) With this action in 2011, the limitation period has been interrupted within the meaning of Article 17(2) of Regulation (EU) 2015/1589, with the consequence that the recovery of the aid awarded in 2003 is not time-barred.

1. CONCLUSION

(366) The Commission finds that the guarantee granted by the Land Rhineland-Palatinate to FFHG constitutes de minimis aid and is therefore exempted from prior notification. The Commission also finds that the airport service agreements of 2013, 2015 and 2016 between FFHG and Ryanair and the financing of a crew and pilot school and a maintenance hall to the benefit of Ryanair comply with the market economy operator principle and do not constitute State aid.

(367) The Commission finds that Germany has unlawfully implemented the following measures in breach of Article 108(3) TFEU, and that those measures cannot be declared compatible with the internal market, thus Germany shall recover the incompatible State aid with interest:

(a) State aid to FFHG as a result of the 2016 withdrawal of the housing plot from the 2014 land sale agreement;

(b) training aid to the benefit of Ryanair;

(c) State aid to Ryanair under the marketing agreements of 2005 and 2017,

HAS ADOPTED THIS DECISION:

Article 1

The airport service agreements of 2013, 2015 and 2016 between FFHG and Ryanair and the financing of a crew and pilot school and a maintenance hall to the benefit of Ryanair Germany has implemented do not constitute aid within the meaning of Article 107(1) of the Treaty on the Functioning of the European Union (TFEU).

The guarantee granted by the Land Rhineland-Palatinate to FFHG that Germany has implemented is exempt from prior notification pursuant to Article 108(3) TFEU because it constitutes de minimis aid.

Article 2

The following measures unlawfully put into effect by Germany in breach of Article 108(3) TFEU in favour of FFHG and Ryanair are incompatible with the internal market:

(a) State aid of an amount of EUR 1,25 million granted to FFHG in 2016 as a result of the 2016 withdrawal of the housing plot from the 2014 land sale agreement;

(b) State aid of an amount of EUR 220427,64, EUR 639146,04 and EUR 680627,93, granted to Ryanair to finance training;

(c) State aid granted to Ryanair under the marketing agreement of 2005 in the years 2005 to 2016 of an amount of EUR 11,2 million (see for the yearly breakdown above in Table 1) and under the marketing agreement of 2017 of an amount the German authorities still need to establish (EUR 350000 for 2017 and up to EUR 1,2 million for each subsequent year).

Article 3

1. Germany shall recover the aid referred to in Article 2 from the beneficiaries.

1. The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery.

1. The interest shall be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794/2004

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EU) 2015/1589 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 140, 30.4.2004, p. 1, ELI: http://data.europa.eu/eli/reg/2004/794/oj).

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Article 4

1. Recovery of the aid referred to in Article 2 shall be immediate and effective.

1. Germany shall ensure that this Decision is implemented within 4 months following the date of notification of this Decision.

Article 5

1. Within 2 months following notification of this Decision, Germany shall submit the following information:

(a) the total amount (principal and recovery interests) to be recovered from the beneficiaries;

(b) a detailed description of the measures already taken and planned to comply with this Decision;

(c) documents demonstrating that the beneficiaries have been ordered to repay the aid.

1. Germany shall keep the Commission informed of the progress of the national measures taken to implement this Decision until recovery of the aid referred to in Article 2 has been completed. It shall immediately submit, on simple request by the Commission, information on the measures already taken and planned to comply with this Decision. It shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiaries.

Article 6

This Decision is addressed to the Bundesrepublik Deutschland.

The Commission may publish the amounts of aid and recovery interest recovered in application of this decision, without prejudice to Article 30 of Regulation (EU) 2015/1589.

If the decision contains confidential information which should not be published, please inform the Commission within 15 working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to publication of the full text of the decision. Your request specifying the relevant information should be sent electronically to the following address:

European Commission

Directorate-General for Competition

State Aid Greffe

1049 Bruxelles/Brussel

BELGIQUE/BELGIË

Stateaidgreffe@ec.europa.eu

Done at Brussels, 9 September 2024.

For the Commission

Margrethe Vestager

Executive Vice-President