This decision is addressed to the Kingdom of Belgium.
Done at Brussels, 12 February 2004.
For the Commission
Loyola de Palacio
Vice-President of Commission
(1) OJ C 18, 25.1.2003, p. 3.
(2) See Note 1.
(3) On the basis of a 1994 Parliamentary Decree, the Walloon Government issued a decree in 1998 that introduced, for Charleroi and Liège airports, a system of airport taxes (landing, passenger and parking) and reductions which were clearly established and available to all (Decree of the Walloon Government of 16 July 1998 laying down the fees to be levied for the use of airports within the Walloon Region, Moniteur Belge of 15 September 1998). This system was amended in March 2001 by a new Walloon Government Decree (Walloon Government Decree dated 22 March 2001 amending the Walloon Government Decree of 16 July 1998, Moniteur Belge of 10 April 2001). Walloon regulations state that "the fees and subscriptions fixed in this decree shall be levied by the airport management company". In addition, at the end of each calendar year, "35 % of the amount of the fees and subscriptions fixed by this decree and levied at each airport shall be paid into a fund for the environment of the airport concerned".
(4) The calculation, shown in detail in points 22-29 of the decision to initiate the procedure, shows a figure of approximately 50 % reduction at the present time, totalling, according to the types of aircraft, approximately EUR 104 and EUR 151 for Ryanair's Boeing 737-200 and 737-800, compared with approximately EUR 250 and EUR 390 according to the general rates for the same aircraft.
(5) "The Walloon Region undertakes to compensate Ryanair against any loss of profit arising directly from a modification of the decree or regulation, unless the exercise by the Walloon Region of its decretal or regulatory power is dictated by a regulation or directive, by an ICAO regulation, or by any international treaty or federal law".
(6) "The concession holder is authorised to collect air-traffic fees and fees corresponding to any services that it is required to provide [...]. The concession mentioned in Article 1.1 [the service concession] is granted through a payment to the Walloon Region of an annual total of 35 % of the air-traffic fees collected by the concession holder during the previous year. The term 'air-traffic fees' means the fees connected with landing, embarkation and parking [...]. The sum total of the fees mentioned in Article 18.4 [35 %] forms a fund allocated to the financial resolution of environmental problems caused by operation of the airport". Article 18 of the 1991 Concession Agreement.
(7) See Point 76 of the decision to initiate the procedure. "The principle of private investor in a market economy cannot be applied in this case. It can only be applied within the framework of economic activity and never within the framework of the exercise of regulatory powers. A public authority may not use an argument according to which it could withdraw economic advantages in its capacity of an airport-owning business in order to justify aid adopted in the form of discriminatory exercise of its regulatory or fiscal powers".
(8) Direct costs per aircraft and rotation out of Brussels National, including landing charges, passenger fees and ground handling costs. On the basis of a forecast volume of 1700000 passengers in 2003, the difference in cost is EUR 23 million.
(9) OJ L 272, 25.10.1996, p. 36. Directive last amended by Regulation (EC) No 1882/2003 of the European Parliament and of the Council (OJ L 284, 31.10.2003, p. 1).
(10) The company quotes the example of Shannon, in Ireland. Shannon granted advantages to Ryanair for a time, but they were not renewed. Ryanair decided to transfer its operations to another airport and Shannon did not receive the expected return on reasonable investment.
(11) Court Judgment of 22 March 1977 in Case 78/76, Steinike & Weinlig/Germany; ECR p. 595. "Any breach by a Member State of an obligation under the Treaty in connection with the prohibition laid down in Article 92 cannot be justified by the fact that other Member States are also failing to fulfil this obligation. The effects of more than one distortion of competition on trade between Member States do not cancel one another out but accumulate and the damaging consequences to the common market are increased". (Ground 24).
(12) The rates imposed by Frankfurt-Hahn and London Stansted would be higher, and the reductions less, while Ryanair operates 49 destinations out of London and 15 out of Frankfurt-Hahn, compared with 9 out of Charleroi.
(13) It accounts for 55 % of TBI's income.
(14) The number of passengers at Luton increased from 1,9 million in 1995-1996 to 6,7 million in 2002, that is, an increase of 250 % against a background overshadowed by the attacks of 11 September 2001.
(15) The number of passengers at Cardiff rose from 1 million in the early 1990s to 2,25 million in 2003.
(16) Before the coming of Ryanair in 1997, there were less than 20000 passengers at Skavsta. The number totalled 315000 in 2002. The launch of the Ryanair base will increase this figure fourfold, taking it to 1,5 million in 2003.
(17) Morrison recalls that, faced with an increase in the fees charged by the Irish airport manager at Shannon (Aer Rianta), Ryanair decided to transfer the greater portion of its flights to Kerry airport in Ireland. See also the Ryanair press communiqué dated 13 February 2003 on the transfer of the Frankfurt Hahn - Shannon route to Frankfurt Hahn - Kerry (www.ryanair.com).
(18) Article 80 of the Treaty provides that provisions relating to transport apply to the air transport sector according to the following procedure: "The Counci may, acting by a qualified majority, decide whether, to what extent and by what procedure appropriate provisions may be laid down for sea and air transport".
(19) COM(97) 154 final (OJ C 257, 22.8.1997, p. 2).
(20) Cranfield University, Study on Competition between Airports and the Application of State Aid Rules, September 2002, available in English on the Commission's website http://europa.eu.int/comm/ transport/air/rules/studies_fr.htm. See in particular Chapter 5.1.4 on the various types of discount granted by airports, as well as Chapter 4.1.3.
(21) This information, protected by commercial secrecy, could not be sent to Belgium for comment and is not reproduced here.
(22) Ryanair cites the experience of Belfast (EasyJet), Liverpool (EasyJet), London Luton (EasyJet), Glasgow Prestwick (Ryanair), Bristol (Go), East Midlands (Go) and London Stansted (Ryanair, EasyJet and Buzz).
(23) For Glasgow, see point 52 of the decision to initiate the procedure. For Copenhagen, Ryanair explains that between 1994 and 2002 the number of passengers increased from 14,1 million to 18,7 million and the value of the airport from EUR 525 million to EUR 956 million between those two years. A 32 % increase in passenger numbers had increased the value of the airport by 82 %. The British Airport Authority airports saw their value increase from EUR 7000 million to EUR 12300 million, that is, an increase of 75 % between 1993 and 2002 based on an increase of 56 % in passenger numbers (from 77,1 million to 121,6 million).
(24) Stansted showed losses during the first few years, but these were subsequently offset.
(25) According to the glossary of terms used in the field of European Union competition policy, network effects appear if the value of a product increases for a user together with the number of users of the same product or compatible products. Economists then speak of an "external network factor" as when additional consumers join the network of existing consumers, they will have a positive "external" influence on the consumers who are already network members.
(26) Ryanair quotes the example of Morrison, which offers financial incentives to companies operating out of Prestwick for each new line opened. These incentives are valid for three years and diminish each year. In the same way as Ryanair has to justify use of funds to BSCA, Morrison requires invoices before any sum is paid. In 1997, Morrison offered
1 million per year for five years to the company that would take on the Glasgow-New York service discontinued by British Airways. Bristol and Cologne/Bonn airports also offer financial incentives.
(27) Commission Decision of 14 June 1999, United Kingdom - Manchester Airport, State Aid NN 109/98.
(28) A report by the University of Westminster titled "The economic impact of Ryanair at Charleroi/ Brussels South Airport", and a Ryanair report titled "Socioeconomic impact of the arrangements" were sent as Annexes 19 and 20 to Ryanair's response.
(29) As a general rule, according to Ryanair 1100 full-time jobs would be generated by an annual volume of 1 million passengers. Ryanair's activity on its own could potentially create 2200 jobs, which should be compared with the aims of the Walloon Region's employment policy for seven years (target of 8500 people for expenditure of EUR 1300000000).
(30) Court Judgement of 17 September 1980 in Case 730/19, Philip Morris/Commission, ECR p. 2671, Ground 24.
(31) OJ L 10, 13.1.2001, p. 20.
(32) The cause of the financial trend is the growth in commercial activity and the development of income linked to the new, larger and more attractive terminal from 2005 onwards, the expiry of the "one-shot" incentives, the opportunity for BSCA to negotiate new commercial conditions with Ryanair beyond the 26 rotations provided for in the current contract, the abolition of the car park shuttle services that will cease to be necessary once the new terminal opens and will represent a saving of EUR [...] and economies of scale in operating the airport.
(33) Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in square brackets.
(34) These modifications are set out in points 60-62 of the decision to initiate the procedure.
(35) In a decision dated 2 May 1989, the Walloon Government ratified the Ministry of Transport analysis according to which:
"The transfer of this area of competence is defined, for the Walloon Region, as the transfer of a deficit estimated at 130 million francs for 1989. The main aim of the Executive is therefore to do everything to ensure that Walloon airports and aerodromes reach their breakeven point quickly. To achieve this goal, several actions have to be carried out together, especially in relation to infrastructure. The development of our airports in fact passes through significant increases in our income, something that can only be achieved by welcoming new activities on their site, such as charter flights, freight transport, business flights and excellent customer service. (...) It must be noted that the basic equipment is far from sufficient for meeting the requirements linked to development of new activities (...). As for Gosselies, although it has suitable buildings and sufficient parking areas for the present, the limited length of its runway will be a disadvantage in terms of the types of activity that it can accommodate". Annex 1 to the response from Belgium of 14 February 2003.
(36) In addition, the costs connected with altering the economic development zones around the airport, including compensation for owners of buildings, were assessed at EUR 75350000 (BEF 3040000000) at the time.
(37) OJ C 350, 10.12.1994, p. 5.
(38) Belgium quotes: the distance between it and Brussels and the absence of rail connection; the dilapidated state of the current terminal, which is lacking in commercial attraction; the preference of charters for Zaventem; the closure of the airport at night; the presence of a Virgin Express base at Zaventem; the prestige of Zaventem; the absence of sufficient technical maintenance for the aircraft based there; the absence of sufficient work for an aircraft based there, hence the need to work in a W (Zaventem, Malaga, Charleroi, Malaga, Zaventem) or via flight ferry; the airport opening times; and the insufficient lengths of runway for flights over two hours (no ILS III).
(39) The contacts with Virgin (1997-2000) did not produce results, most notably because of the agreement currently in force and correspondence with Sabena. EasyJet was not interested because it was developing two new continental bases (Geneva and Amsterdam) in 2002, considered the absence of rail connection close to Charleroi to be a major obstacle to setting up, and considered the French market more interesting than the Belgian market. The development strategy followed by Go, approached by BSCA in 2000, was suspended in anticipation of a buyer for the company. Buzz studied the possibilities of the Charleroi-Stansted route, but withdrew from it for fear of lack of profitability. City Bird demanded that the Walloon Region acquire a share in its capital as a prerequisite for setting up at Charleroi; this was refused because of the poor financial health of the business. In 2002, BSCA canvassed some 35 airlines in the so-called "ethnic" flight sector, the East European countries and the charter companies.
(40) The airports mentioned are Liverpool, Luton, Glasgow Prestwick, Frankfurt-Hahn, Paris Beauvais, etc. Liverpool airport, a subsidiary of the private group Peel Holdings, has seen three times as many passengers after its privatisation and the arrival of EasyJet in 1997. The arrival of EasyJet did not prevent the arrival of other companies such as Ryanair and Euroceltic Airways, and some charter companies. Following the inauguration of the new terminal in 2002, the airport granted numerous reductions on official prices.
(41) The following are mentioned: a bookshop, a contract with Coca-Cola for drink distributors and another with Air Terminal Publicity, which manages advertising on behalf of the airport (February 2002); a "Guide du Routard" clothes shop (March/April 2002); an internet terminal supplier (June 2002); a Belgian Sky Shops duty-free store (July 2002); a new cafeteria (August 2002); Budget car hire company (October 2002); a branch of Dexia Bank (November 2002); and a bureau de change (February 2003). BSCA also succeeded, in 2002, in re-negotiating its commission rates on a number of concessions (cafeteria, car hire, Brussels shuttle bus service, supplies of motor fuel).
(42) In this regard, Belgium states that contrary to what the Commission asserts in point 9 of the decision to initiate the procedure, the fact that GTM did not buy into BSCA has nothing to do with the conditions granted by BSCA to Ryanair. Two letters dated April 2001 from the Vinci Group, the group that purchased GTM, certify that the group is still interested in the possibility of buying into BSCA.
(43) "In accordance with the concession agreement dated 9 July 1991 concluded between the Walloon Region and BSCA, the right to collect the fees was transferred to the agent, so that BSCA is in fact the owner of the fees as soon as they are collected from the users, because of the services that it provides to the users on the basis of the concession, with the exception, of course, of the 35 % paid initially to the Environment Fund and then the fixed-ceiling total paid to Sowaer from 2002 onwards. This is developed more specifically in the schedule of conditions dated 9 July 1991. In fact, Article 7 provides that the agent shall collect the fees connected with air traffic, while complying with the regulatory provisions in force or to be issued by the Walloon Regional Executive. Where necessary, the collection of these fees shall, for the purpose of the present document, be considered as a transfer to the agent".
(44) European Union CoJ Judgment of 13 March 2001 in Case C-379/98, PreussenElektra & Schleswag, ECR p. I-2099, Grounds 59 & 61: "In this case, the obligation imposed on private electricity supply undertakings to purchase electricity produced from renewable energy sources at fixed minimum prices does not involve any direct or indirect transfer of State resources to undertakings which produce that type of electricity. (...) In those circumstances, the fact that the purchase obligation is imposed by statute and confers an undeniable advantage on certain undertakings is not capable of conferring upon it the character of State aid within the meaning of Article [87] (1) of the Treaty."
(45) The Commission assumes that Belgium was referring to the Walloon Region and not to BSCA.
(46) Judgment of 2 February 1998 in the joined cases 67, 68 and 70/85, Kwekerij Gebroeders van Der Kooy BV and others v. Commission, ECR p. 219, Ground 30.
(47) Judgment of 29 February 1996 in Case C-56/93, Belgium v. Commission, ECR p. I-723, Ground 82.
(48) This agreement was laid down in an amendment to the 16 July 1998 decree made on 22 March 2001.
(49) During this meeting, the question of the existence of potential State aid was addressed. "[The Walloon government representative] emphasised that the European Commission appears to admit that the regional public authority, whose legal task was to develop the activities of airports, makes a promotional effort. This involvement, which because of the composition of BSCA's shareholding will be treated as expenditure of public funds, should escape criticism by the Commission because of the purpose of the expense. Some members of the Board suggest that unofficial contact should be made with one of the representatives of the Commission to assess the Commission's views on the compatibility of the agreement signed with Ryanair in relation to State aid and competition rules. Most members believe that it is advisable to wait for the end of the negotiations, which will be conducted naturally subject to the Board's approval, and then assess the conditions that may have been obtained before approaching the Commission's departments, albeit unofficially".
(50) If the number of aircraft exceeds the four provided for in the contract, the terms of the contract must be re-negotiated. Ryanair could not obtain any additional financial advantages without basing further aircraft, as the advantages cover only 26 flights per day.
(51) Regional airlines have "a strategy which is oriented towards the leading airline of the alliance to which they belong and they tout for customers which they then redirect towards the leading airline's main hub. In this context, Charleroi airport is of little interest to them". Charter companies "all prefer Zaventem because of the quality of the service it provides and choose Liège as an alternative because it is open day and night".
(52) Since the concessions were amended in April 2002, these costs have been borne by the Walloon Region.
(53) The auditor explains that the Walloon Region took care of the fire and maintenance service until 1997, and then for a transitional three-year period until 31 December 2000, but that it is no longer required to do so: "In addition, the auditor indicates that had this not been done, the fire service agreement, which had expired, would have to be renewed. [The Director of BSCA and the head of the minister's office responsible for airport management] indicates that the texts are currently up to date, especially so that the fire subsidy can be paid more regularly during the year and the management company does not pay too much by way of funds before being reimbursed, as happened in the past. These texts will be supplied shortly".
(54) For the 2000 subsidy: Budgetary Decree of 16 December 1999 (Moniteur Belge, 28 June 2000), Programme 54.02, Heading 31.04.22 (page 22440). For the 2001 subsidy: Budgetary Decree of 14 December 2000 (Moniteur Belge, 22 June 2001), Programme 54.02, Heading 31.04.22 (Page 21524). In addition, the Belgian authorities assured the Commission that the compensation granted did not involve any over-compensation and was calculated on the basis of the service costs in separate accounts.
(55) EU CoJ Judgment of 24 July 2003 in Case C-280/00, Altmark Trans GmbH, not yet published in ECR.
(56) See Points 60-62 of the initiation of the procedure.
(57) Still in response to Interested Party C, which believes that BSCA is benefiting from an exemption of one half of the fees payable by BSCA to Sowaer, Belgium explains that: "The concession contracts that bind Sowaer to the operating companies of airports located in the Walloon Region provide that these companies must pay a fee for the provision of the airport infrastructure as well as for its development. Under the terms of Article 11 of the agreement for sub-concession of the land of 15 April 2002, concluded between Sowaer and BSCA, the annual total was fixed at 35 % of the airport fees fixed at a ceiling of EUR 883689 from 2003 onwards. This total is indexed at a rate of 2 % per year [...]. The ceiling of 35 % of fees payable to Sowaer will be raised to 2651067 from 2007 and increased annually by 2 % from 2008, that is, shortly after the new terminal is made available to BSCA. The increase in the ceiling is justified by the fact that the new infrastructure will allow BSCA to generate higher levels of business income (shops, catering, car parks etc). The calculation made consists of tripling the sub-concession price from 2007 onwards while taking account of an annual indexation of 2 %." "There has been not an exemption on part of the fees payable by BSCA to Sowaer, but a gradual alteration of the fee total commensurate with the development of the infrastructure".
(58) The strategic note submitted to the BSCA Board of Directors meeting on 31 July 2001 states: "BSCA is expected to accumulate losses of 164 million over the next three years. Its equity fund at 31 December 2003 should then be reduced to 23 million francs, that is, less than 20 % of the current capital of 153 million francs. For this reason, an increase in capital of EUR 5 million should be provided in order to avoid being in a precarious position. In anticipation of the finalisation of this operation, which could take several months in view of the large number of shareholders, Sowaer could be called upon in order to obtain a capital credit line, as Sowaer has budgeted for 150 million francs intended for use in increasing the capital".
(59) Decision of 23 May 2001 entitled "Development of airports, adoption of a financial mechanism and creation of a specialist company". It is in this decision that the Walloon Government indicates its approval of Sowaer's statutes, financial level, budget forecasts and management structure. It invites Sogepa to set up Sowaer, and provides that "the financing of environmental measures, except for isolation, shall be examined by Sowaer in cooperation with the concessionary companies".
(60) Minutes of the BSCA Board of Directors' meeting on 31 July 2001.
(61) "It emerges from this analysis that the average annual profitability of the funds invested on the basis of the amended business plan and over an estimated period of 10 years totals [...] %", and that "this return must be compared with a rate for the market risk for this type of activity at 15 % per year".
(62) It quotes the Commission Decision of 5 March 2002 in Case N IV/M.2672, SAS/Spanair (OJ C 93, 18.4.2002, p. 7), and the Commission Decision of 11 August 2000 in Case N IV/M.0019, KLM/Alitalia (OJ C 96, 5.4.2000, p. 5).
(63) Note: the net loss of EUR 1531793 for 2003 is actual, and in accordance with the analysis presented by Deloitte & Touche on 13 February 2003, the loss anticipated in the business plan of 22 April 2002. The loss anticipated in the 2001 business plan, used both for the BSCA decision-making process and for the present analysis, totalled EUR 1066672 in the operating result.
(64) In its proposal on airport fees, mentioned above, the Commission stressed the application of the rules relating to State aid by pointing out that reductions or exemptions that are not justified by a difference in cost may distort competition between users. They may have a discriminatory effect (...). Because in many cases airports are still controlled directly or indirectly by the public authorities, such practices could constitute indirect State subsidies that are in contradiction with Community rules when they affect or are likely to affect competition.
(65) Walloon Regional Council Decree of 23 June 1994 on the creation and operation of airports and aerodromes located in the Walloon Region (Moniteur Belge, 15 July 1994).
(66) The Commission remarks in this respect that the Walloon Government apparently did not consult the users' advisory committee when the 2001 decree altered levels of airport taxes, with the specific aim of taking account of Ryanair's arrival in Charleroi, and increased both passenger and landing taxes for all users. This consultation is not mentioned in the preamble to the 2001 decree.
(67) See point 167 of the Advocate-General's conclusions in the joined cases C-34/01 to C-38/01, Enirisorse SpA v. Ministero delle Finanze (not yet published in the Court Reports).
(68) Especially in its Judgment of 2 July 1974 in Case C-173/73, Italy v. Commission, ECR p. 709, in which it specified that "as the funds in question are financed through compulsory contributions imposed by State legislation and as, as this case shows, they are managed and apportioned in accordance with the provisions of that legislation, they must be regarded as State resources within the meaning of Article [87], even if they are administered by institutions distinct from the public authorities" (Ground 35). Similarly, in its Judgment of 11 March 1992 in joined case C-78 to C-83/90, Compagnie Commerciale de l'Ouest, ECR p. I-01847, the Court confirmed that aid financed from parafiscal charges constituted aid within the meaning of Article 87 of the Treaty.
(69) See Walloon decree of 16 July 1998: "A fee shall be payable for the landing of an aircraft" (Article 3.1). "A fee shall be payable for outside parking of the aircraft" (Article 4.1). "A fee shall be due for use of the facilities by the passengers" (Article 5).
(70) See in particular Commission Decisions 95/364/EC of 28 June 1995 concerning Belgium (OJ L 216, 12.9.1995, p. 8), 1999/199/EC of 10 February 1999 concerning Portugal (OJ L 69, 16.3.1999, p. 31), and 2000/521/EC of 26 July 2000 concerning Spain (OJ L 208, 18.8.2000, p. 36).
(71) CoJ Judgment of 29 March 2001 in Case C 163/99, Portugal v. Commission, ECR p. I-2613, confirming Decision 1999/199/EC.
(72) For the economic regulation of airports, see for example Section 5.1.2 of the University of Cranfield report mentioned above.
(73) A number of activities are dealt with by the Walloon Region or by the Walloon Airport Company, including construction of new infrastructure and major repairs on the Charleroi site, environmental, security and airport guarding services (including for example control of access to the embarkation area and luggage checks), insurance intended to cover the civil liability of staff responsible for police tasks, security and inspection of transport, fees paid to lawyers hired to defend the interests of the Region in relation to airports, studies and conferences on airport-related issues, the repayment of certain air traffic control payments borne by Belgocontrol, the purchase of durable furniture specific to the airport, etc. See for example the income and expenditure budget for the Walloon Region for 2003 (Organic Division 54-Transports - Programmes 02: regional airports and aerodromes), Internet site http://mrw.wallonie.be/sg/ db/Depenses/..\Kubla\KU %20DO5205402.htm.
(74) See Ground 107 of the Judgment of the Court of First Instance of the European Communities of 12 December 2000 in Case T-128/98, Aéroports de Paris vs. Commission, ECR p. II-3929: "It must first be noted that, under Community competition law, the concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed (...) and that any activity consisting in offering goods and services on a given market is an economic activity".
(75) See the report, mentioned above, from the University of Cranfield, pages 5-24 and 5-25. See also the Irish Transport Minister's report: www.gov.ie/tec/aviation/reports/knockairport.htm.
(76) See http://www.nyköping.se/ templates_new/Page_end.asp?id=5911.
(77) CoJ Judgment of 16 May 2002, "Stardust Marine" in Case C-482/99, France v Commission, ECR, p. I-4397: "In order to examine whether or not the State has adopted the conduct of a prudent investor operating in a market economy, it is necessary to place oneself in the context of the period during which the financial support measures were taken in order to assess the economic rationality of the State's conduct, and thus to refrain from any assessment based on a later situation." (Ground 71). See also the Commission Communication to the Member States on the application of Articles 92 and 93 of the EEC Treaty and of Article 5 of Commission Directive 80/723/EEC to public undertakings in the manufacturing sector (OJ C 307, 13.11.1993, p. 3) where the Commission notes that it is out of the question for the Commission to use its knowledge of facts after the event to decide that the provision of public resources constituted State aid, for the sole reason that the rate of return finally obtained is too low. Only projects for which the Commission considers that there were no objective reasons or good faith for reasonably expecting an appropriate rate of return in a comparable private business at the moment when the decision to invest/finance was taken can be treated as State aid (point 28).
(78) See Points 60, 61 and 62 of the decision to initiate the procedure, relating to the changes made to the 1991 concession on 29 March and 15 April 2002, that is, after the date of signature of the agreements with Ryanair in November 2001.
(79) See point 29 of the abovementioned Commission communication on undertakings in the manufacturing sector, as well as its point 27 where it states that the Commission does not claim, and never has claimed, to substitute its judgement for that of the investor. All requests for additional resources clearly lead the public undertakings and public authorities to evaluate the risk and the probable result of the project, just as private businesses and private capital providers also would. For its part, the Commission knows that in order to carry out this risk analysis, public undertakings must, in the same way as private ones would, apply profitability criteria, which because of the nature of the problem suggests a significant scope for discretion for the investor. Within this significant scope, the exercise of the investor's freedom to evaluate the situation must not be considered as involving State aid.
(80) On 30 May 2001, the Board of Directors wished "to be in possession of a financial projection relating to future operations with Ryanair as soon as possible". On 10 July 2001, a director indicated to the Board that the directors knew only a few of the elements needed for assessing the contract in financial terms, and stressed the importance of this given that the directors had been made responsible. The business plan was not submitted to them or discussed until 31 July 2001.
(81) Depending on the aircraft used (B 737-200 or 800) and the minimum aircraft load factor of 70 % likewise indicated in BSCA's business plan, 26 flight rotations (i.e. 26 departures) would comprise between 850000 and 1250000 departing passengers a year. The latter figure was adopted as the ceiling of Ryanair's activity in the analysis of the business plan made by the Commission and for calculating the maximum adjustment adopted above.
(82) For a table of rates covering several years, see the following address on the Commission's Internet site: http://europa.eu.int/comm/ competition/state_aid/others/ reference_rates.html
(83) OJ C 273, 9.9.1997, p. 3.
(84) The EUR 28159047 correspond, in the business plan mentioned above, to the sum of the "fire and maintenance services" subsidies for 2002-2010 as the Commission takes account of the fact that the Walloon Region had in its budgetary decision of December 2000 undertaken to finance the costs of 2001 and that BSCA could count on this sum. However, it had no assurance beyond 2001.
(85) And a planned loss of EUR 1531000 in the 2002 business plan after the signing of the contract with Ryanair.
(86) Minutes of the meeting of the BSCA Board of Directors of 31 July 2001.
(87) If this decision had been taken in May 2001, however, the Commission would have had reasons to doubt that the recapitalisation was in accordance with the principle of a private investor operating in a market economy. In May 2001, neither the Walloon Region nor Sowaer (in the process of being set up) could a priori evaluate return on investment by recapitalising BSCA. At the time, BSCA's Board of Directors had not really discussed the terms of the contract with Ryanair and did not have at its disposal the financial forecasts relating to the contract which it only obtained on 31 July 2001.
(88) Page 9 of Sowaer's financial plan appended to the Walloon Government's decision.
(89) Provision 5.1 of the BSCA-Ryanair contract: "No party shall make a public announcement or any other communication concerning the matters dealt with under the present contract or its annexes until the other parties have received a draft of the proposed disclosure or of the communication to be made and until the parties have issued their prior written consent, unless the publication or production of documents is required by law or by an international, Community or federal court, in which case the other parties shall be informed beforehand of the steps taken by the court".
(90) See in particular the Judgment of the Court of First Instance of 15 June 2000 in Case T-298/97, Alzetta Mauro, ECR, p. II-2319, Grounds 80 & 81.
(91) Council Regulation (EEC) No 2407/92 of 23 July 1992 on licensing of air carriers (OJ L 240, 24.8.1992, p. 1), Council Regulation (EEC) No 2408/92 of 23 July 1992 on access for Community air carriers to air routes (OJ L 240, 24.8.1992, p. 8) (as last amended by Council and Parliament Regulation (EC) No 1882/2003) and Council Regulation (EEC) No 2409 of 23 July 1992 on fares and rates for air services (OJ L 240, 24.8.1992, p. 15).
(92) OJ L 74, 10.3.1998, p. 9.
(93) In the guidelines on State aid for the regions, operating aid means aid intended to reduce the undertaking's current expenditure (point 4.15), while initial investment aid relates to an investment in fixed capital relating to the creation of a new establishment, the extension of an existing establishment, or the commencement of an activity that involves a fundamental change in the product or procedure provided by an existing establishment (point 4.4).
(94) See point 4.15 and following of the guidelines on State aid for the regions.
(95) Commission Decision 1999/502/EC of 1 July 1999 drawing up the list of regions covered by Objective 1 of the Structural Funds for the period 2000-2006 (OJ L 194, 27.7.1999, p. 53).
(96) See State Aid 799/1999 - Belgium: Regional aid maps for Belgium.
(97) See guidelines on State aid for the regions which indicate that individual ad hoc aid granted to a single undertaking or aid limited to one sector of activity may have a significant effect on competition in the market concerned, while its effect on regional development is likely to be too limited [...]. In consequence, the exemptions in question will in principle only be granted in favour of multi-sector aid schemes open to everyone in all the sectors concerned in a given region.
(98) Court Judgment of 14 September 1994 in joined cases C-278, C-279 and C-280/92, Spain v Commission, ECR, p. I-4103.
(99) Community Framework on State Aid for research and development (OJ C 45, 17.2.1996, p. 5), modified (OJ C 48, 13.2.1998, p. 2) and extended (OJ C 111, 8.5.2002, p. 3).
(100) Community Framework on State Aid for environmental protection (OJ C 37, 3.2.2001, p. 3).
(101) Community Guidelines on State Aid for the rescue and restructuring of companies in difficulty (OJ C 288, 9.10.1999, p. 2) and the guidelines in the aviation sector.
(102) Community Regulation (EC) No 70/2001 dated 12 January 2001 concerning application of Articles 87 and 88 of the EC State Aid Treaty for small/medium businesses (OJ L 10, 13.1.2001, p. 33).
(103) Commission Communication - State Aid and capital investment (OJ C 235, 21.8.2001, p. 3).
(104) These costs are staff costs relating to trainers, travelling expenses for trainers and persons involved in the training, ongoing expenses (materials and supplies), depreciation on instruments and equipment in proportion to their exclusive use for the training project in question, the cost of consultancy services relating to training activities, and staff costs of participants in the training project, within certain limits.
(105) OJ L 337, 13.12.2002, p. 3. Job creation aid does not fall within the scope of this regulation when aid is granted in the transport sector (Article 1). The only aid covered by the regulation in the transport sector is aid for recruiting disadvantaged and disabled workers and aid intended to cover additional costs connected with the employment of disadvantaged workers. The aid measure mentioned does not have this aim, nor does it satisfy the other criteria in the regulation.
(106) OJ L 10, 13.1.2001, p. 30.
(107) See point 115 fourth indent of the decision to initiate the procedure.
(108) The Commission has already had an opportunity in the past to apply Article 87(3)(c) directly in order to take account of the economic development of certain sectors, by defining the conditions applicable to the granting of aid in individual decisions. See for example the Commission Communication sent to the Member States and other interested parties on the subject of State aid, No 376/01 (Italy), Aid scheme in favour of installations with cables (OJ C 172, 18.7.2002, p. 2), points 44-49. In the same way, Advocate General Jacobs points out, in point 38 of his conclusions of 18 September 2003 (not yet published in Recueil) in Case C-91/01, Italy v Commission, that "the Commission's power of assessment cannot be limited definitively by the adoption of such texts" (note: guidelines or other forms of "soft law").
(109) Reflecting all the costs of the small airports at tax level means imposing a charge that is often very heavy on a small number of users, thus deterring them from setting up at secondary airports. The abovementioned Commission Proposal on airport fees, which suggested that the fees reflect the real cost of the airport activity, also took account of the specific nature of the small airports, which cannot do without government aid (see point 32). In addition, the Commission notes that some Member States in Europe apply a system of financial equalisation between airports, in which the largest airports often subsidise the smallest. Requiring that the small airports' fees reflect their full total costs would cause unnecessary disruption to their method of organisation.
(110) On the problem of airport taxes in Europe, see for example "Airport charges in Europe", Airport Council International Europe, 8 May 2003.
(111) Point 85 of the decision to initiate the procedure: "With regard to ground handling tariffs, the Commission believes that economies of scale could be applied when an airport user makes significant use of a company's assistance services. It comes as no great shock that the tariff applied to some companies will be lower than the general tariff, insofar as the service requested by these companies will be less than for other clients".
(112) Directive 96/67/EC expressly envisaged the risk of cross-subsidies, by requiring separation in accounts between ground handling activities and other airport activities. Its Article 4 stipulates:
"1. The airport manager, user or service provider that provides ground handling services must apply strict separation in accounts according to current business practice, between activities linked to the supply of these services and their other activities.
2. The reality of this separation in accounts must be checked by an independent auditor nominated by the Member State.
The State shall also check that there has been no financial flow between the activity of the manager as an airport authority and its ground handling activities".
(113) (16) of Directive 96/67/EC.
(114) (25) of Directive 96/67/EC.
(115) Court judgment of 16 October 2003 in Case C-363/01, Flughafen Hannover-Langenhagen GmbH vs. Deutsche Lufthansa AG (not yet published in ECR).
(116) In this regard, the Commission points out the referrals made by the Court of Justice against Italy on 19 December 2002 and 12 September 2003 respectively, on the grounds that these Member States had transposed Directive 96/67/EC in an inappropriate way, leading to direct effects that hindered the arrival of new operators at principal airports in those countries.
(117) Commission Decision 2002/610/EC of 30 January 2002 on the aid regime that France plans to implement in favour of the launch of short-distance sea transport routes (OJ L 196, 25.7.2002, p. 31).
(118) COM(97) 154 final, mentioned above.
(119) CDR 393/2002, end.
(120) COM(2001) 370, end.
(121) Pages 5.33 and 6.11 of the abovementioned report.
(122) See Page 5-27 of the abovementioned University of Cranfield study, which considers: "To some extent, subsidisation of air services within the PSO framework can be interpreted as an indirect subsidy to an airport. With regard to some remote airports in Scotland and Ireland, they are almost exclusively reliant on subsided PSO air services".
(123) While airports directly create 1100 jobs for every million passengers processed in a year, the overall impact (including direct and induced jobs) is assessed at some 2200 jobs or double that total. These are economic engines, "strategic catalysts" that act as a magnet for many other economic activities.
(124) "Europe's Low Cost Airlines: An analysis of the Economics and Operating Characteristics of Europe's Charter and Low-Cost Scheduled Carriers": Air Transport Research Report 7, Cranfield.
(125) This total includes EUR 250000 for hotel costs, EUR 1920000 (that is, EUR 160000 for each of the twelve lines opened), EUR 768000 for pilot training, and EUR 4000 for office equipment.
(126) Each rotation of Ryanair brings in approximately 100000 passengers of 50000 embarking passengers.
(127) See for example OJ S 219, 14.11.2001, p. 150993, and OJ S 240, 11.12.2002, p. 191371.
(128) According to the definitions and the classification shown in Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports (OJ L 14, 22.1.1993, p. 1). Regulation last amended by European Parliament and Council Regulation (EC) No 1554/2003 (OJ L 221, 4.9.2003, p. 1).
(129) Court Judgments of 5 December 2002 in Cases C-466 to C-469/98 and C-470 to C-472/98, Commission v the United Kingdom, Denmark, Sweden, Finland, Belgium and Luxembourg respectively. ECR, p. I-9427 to 9741.
