EN Official Journal of the European Union L 325/63

COMMISSION DECISION (EU) 2016/2069

of 1 October 2014

concerning measures SA.14093 (C76/2002) implemented by Belgium in favour of Brussels South Charleroi Airport and Ryanair

(notified under document C(2014) 6849)

(Only the French text is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof (1),

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments pursuant to the above Articles (2), and having regard to these comments,

Whereas:

1. PROCEDURE

(1) Following information published in the Belgian press in July 2001 and the receipt of a complaint in January 2002, the Commission was informed that Belgium had granted aid measures to the airline Ryanair Ltd (hereinafter ‘Ryanair’) for the operation of air services at Charleroi Airport. In letters dated 21 November 2001, 13 June 2002 and 4 July 2002, and in a meeting held on 9 October 2002, Belgium provided information on this subject to the Commission.

(2) In a letter dated 11 December 2002 (3) (hereinafter ‘opening decision’), the Commission informed Belgium of its decision to initiate the procedure provided for in Article 108(2) TFEU (hereinafter ‘formal investigation procedure’) in respect of these measures. Belgium submitted its comments on 14 February 2003.

(3) The opening decision was published in the Official Journal of the European Union (4). The Commission invited interested parties to submit their comments on the measures in question within one month of the publication date.

(4) The Commission received comments from interested parties. It forwarded the comments to Belgium by letters dated 19 March and 22 April 2003. Belgium was given the opportunity to respond to them. The Commission received Belgium's observations by letters dated 16 and 27 May 2003.

(5) At the request of the Commission, three meetings were held with the Belgian authorities on 24 June 2003, 23 July 2003 and 25 July 2003. These meetings were followed by the dispatch of additional information on 27 August 2003, as requested by the Commission.

(6) On 19 December 2003 Belgium sent a letter containing additional information to the Commission. In this letter, the Belgian authorities requested another meeting with the Commission; this meeting was held on 16 January 2004.

(7) On 12 February 2004 the Commission adopted a partly negative final decision (5) (hereinafter ‘2004 decision’).

(8) This decision was annulled by judgment of the General Court of 17 December 2008 (6) (hereinafter ‘2008 judgment’), obliging the Commission to take a new final decision on the measures in question. The General Court found that the Commission's failure to examine together the measures granted to Ryanair by the Walloon Region (hereinafter ‘Region’) and by the Charleroi airport manager, the public sector company Brussels South Charleroi Airport (hereinafter ‘BSCA’), and to check whether, taken together, these two entities had acted as rational operators in a market economy, was vitiated by an error in law. The 2008 judgment had the effect of reopening the formal investigation procedure, which had been closed by the 2004 decision.

(9) In a letter dated 23 July 2010, the Commission gave Belgium, and the parties having submitted comments in the formal investigation procedure initiated on 11 December 2002, the opportunity to submit further comments in the formal investigation procedure reopened following the 2008 judgment. At the request of the Commission made on 20 April 2011, the Belgian authorities sent further information in letters dated 14 July and 21 September 2011.

(10) In a letter dated 21 March 2012, the Commission informed Belgium of its decision to extend the formal investigation procedure to other measures (hereinafter ‘2012 extension decision’).

(11) The 2012 extension decision was published in the Official Journal of the European Union (7). The Commission invited interested parties to submit their comments on the measures in question.

(12) Belgium submitted its comments on 22 May 2012. The comments of 22 May 2012 did not contain the summary table in Annex I to the 2012 extension decision. This was submitted on 5 June 2012.

(13) On 9 August 2012 the Commission requested further information on, inter alia, the costs incurred by the Société Wallonne des Aéroports (hereinafter ‘SOWAER’) due to its investments in Charleroi airport and its work for BSCA. On 3 September 2012 the Belgian authorities submitted SOWAER's annual accounts for the years 2001 to 2004. They provided further information on 9 October and 18 October 2012.

(14) On 26 October 2012, following a meeting, the Commission requested further information. Belgium provided this information on 9 November 2012.

(15) The Commission received comments from the following interested parties: — comments were received from Interested Party C on 14 September 2012, — comments were received from the Board of Airline Representatives on 17 September 2012, as also comments from Air France, the Association of European Airlines and the Brussels Airport Company, — comments were received from Brussels Airlines on 18 September 2012, — comments were received from BSCA on 4 October 2012, — Ryanair submitted its comments on 3 October 2012, making reference to the comments provided on 30 September 2011, 13 April 2012 and 4 July 2012. Ryanair submitted further comments on 10 April 2013, 20 December 2013, and 17 and 31 January 2014.

(16) The Commission forwarded these comments to Belgium on 2 July and 29 October 2012, 3 May 2013, 22 January and 24 February 2014. Belgium was given the opportunity to respond to them. The Commission received Belgium's observations by letters dated 17 July 2012, 14 December 2012 and 5 June 2013.

(17) On 14 January 2014 the Commission requested further information from Belgium, particularly with regard to applying the market economy operator test to the measures granted to BSCA. Belgium responded in letters sent on 7 and 24 February 2014. However, as these responses were incomplete, the Commission sent a reminder to Belgium on 10 March 2014, indicating the missing responses and asking Belgium to answer accordingly. Further information was submitted by Belgium on 24 March 2014.

(18) On 7 February 2014 the Commission requested further information from Belgium, particularly with regard to the measures granted to Ryanair. On 18 and 24 March 2014 Belgium provided some answers to the questions asked.

(19) Also on 7 February 2014, a meeting was held at Charleroi airport between representatives of the Walloon Region, SOWAER and BSCA, on the one hand, and the Commission services on the other.

(20) On 25 February and 11 March 2014, the Commission asked Belgium for further information, including clarifications on the information provided by Belgium on 7 and 24 February 2014 concerning the measures granted by the Region and SOWAER to BSCA. Belgium responded in letters sent on 25 March and 4 April 2014 (annexes sent on 9 April 2014).

(21) On 17 and 19 March 2014, following the adoption of the Guidelines on State aid to airports and airlines (hereinafter ‘aviation guidelines’ (8)), the Commission called on Belgium and the interested parties to submit their comments on the application of the aviation guidelines to this case. In addition, on 15 April 2014 a notice was published inviting Member States and interested parties to submit their comments, including in this case, on the entry into force of the EU Guidelines on State aid to airports and airlines. The Commission received comments from the Brussels Airport Company, Brussels Airlines, the Board of Airline Representatives, Air France, and the Association for Transport and Environment. It forwarded these comments to Belgium on 26 May 2014. The latter submitted its comments on 26 June 2014.

(22) A further meeting was held on 11 April 2014 between the Commission services on the one hand and Belgium, BSCA and SOWAER on the other hand. Following this meeting, Belgium submitted documents together with a note dated 5 May 2014 on the public service tasks entrusted to BSCA.

(23) On 5 May 2014 the Commission sent a further request for information to Belgium, to which the latter responded on 13 May 2014.

(24) In a letter of 7 May 2014, Belgium accepted that, in this case and given the undertaking made by the Commission services to provide it as soon as possible with a Dutch translation of the decision, the Commission could exceptionally notify the decision in French under Article 297 TFEU. Belgium accepted that only the French version of the decision would be authentic and that the decision would take effect on its notification in French.

(25) On 2 July 2014 Brussels Airlines submitted an updated version of the comments that it had submitted on 25 September 2013 following the publication of the draft guidelines on State aid to airports and airlines. These comments were forwarded to Belgium on 4 July 2014 and the latter submitted its comments on 18 July 2014.

2. BACKGROUND TO THE MEASURES INVESTIGATED

2.1. Creation of BSCA and SOWAER — Background to the commitments made by the Walloon Region and SOWAER concerning Brussels South Charleroi Airport

2.1.1. Institutional reform of 1980

(26) Following the institutional reform law of 8 August 1980, the Belgian regions were given the necessary powers to equip and operate public airports and aerodromes situated within their territory, except for Brussels National Airport, over which the Belgian Federal State retained such powers.

(27) According to Belgium (9), the Walloon Government therefore decided to take advantage of the economic potential offered by such transport infrastructure and gradually make the necessary investments. On 2 May 1989 the Walloon Government ratified a Ministry of Transport note according to which ‘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.’

2.1.2. Creation of BSCA and Region/BSCA agreement of 1991

(28) In 1991 the Region set up BSCA to manage Brussels South Charleroi Airport (hereinafter ‘Charleroi airport’).

(29) Under an agreement dated 9 July 1991 (hereinafter ‘Region/BSCA agreement’), the Region granted BSCA for a period of 50 years: — a service concession for the commercial management of the public property of Charleroi airport, — a property concession covering the permanent and exclusive use of the airport zone.

(30) The Region/BSCA agreement — including the schedule of conditions annexed to the agreement (hereinafter ‘schedule of conditions’) — determines how the costs are shared between the Region and BSCA: (a) With regard to the service concession, the Region/BSCA agreement (10) provides that BSCA ‘shall be responsible for the cost’ arising from the obligations associated with the technical and commercial management of the airport zone. However, under Article 25 of the schedule of conditions, the Region will cover ‘the cost of fire (11) and maintenance (12) services’ until 1 January 1997. (b) With regard to the property concession, the agreement provides that the Region is responsible for preparing the concession area, as well as for any development, installation and equipment work in this area (13), whilst BSCA is responsible for cleaning and maintaining the concession area … (14). The schedule of conditions (15) also provides for an annual or multiannual equipment programme, proposed by BSCA and decided in agreement with the Region, that will be financed by the concession authority.

(31) As regards fees, the agreement (16) provides that: — BSCA is authorised to collect air traffic fees as well as fees corresponding to any services provided, — as consideration for the concession, BSCA pays the Region an annual fee of 35 % of the airport charges collected by BSCA in the previous year. This fee is allocated to a fund for the financial resolution of any environmental problems caused by the airport's operation.

2.1.3. Measures relating to payment of the ‘fire-maintenance’ subsidy by the Region to BSCA from 1997 to 2002

(32) Under Amendment No 2 to the schedule of conditions, payment of the ‘fire and maintenance services cost’ by the Region was extended until 1 January 2000.

(33) The Region also paid the fire and maintenance services cost for the years 2000 (17) and 2001 (18).

(34) As regards the year 2002, Belgium states that, although the Region had always planned to continue granting compensation for these costs, the creation of SOWAER and the introduction of a new legal framework led to a delay in formalising the extension of this compensation. According to Belgium, the continuation of this payment was confirmed in a letter of 5 July 2001 sent by BSCA to the Walloon transport and facilities administration, detailing the main lines of BSCA's 2002 budget covering the costs of these services, following a telephone conversation during which the payment of these services by the Region for 2002 had apparently been confirmed.

2.1.4. Formulation of the investment plan for Charleroi airport in 1999-2000

(35) At the end of the 1990s, a number of studies on the options for developing Charleroi airport were carried out by external consultants. Thus the Region asked Tractebel to conduct a strategic development study on Charleroi airport. This study was completed in April 2000 (19). At the same time, a study carried out by Roland Berger International Management Consultant in July 2000 examined the development of an airport strategy for Wallonia (20). Finally, as part of the negotiations with the Region at the beginning of 2001 with a view to possibly participating in the capital of BSCA, Grands Travaux de Marseille ordered a study into the airport's development potential (21).

(36) According to Belgium, even before these studies and due to technical constraints associated with the existing infrastructure (22), it was clear that a new terminal needed to be built in the northern part of the site. Land had already been compulsorily purchased by the intercommunal body Igretec, which was responsible for creating the ‘Aéropôle’ airport business park. The Region itself compulsorily purchased further land during the 1990s, and in 1999 Igretec transferred to the Region the land that it had purchased. It was on this land that the new passenger terminal, which is now operational, was built.

(37) During a session on 20 July 2000, the Region approved the outlines of a framework agreement on a multiannual investment programme for Charleroi airport, referring in particular to the ‘concept of a new passenger terminal’, with a total budget of EUR 113,74 million. Table 1 Infrastructure investment planned by the framework agreement of 20 July 2000 (million) 2000 2001 2002 2003 2004 2005 2006 2007 Total BEF Total EUR Land 145 38 183 4,54 Infrastructure 340 613 601 1 044 412 100 923 372 4 405 109,20

(38) On 8 November 2000 the Region adopted a decision implementing its decision of 20 July 2000, amending the assumptions of the multiannual investment programme and increasing the total investment cost to EUR 121 million. However, according to the note attached to this decision, ‘investments in the new terminal and its associated infrastructure will only be made as and when specific needs arise. The funding of these investments must be examined as the work is carried out’. The note sets out the calculation, at this stage, of the costs of a new terminal: ‘if actually required by the airport …, the construction of the new terminal and its associated infrastructure could result in an investment in the order of MBEF 1 514’, i.e. approximately EUR 37,5 million, without, however, the implementation timetable of this sum being detailed (see Table 9). The arrangements for financing the Charleroi airport investment programme were also not detailed at this stage (23). Table 2 Infrastructure investment planned by the note attached to the decision of 8 November 2000 (million) 2000 2001 2002 2003 2004 Post-2004 Total BEF Total EUR Total A 93 160 15 38 306 7,59 Total B 12 729 709 548 319 743 3 060 75,86 Terminal 0 0 1 514 1 514 37,53 Total 105 889 2 238 548 357 743 4 880 120,97 A: Direct financing by the Region; B: Investment grants.

2.1.5. Creation of SOWAER on 1 July 2001

(39) On 1 July 2001 the Region formed a company under its exclusive control, the Société Wallonne des Aéroports (hereinafter ‘SOWAER’), to develop the Region's airport infrastructure, place this infrastructure at the disposal of the airport management companies in question, and keep it operational by covering the costs of major repairs and maintenance.

(40) Beforehand, in a decision of 23 May 2001 concerning the ‘establishment of a financial mechanism and [the] creation of a specialised company’, the Region had approved the articles of association and financial plan of SOWAER for the years 2001 to 2004 (24), including a total investment amount for Charleroi airport of MBEF 3 753, i.e. approximately EUR 93 million, of which EUR 28 million was intended for the new terminal (see Table 3). Table 3 Infrastructure investment planned by the SOWAER financial plan approved by the Region on 23 May 2001 (million) 2001 2002 2003 2004 Total BEF Total EUR Land 253 15 0 38 306 7,59 Infrastructure 741 709 548 319 2 317 57,44 Terminal 10 500 500 120 1 130 28,01 Total 1 004 1 224 1 048 477 3 753 93,03

(41) A more detailed financial plan containing the latest versions of the Liège and Charleroi investment programmes was presented to SOWAER's board of directors in March 2002 (25). This plan was subsequently updated at regular intervals (around once a year).

(42) The SOWAER financial plan approved on 23 May 2001 also capped the contribution to the environment fund at BEF 75 million (EUR 1,86 million) for the year 2002. This financial plan also included the balance of the environment fund within SOWAER's revenue, given its delegated tasks.

2.1.6. SOWAER/BSCA agreement of 15 April 2002 and Amendment No 3 of 29 March 2002 to the Region/BSCA agreement

(43) On 15 April 2002 SOWAER, which on 29 March 2002 had taken over the property concession granted to BSCA in 1991, concluded a property sub-concession agreement with BSCA (hereinafter ‘2002 SOWAER/BSCA agreement’) under which: (a) BSCA can exclusively use the airport zone for operating purposes until 2040. Within this airport zone, SOWAER undertakes to conduct an investment programme (hereinafter ‘investment programme’), as detailed in the SOWAER/BSCA agreement, that is identical to the programme mentioned in recital 40 above. SOWAER also undertakes to carry out any major repairs and maintenance on the land, buildings and infrastructure. (b) In return for the airport zone being placed at its disposal and for the investment programme and major repairs and maintenance, BSCA must pay a concession fee consisting of: — an annual variable part equal to 35 % of the airport charges, subject to a cap that will change over time (hereinafter ‘capped variable fee’), — an annual fixed fee, which will also change over time (hereinafter ‘fixed fee’).

(44) Almost at the same time (29 March 2002), the Region and BSCA concluded an amendment to the Region/BSCA agreement. Under this Amendment No 3 to the Region/BSCA agreement (26), the Region undertook to pay BSCA: — a subsidy enabling the Region to assume the costs of the airport land, buildings and infrastructure being placed at the disposal of BSCA by SOWAER. This subsidy corresponded to the fixed fee mentioned in recital 43, meaning that BSCA ultimately bore only the capped variable fee, — a subsidy reimbursing the costs (expenses and investments) incurred by BSCA for the ‘fire and maintenance’ services. Amendment No 3 also amended Article 25 of the schedule of conditions, in particular providing for the inclusion of investment costs and/or investment depreciation costs in the operating account for the fire and maintenance services cost.

2.1.7. Revision of the investment programme on 3 April 2003

(45) On 3 April 2003 the Walloon Government officially noted a revision to the investment programme. This revision specifically amended the capacity of the new terminal in line with the level decided in the initial version of the investment programme. Instead of a capacity of two million passengers, it was now planned to build a terminal with a capacity of three million passengers, together with a larger car park than the one originally planned. This revision involved an additional investment of EUR 33 million.

2.1.8. SOWAER/BSCA agreement of 4 April 2006 and Amendment No 5 of 10 March 2006 to the Region/BSCA agreement

(46) The 2002 SOWAER/BSCA agreement was replaced on 4 April 2006 by a new agreement (hereinafter ‘2006 SOWAER/BSCA agreement’). The latter still contained most of the provisions of the 2002 SOWAER/BSCA agreement, but clarified the content of certain services provided by SOWAER to BSCA in addition to the services defined by the 2002 SOWAER/BSCA agreement. It also amended the terms for calculating the concession fees payable by BSCA to SOWAER.

(47) The Region/BSCA agreement was amended at the same time through Amendment No 5 of 10 March 2006. Article 3.2.2 of the Region/BSCA agreement subsequently provided that: — the costs incurred by BSCA for the fire protection and ground traffic and airport site safety services would be compensated by the Region, — this compensation would be capped. The cap, set at EUR 5 774 000 for 2006, would be annually adjusted.

(48) The Amendment also stipulated that the amount of the financial compensation had to be revised before July 2009.

2.1.9. Amendment No 6 of 15 January 2008 to the Region/BSCA agreement

(49) The Region/BSCA agreement was amended again on 15 January 2008 (Amendment No 6). Under this amendment: — the Region entrusts BSCA with, in addition to the fire protection and ground traffic and airport site safety services, the flight tracking and recording, provisional flight planning (27), marshalling (28) and security (29) services (these tasks were previously carried out directly by the Region (30)), — the Region's subsidy now covers not only BSCA's costs for the fire protection and ground traffic and airport site safety services (with the cap being maintained), but also for those services associated with security, flight tracking and recording, provisional flight planning and marshalling.

2.2. Development of Charleroi airport

(50) Having previously had very few regular users, on 1 May 1997 Charleroi airport welcomed Ryanair, which initially operated one route between Dublin and Charleroi. In April 2001 Ryanair opened its first continental base at Charleroi, initially with two aircraft and some new destinations (Shannon, Glasgow, Pisa, Venice and Carcassonne).

(51) From 2000 to 2013, traffic at Charleroi increased from around 200 000 passengers to nearly 7 million. Table 4 Annual traffic statistics for Charleroi airport Year Passengers Year Passengers 2000 255 317 2007 2 458 980 2001 773 431 2008 2 957 026 2002 1 271 596 2009 3 937 187 2003 1 804 287 2010 5 195 372 2004 2 034 140 2011 5 901 007 2005 1 873 651 2012 6 156 427 2006 2 166 915 2013 6 786 979

(52) Ryanair has always accounted for over [70-80] (*1) % of the traffic at Charleroi airport.

2.3. Status and share ownership of BSCA

(53) The share ownership of BSCA has been remodelled on numerous occasions since 2001. At the end of 2000, BSCA was over 80 % owned by Sambrinvest (31) and, to a lesser extent, by Cockerill Sambre, Igretec (32) and a few other shareholders.

(54) The first alteration stemmed from a decision of the Walloon Government of 8 February 2001. Through this decision, the government ordered Sogepa (33), a company controlled by the Region, to purchase 2 680 shares in BSCA (i.e. 43,79 % of the capital) held by Sambrinvest, the own shares held by BSCA, and the shares that the ‘private shareholders’ wanted to sell. In the same decision, the government also ordered the minister responsible for airport management to ‘prepare a shareholder agreement binding SOWAER, Sambrinvest and possibly Igretec, which will arrange between them the coordination of powers within BSCA, both in the general meeting and on the board of directors and the executive committee.’

(55) The Region also decided to increase the capital of BSCA at the same time: the principle of such a recapitalisation appeared in May 2001 in a Walloon Government decision (34). This capital increase, totalling EUR 3 941 300, was carried out on 3 December 2002. SOWAER contributed the cash sum of EUR 3 808 660 in return for 49,23 % of the shares in BSCA. Table 5 Change in the composition of the BSCA share ownership (35) (%) Year BSCA SOWAER Sogepa Sambrinvest Igretec Belgian airport Other 2000 6,21 — 0,00 82,84 2,29 0,00 8,66 2001 0,00 — 55,07 39,05 2,29 0,00 3,59 2002 0,00 49,23 27,01 19,16 2,32 0,00 2,28 2003 0,00 48,89 27,65 19,16 2,32 0,00 1,99 2004 0,00 48,89 27,65 19,16 2,32 0,00 1,99 2005 0,00 48,89 27,65 19,16 2,32 0,00 1,99 2006 0,00 48,89 27,65 19,16 2,32 0,00 1,99 2007 0,00 48,89 27,65 19,16 2,32 0,00 1,99 2008 0,00 48,89 27,65 19,16 2,32 0,00 1,99 2009 0,00 22,56 27,65 19,16 2,32 27,65 0,67 2010 0,00 22,56 27,65 19,16 2,32 27,65 0,67 2011 0,00 22,56 27,65 19,16 2,32 27,65 0,67 2012 0,00 22,56 27,65 19,16 2,32 27,65 0,67 2013 0,00 22,56 27,65 19,16 2,32 27,65 0,67 These figures are valid as at 31 December of the year indicated.

(56) From 2002 to 2008, SOWAER managed around 49 % of BSCA's capital. According to the Belgian authorities, this management was carried out on behalf of the Walloon Government.

(57) In 2009 BSCA opened its capital to a private partner. The consortium Belgian Airports (hereinafter ‘Belgian Airports’), consisting of the Italian group SAVE and the Belgian company Holding Communal S.A. (36), purchased 27,65 % of the shares in the airport manager. Belgian Airports has a right of veto over certain important decisions, including commercial agreements with Ryanair.

3. DESCRIPTION OF THE MEASURES

(58) Two types of measure are covered by this decision: — the measures granted by the Region and SOWAER to BSCA (Section 3.1), — the measures granted by the Region, SOWAER and BSCA to Ryanair (Section 3.2).

3.1. Measures granted by the Region and SOWAER to BSCA

(59) The measures granted to BSCA that are covered by the procedure are as follows: — under the SOWAER/BSCA agreement and investment decisions, the land and infrastructure of Charleroi airport placed at the disposal of BSCA and the implementation of an investment programme intended to modernise and extend said infrastructure, and also the provision of certain services by SOWAER, including major repairs to the infrastructure, in return for a fee paid by BSCA (Section 3.1.1); — under the Region/BSCA agreement, the granting by the Region of a subsidy for certain services associated with the airport activities (Section 3.1.2); — the subscription by SOWAER on 3 December 2002 of a capital increase in BSCA (Section 3.1.3).

3.1.1. Land and infrastructure of Charleroi airport placed at the disposal of BSCA, including infrastructure constructed under the investment programme, and provision of certain services, particularly major repairs, in return for a concession fee

3.1.1.1. Land and infrastructure of Charleroi airport placed at the disposal of BSCA, including infrastructure constructed under the investment programme, and provision of certain services, particularly major repairs

(60) Under the 2002 SOWAER/BSCA agreement, SOWAER: — grants BSCA a property sub-concession covering the permanent and exclusive use of the airport zone for operating purposes until 2040, — provides BSCA with new investment. The investment programme, which particularly includes the construction of a new terminal, lengthening of the runway, and construction of a taxiway and parking stand for additional aircraft and navigational aid equipment, totals EUR 93 million (37), Table 6 Investment programme annexed to the 2002 SOWAER/BSCA agreement (million) 2001 2002 2003 2004 Total BEF Total EUR Land 253 15 0 38 306 7,59 Infrastructure 741 709 548 319 2 317 57,44 Terminal 10 500 500 120 1 130 28,01 Total 1 004 1 224 1 048 477 3 753 93,03 — carries out any major repairs and maintenance on the airport land, buildings and infrastructure within the concession area.

(61) The investment programme has been annually revised. These revisions have included both updates connected with additional costs not anticipated in April 2002 and decisions on new investments. In particular, on 3 April 2003 the Walloon Government officially noted a revision to the investment programme approved by SOWAER's board of directors. This revision (38) specifically provided for a new terminal with a larger capacity than that originally envisaged (3 million passengers instead of 2 million) and a larger car park than originally planned. It involved an additional investment of EUR 33 million.

(62) The investment programme was annually revised until 2009 (39). The total cost of SOWAER's investment programme for Charleroi for 2002-2010, as revised during its last update by SOWAER's board of directors in 2009, is EUR 219 103 435 (40). Although this investment programme has been referred to as the ‘investment programme for 2002-2010’, the expenditure was planned until 2017. Table 7 Total cost of SOWAER's investment programme for Charleroi, as revised by SOWAER's board of directors in 2009 (EUR) Type of investment Traditional investments [180 000 000 - 210 000 000 ] Of which land [4 000 000 - 5 000 000 ] Of which aircraft parking stand [36 000 000 - 40 000 000 ] Of which new terminal [80 000 000 - 100 000 000 ] Of which control tower [10 000 000 - 13 000 000 ] Previous commitments [1 000 000 - 2 000 000 ] Income generating investments [3 000 000 - 4 000 000 ] Safety - Security - Environment [8 000 000 - 11 000 000 ] Extraordinary maintenance [4 000 000 - 6 000 000 ] Total 219 103 435 Source: Annex 7 to the letter from the Belgian authorities of 21 September 2011.

(63) In addition to the major repairs and maintenance, under the 2006 SOWAER/BSCA agreement, SOWAER undertook to provide additional services on behalf of BSCA, including consultancy services of all kinds (legal, environmental, financial, administrative, etc.), analysis and recommendations on noise pollution associated with the airport, and creation and update of a Geographical Information System (GIS).

3.1.1.2. Concession fee payable by BSCA to SOWAER

(64) In return for the items described in section 3.1.1.1, BSCA pays SOWAER a concession fee.

(i) Contractual provisions

(a) Period from 15 April 2002 to 31 December 2005

(65) Under the 2002 SOWAER/BSCA agreement, BSCA was to pay the Region a concession fee consisting of: — a variable annual amount (hereinafter ‘capped variable fee’), equal to 35 % of the airport charges collected during the current year, with a cap set at EUR 883 689 in 2002, which was increased by 2 % per year from 2003 to 2006. This cap was increased to EUR 2 650 000 in 2007, with a 2 % per year increase thereafter and a review in 2015 (41). This fee is allocated to a fund for the financial resolution of any environmental problems caused by the airport's operation, — a fixed annual amount (hereinafter ‘fixed fee’), set at EUR 9 371 000 for 2002 and indexed thereafter. This amount was increased to EUR 13 525 000 from 2010 and indexed thereafter (42).

(66) However, under the Region/BSCA concession agreement, as amended on 29 March 2002, BSCA benefited from a subsidy from the Region allowing it to ‘perform the public service tasks forming part of the operation of Charleroi airport, namely the costs associated with using the airport land, buildings and infrastructure placed at its disposal by SOWAER’. This subsidy was equal to the fixed fee, so that only the capped variable fee was actually paid by BSCA. Moreover, under the 2002 SOWAER/BSCA agreement, BSCA was exempt from paying the fixed fee if the subsidy from the Region was not received (43).

(b) Period from 1 January 2006

(67) The 2002 SOWAER/BSCA agreement was revised by the 2006 SOWAER/BSCA agreement, applicable from 1 January 2006. Under this agreement (44), BSCA pays SOWAER: — a variable annual amount, set at EUR 1.5 per passenger and EUR 8 per tonne of freight, indexed to the Belgian consumer price index (45). This variable amount was contractually capped at EUR 956 533 (46) for 2006, and then at EUR 2 651 067 from 2007. Since 2008 it has been increased by 2 % per year, compounded annually, — an annual fixed amount of EUR 10 094 000, plus 2 % per year.

(68) At the same time, the service concession agreement between the Region and BSCA of 10 March 2006 amends the terms of the Region's subsidy intended to cover the fixed part of the fees payable by BSCA to SOWAER (47) and includes the exemption clause referred to in recital 66 above (48).

(69) Lastly, through Amendment No 1 of 27 May 2009 to the 2006 SOWAER/BSCA agreement, BSCA and SOWAER agreed that an additional annual amount of EUR […] per additional square metre (49) would be paid by BSCA to SOWAER from 2009 with a view to the acquisition of new land by SOWAER and the correlative extension of the scope of the service agreement. These additional sums amounted to EUR 1 206 in 2010, EUR 1 230 in 2011, EUR 1 255 in 2012 and EUR 1 280 in 2013 (50).

(ii) Amounts of the fees paid by BSCA to SOWAER

(70) In the light of these elements, the amounts of the fees actually paid by BSCA to SOWAER are summarised in Table 8, taking into account the compensation paid by the Region to BSCA for transfer to SOWAER. Table 8 Fees paid by BSCA to SOWAER (51) (EUR) Year Fixed part Variable part Total fees Net fees 2002 9 371 000 883 689 10 254 689 883 689 2003 9 558 420 901 363 10 459 783 901 363 2004 9 749 588 919 390 10 668 978 919 390 2005 9 944 580 937 778 10 882 358 937 778 2006 10 094 000 956 532 11 050 532 956 532 2007 10 262 000 2 651 067 12 913 067 2 651 067 2008 10 478 000 2 704 088 13 182 088 2 704 088 2009 10 150 000 2 758 170 12 908 761 2 758 761 2010 10 150 000 2 813 333 12 964 539 2 814 539 2011 10 353 000 2 869 600 13 223 830 2 870 830 2012 10 353 000 2 926 992 13 281 247 2 928 247 2013 10 353 000 2 985 532 13 339 812 2 986 812 In addition to the fixed and variable parts, the total fees include the additional amount associated with the extension of the scope of the service agreement from 2009, as referred to in recital 69. The net fees take into account the subsidy from the Region to BSCA.

3.1.2. Subsidy paid by the Region for certain services associated with airport activities

3.1.2.1. Contractual provisions

(a) Period from 29 March 2002 to 31 December 2005

(71) Amendment No 3 of 29 March 2002 to the Region/BSCA agreement amended Article 3.2 of this agreement and provided that the Walloon Region would reimburse the costs inherent in the fire and maintenance services: — the fire service is defined by reference to the standards of the International Civil Aviation Organisation (52), — the maintenance service is defined as ‘technical maintenance services for buildings, runways, surrounding areas, vehicle fleet, etc.’ (53), and as ‘maintenance of land, buildings and building facilities, and equipment forming part of the concession or placed at the disposal of the concession, such that they are always fit for their intended purpose’ (54).

(72) Amendment No 3 of 29 March 2002 also amended Article 25 of the schedule of conditions and provided that the concession-holder would present the concession authority with the budget for the fire and maintenance services and that it would keep a separate operating account that could at any time be analysed and checked by the concession authority. ‘This operating account shall particularly include: — the full cost of the staff responsible for fire protection and maintenance of the airport site and of training for these staff, including employer costs and associated provisions (new activities), — the costs of various goods and services (including any subcontracting), — the investment costs and/or investment depreciation costs (55), — any costs of subcontracting the fire protection and maintenance’.

(b) Period from 10 March 2006 to 31 December 2007

(73) Amendment No 5 of 10 March 2006 to the Region/BSCA agreement amended Article 3.2.2 of this agreement as follows: ‘The following shall be annually included in the Walloon Region's budget: … the financial compensation granted by the Walloon Region to BSCA for the costs of providing the fire protection and ground traffic and airport site safety services, in accordance with the conditions laid down by Article 25 of the schedule of conditions annexed to this agreement’.

(74) Amendment No 5 also amended Article 25 of the schedule of conditions. The amended Article 25 provides that: ‘the ground traffic and airport site safety services include routine maintenance of the airport site, technical maintenance services for buildings, runways, surrounding areas and vehicle fleet, minor surfacing work, routine maintenance and repair of the runway and accesses, operational maintenance and servicing of the general lighting and runway lighting, mowing services, rubber removal from the runway and its markings, snow clearance and any other services ensuring the safety of ground traffic, airport site and infrastructures, except for commercial areas of the airport zone’.

(75) Under Article 25 of the schedule of conditions, the financial compensation was capped at EUR 5 774 000 for 2006. This cap was annually indexed until 31 December 2009. The amount of the financial compensation was to be revised no later than the second half of 2009.

(76) Moreover, Article 25.7 of the schedule of conditions, introduced by Amendment No 5 of 10 March 2006, provides that the amount of the compensation may not exceed the actual costs incurred by BSCA and that any overcompensation of the costs will result in budgetary compensation through the budget entry for the following year.

(c) Period from 1 January 2008

(77) Amendment No 6 of 15 January 2008 to the Region/BSCA agreement amended Article 25.1 of the schedule of conditions and added flight tracking and recording, provisional flight planning, marshalling and security to the services already being provided by BSCA (56).

(78) Flight tracking and recording involve adding information on flights (number of passengers, aircraft registration, name of pilot, type of aircraft, nature of flight, origin, weight of aircraft, etc.) to the database of the Walloon administration. Flight planning involves communications, flight plans, slots, radio announcements and management of aircraft parking stands. Flight tracking and recording and flight planning are provided by the ‘navigation office’.

(79) Marshalling consists of two tasks, namely marshalling on stand, which is carried out by the area coordinator when an aircraft arrives, and follow me marshalling, which involves guiding the aircraft with a vehicle. This service is used only for pilots who are unfamiliar with the airport (business aviation) or for Category D large aircraft. At Charleroi airport, the number of such operations is very limited (maximum of 100 per year).

(80) The security services are defined by Article 25.2 of the schedule of conditions, as amended by Amendment No 6 of 15 January 2008, as: ‘screening, remote surveillance, security rounds and patrols, access control and issue of visitor badges’. BSCA delegates the security services to the public limited company BSCA Security. BSCA Security's tasks are defined by reference to the Decree of 23 June 1997 on the creation of airports in the Walloon region (57). BSCA Security is 51 % owned by the Region and 49 % by BSCA.

(81) The terms of the financial compensation are set out as follows by Article 25.1 of the amended schedule of conditions: — with regard to the fire protection and ground traffic and airport site safety services, the Region assumed the costs of their provision under the same terms as those defined by Amendment No 5 (see recital 75) up to 31 December 2009; the parties were to reassess the amount of the compensation no later than during the second half of 2009, — with regard to the flight tracking and recording, provisional flight planning, marshalling and security services (58), the Region assumed the costs of these services for the years 2008 and 2009. Since 1 January 2010, this assumption of costs has been capped at the indexed amount of the compensation paid for the previous year.

(82) Article 25.7 of the schedule of conditions has been amended and provides that the amount of the compensation may not exceed the actual costs incurred by BSCA, after deducting any fees collected from users to cover these services.

3.1.2.2. Amount of the subsidy paid by the Region

(83) Table 9 summarises the subsidies paid by the Region to BSCA and BSCA Security, excluding the ‘public task’ subsidy compensating the annual fixed fee. Table 9 Subsidies paid by the Region to BSCA or BSCA Security (59) from 2001 to 2013 (excluding the ‘public task’ subsidy compensating the annual fixed fee) Fire, safety, maintenance Security Navigation office, including marshalling Total 2001 2 892 612 — — 2 892 612 2002 3 201 000 — — 3 201 000 2003 4 184 964 — — 4 184 964 2004 5 182 000 — — 5 182 000 2005 5 525 000 — — 5 525 000 2006 5 774 000 — — 5 774 000 2007 5 774 000 — — 5 774 000 2008 5 993 000 9 233 984 317 000 15 544 054 2009 6 148 000 13 512 788 417 324 20 078 112 2010 6 148 000 13 596 515 419 909 20 164 424 2011 6 148 000 13 703 323 533 323 20 384 646 2012 6 148 000 14 013 621 454 381 20 616 002 2013 6 148 000 14 013 621 454 381 20 616 002 Total 69 266 576 78 073 852 2 596 388 149 936 816 Source: Annex 9 to the letter from Belgium sent on 6 February 2014, amended for the Giro subsidy by the response from Belgium sent on 25 March 2014.

3.1.3. Capital increase subscribed by SOWAER

(84) In the context of its development projects, and particularly the negotiation of the 2001 agreements with Ryanair, a strategy note submitted to the BSCA's board of directors on 31 July 2001 indicated that ‘over the next three years, BSCA is expected to accumulate 164 million in losses. Its capital as at 31 December 2003 is therefore expected to fall to 23 million francs, i.e. less than 20 % of the current capital of 153 million [Belgian] francs. That is why a capital increase of EUR 5 million should be planned in order to avoid the company finding itself in a precarious situation.’

(85) In fact, in its decision of 23 May 2001 on the SOWAER financial plan, the Region had already confirmed the principle of successive capital injections in the companies managing the Walloon airports (60). At that time the SOWAER financial plan suggested ‘a capital investment in BSCA in the amount of +/– BEF 60 million … followed by, spread over three years, three times 30 million (capital of 600 million with SOWAER holding 25 %, i.e. 150 million)’, i.e. a capital injection of EUR 3,718 million spread over three years.

(86) In the end, the capital increase was implemented in one go on 3 December 2002. The subscribed capital was fully paid up: SOWAER therefore contributed the cash sum of EUR 3,809 million in return for 49,23 % of the shares in BSCA (61).

3.2. Measures granted by the Region and BSCA to Ryanair (62)

3.2.1. The 2001 agreements

(87) The term ‘2001 agreements’ shall mean all the following: — the commitment of the Walloon Government of 6 November 2001, — the contract between BSCA and Ryanair of 2 December 2001 (hereinafter ‘2001 contract’), — the Promocy agreement of 12 December 2001 and the contract between Promocy and Leading Verge of 31 January 2002, on which the decision was taken by the BSCA's board of directors on 31 July 2001 (63).

3.2.1.1. The commitment of the Walloon Government of 6 November 2001

(88) On 6 November 2001 the Region concluded an agreement with Ryanair. This agreement provided for a landing fee of EUR 1 per departing passenger for Ryanair, i.e. a reduction in the order of 50 % in the landing fee compared with the amount set and published by the Walloon Government, which involved a different calculation method (64) (at the time, the airport charges payable by airlines were determined using a fee structure decided and published by the Walloon Government and not BSCA). In addition, the Region undertook to compensate Ryanair for the losses that the airline might directly incur due to a possible change in the level of airport charges or opening hours during the years 2001 to 2016, except where these changes were dictated by the European Union, the Federal State, the International Civil Aviation Organisation or other requirements of international law.

3.2.1.2. The 2001 contract, including the provisions relating to Promocy

(89) Under the 2001 contract between BSCA and Ryanair, BSCA set a price for ground handling services for Ryanair of EUR 1 per passenger (65), i.e. 10 % of the price published in 2001 by BSCA for other users.

(90) BSCA also undertook to contribute, both financially and by providing various services, to the costs associated with opening the Ryanair base at Charleroi (66). This contribution amounted to: — EUR 250 000 for the hotel and living expenses of Ryanair staff, — EUR 160 000 per new route opened, up to a maximum of three routes per aircraft based at the airport, i.e. a maximum of EUR 1 920 000, — EUR 768 000 towards the recruitment and training costs of pilots and crews assigned to the new destinations served by the airport, — EUR 4 000 for the purchase of office equipment.

(91) At the same time BSCA had to place at Ryanair's disposal, free of charge, 100 square metres of office space and 100 square metres of engineering store, and also guarantee a non-exclusive right of access to a training room. BSCA also had to use its good offices to ensure that Ryanair paid nothing or very little for the use of an aircraft maintenance hangar.

(92) In addition, under the 2001 contract, Ryanair and BSCA formed a joint business promotion company called Société de Promotion de Brussels South Charleroi Airport (hereinafter ‘Promocy’). Promocy's company object was to develop Charleroi and its region through the commercial operation of the airport (67) (for example, Promocy financed part of the cost of Ryanair's promotional tickets). BSCA and Ryanair were to contribute in equal proportions to Promocy's operation (68). As a result, BSCA and Ryanair took equal shares in Promocy's capital, which totalled EUR 62 500. In addition, BSCA and Ryanair each paid a contribution of EUR 4 per departing passenger from Charleroi airport carried by Ryanair.

(93) The fees per departing passenger applicable to Ryanair's operations under the 2001 contract and the contributions to the financing of Promocy are summarised in Table 10. Table 10 Fees applicable to Ryanair under the 2001 contract (69) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Landing fee 1 1 1,1 1,13 1,13 1,13 1,26 1,3 1,3 1,3 1,3 1,3 Fee per passenger 7 7 7,38 7,5 7,88 8 8 8 8 8 8 8 Ground handling services 1 1 1,1 1,13 1,13 1,13 1,26 1,3 1,3 1,3 1,3 1,3 Promocy – 4 – 4 – 4 – 4 – 4 – 4 – 4 – 4 – 4 – 4 – 4 – 4 Net total paid by Ryanair 5 5 5,58 5,76 6,14 6,26 6,52 6,6 6,6 6,6 6,6 6,6 Given that the fees under the 2001 contract were revised on 1 April, they have been applied on a pro rata basis so that they are comparable on an annual basis (1 January-31 December).

(94) In return, Ryanair undertook vis-à-vis BSCA to base a number of aircraft at Charleroi (between two and four) and to operate at least three rotations per day and per aircraft departing Charleroi over the 15-year period (2001-2016) covered by the contract. The Irish company thus assured the airport manager of passenger traffic allowing it to anticipate income, either through airport charges or through non-aviation activities. Under the contract, if Ryanair ceased its operations at Charleroi in the first five years of the contract, the company would be required to reimburse to BSCA the contribution to the costs associated with opening Ryanair's base and the marketing contribution. Beyond the fifth year of the contract, the reimbursement would be calculated on a sliding scale (70).

3.2.2. The Ministerial Order of 11 June 2004 and the BSCA letter of 24 June 2004

(95) According to Belgium, under its national law, the 2004 decision effectively rendered the 2001 agreements null and void. The Region therefore decided to adopt a ministerial order on 11 June 2004 that reduced, on a promotional basis, the landing fees for aircraft at Charleroi airport. This order entered into retroactive force on 13 February 2004. It stipulated that, on a promotional basis and for all airlines, the landing fee for an aircraft on a scheduled route was EUR 1 per passenger (i.e. the fee paid by Ryanair under the 2001 agreements). This general reduction was valid only for a period of 36 months from the entry into force of the ministerial order.

(96) In a letter of 24 June 2004 (71), BSCA undertook towards Ryanair to continue applying the terms of the 2001 agreements until 31 March 2006 and guaranteed, in particular, that the company would pay a total cost for using the airport's services of EUR 5 per departing passenger, corresponding to the level that would have resulted from applying the 2001 agreements if they had continued to be applied in 2005 and 2006 (see Table 10). This provisional commercial framework was dependent on a limit of 2 million passengers per year not being exceeded in terms of all the airport's activities (72). However, despite this limit being slightly exceeded in 2004 (73), the conditions offered to Ryanair were not altered in 2004 and 2005.

3.2.3. The 2005 amendment

(97) By Decree of 3 February 2005, the Region delegated responsibility for setting airport charges to airport managers, including BSCA (74).

(98) From 1 April 2006, the general landing fee payable to BSCA was increased to EUR 2 per departing passenger. This fee of EUR 2 was indexed. In addition, a system of annual discounts according to the number of departing passengers was applied in accordance with Table 11. Table 11 Discounts on landing fees applicable to all airlines operating at Charleroi airport from 1 April 2006 (75) Discounts on an annual basis Percentage discount (%) From number of departing passengers To number of departing passengers 0 0 15 000 5 15 001 35 000 10 35 001 50 000 25 50 001 100 000 35 100 001 200 000 50 200 001 —

(99) On 9 December 2005 BSCA proposed to Ryanair, which accepted this, a new commercial agreement dated 9 December 2005 (hereinafter ‘2005 amendment’) for the period from 1 April 2006 to 31 December 2015.

(100) Under the 2005 amendment: — the landing fee payable by Ryanair was calculated based on the general landing fee, which provided for a 50 % discount above 200 000 passengers (see Table 11), — the ground handling fee applicable to Ryanair's operations was set until 2015 in accordance with Table 12, — Ryanair was subject to a new fee, called the ‘infrastructure access fee’, — the contract no longer required the contribution by BSCA to Promocy. Table 12 Fees applicable to Ryanair under the 2005 amendment (76) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Landing fee [1-1,2 [1-1,2 [1-1,2 [1-1,2 [1-1,2 [1-1,2 [1-1,2 [1-1,2 [1-1,2 [1-1,2 Fee per passenger 0 0 0 0 0 0 0 0 0 0 Ground handling services [4-6] [4-6] [4-6] [4-6] [4-6] [4-6] [4-6] [4-6] [4-6] [4-6] Infrastructure access [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] Net total paid by Ryanair [5-7] [5-7] [5-7] [5-7] [5-7] [5-7] [5-7] [5-7] [5-7] [5-7] Difference compared with the 2001 contract [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] [0-0,5] The landing fee figures are based on Ryanair's passenger projections at the time when the 2005 amendment was signed.

(101) The Commission notes that the amounts per passenger paid by Ryanair in accordance with Table 12 are, except for […], identical to those stipulated by the 2001 contract (77) (see Table 10).

(102) Lastly, the 2005 contract stipulated that, for a period of at least six months after the new terminal's entry into use, Ryanair would base four aircraft at Charleroi with a minimum of [25-32] daily rotations. If it failed to do so, Ryanair would pay a [10-25] % surcharge.

3.2.4. The 2010 amendment

(103) On 1 January 2009 BSCA introduced an additional fee per passenger, payable by all airlines operating at Charleroi airport, in relation to Passengers with Reduced Mobility (hereinafter ‘PRM fee’). Amendment No 7 to the Region/BSCA agreement authorises BSCA to set such a fee, which, according to Belgium, is in line with Union law (78). The PRM fee was set at 19,5 euro cents per departing passenger in 2009 (79).

(104) An amendment to the contract between BSCA and Ryanair was concluded on 6 December 2010 (hereinafter ‘2010 amendment’), following an exchange of letters between BSCA and Ryanair. It provides for: — a general exemption from the PRM fee, under which Ryanair will pay [10-30] euro cents per passenger for the year from 1 February 2009 to 31 January 2010; moreover, the terms of indexation of the PRM fee provide for a reduction in this fee proportional to the increase in traffic generated by Ryanair (80), — a reduction of [10-50] euro cents per Ryanair passenger in the ground handling fee.

3.2.5. Sale of BSCA shares in Promocy

(105) On 31 March 2010 BSCA sold its 50 % holding in Promocy (81) to Ryanair. BSCA sold the shares at their book value for a total amount of EUR 31 100 (i.e. EUR 100 per share). All the risks and obligations were transferred to the sole shareholder, namely Ryanair.

(106) According to Belgium, at the time of this sale, Promocy's cash resources totalled EUR 261 073 (balance of the assets, having deducted the capital and statutory reserve) (82). BSCA therefore sold half of Promocy's capital for a price well below half the value of the cash resources.

4. COMMENTS FROM INTERESTED PARTIES

4.1. Comments from interested parties on the measures granted to BSCA

4.1.1. Brussels Airport Company (hereinafter ‘BAC’)

(a) Comments received in September 2012 following the adoption of the 2012 extension decision

(107) BAC considers that all the measures granted to BSCA, as described in the 2012 extension decision, constitute State aid that cannot be declared compatible with the internal market.

(108) According to BAC, none of the investments described in the 2012 extension decision was the object of a legally binding decision before 12 December 2000.

(109) BAC considers that none of the infrastructure investments related to the exercise of public power, as they are all essential elements for the economic activities of the operator, including works to improve the operation of the airport such as landing systems or runway extensions, or to facilitate its economic development such as car parks, access roads or maintenance hangars.

(i) BSCA's payment for the concession and infrastructure

(110) BAC submits that none of the measures granted to BSCA as described in the 2012 extension decision is in line with the market economy investor principle (hereinafter ‘MEIP’). Based on industry practice, the return on investment that the Region/SOWAER receives is far below what a private investor would expect (83).

(111) According to BAC, any investment aid granted to BSCA was not limited to the minimum necessary. This is because BSCA's payment for the concession and infrastructure remained constant between 2002 and 2010, apart from a step up in 2007, while passenger numbers and revenues increased over the same period. This resulted in an increase in the average net value of the infrastructure for BSCA, whereas average net payments decreased.

(ii) Services provided by SOWAER to BSCA and services reimbursed by the Region

(112) With reference to the services provided by SOWAER to BSCA and the services reimbursed by the Region to BSCA, BAC submits that, apart from public services such as police and customs, the Belgian State does not pay for any other activities at Brussels airport. BAC bears the cost of fire services, safety and maintenance itself. The flight tracking, recording and planning services provided by Belgocontrol are paid for directly by the airlines using Brussels airport. At Charleroi airport, airlines do not have to pay for these services. As such, the services reimbursed by the Region to BSCA do not relate to the exercise of public power.

(113) BAC considers that these services do not constitute services of general economic interest as they are inherent in the operation of an airport and in the essential aspects of the economic activities of an airport and do not meet the Altmark criteria.

(114) BAC considers that the payments made to reimburse BSCA for these services are not in accordance with the MEIP and constitute operating aid. As the payments made by BSCA to the Region for the use of the infrastructure are less than what a private investor would find acceptable, such an investor would not agree to additional payments being made for services without a corresponding return.

(115) BAC points out that operating aid can be declared compatible only under exceptional circumstances and under strict conditions in disadvantaged regions. None of these conditions is met in the case of Charleroi airport and the aid cannot be regarded as compatible with the internal market.

(iii) Participation of SOWAER in the BSCA capital increase

(116) BAC doubts whether the BSCA capital increase of 3 December 2002 complied with the MEIP. BAC further points out that, when assessing whether the capital increase would have been made by a private investor, other aid measures from which BSCA benefits should not be taken into account.

(iv) Impact on competition

(117) BAC submits that the aid measures have allowed Charleroi airport to strengthen its competitive position in relation to other airports and other means of transport such as high-speed rail, as they enable BSCA to apply low airport charges. This creates a significant disparity between the fees at Brussels airport and at Charleroi airport, particularly due to differences between the passenger fees and safety fees. The airport charges collected by BSCA are below market price in comparison with Brussels airport and other comparable airports in the Charleroi airport catchment area, such as Eindhoven, Lille and Cologne/Bonn airports.

(118) According to BAC, this difference has resulted in a loss of 2,5 million passengers over the 2004-2011 period. The growth of Charleroi airport is not purely the result of additional traffic that Brussels airport has failed to generate, as proven by the fact that the average annual growth of a reference sample of European airports was 20,5 % between 2005 and 2011, whereas traffic at Brussels airport remained constant. In addition, the increase in destinations and frequencies at Charleroi airport has led to a corresponding loss of destinations or reduction in frequencies at Brussels airport.

(b) Comments received in May 2014 following publication of the Guidelines on State aid to airports and airlines

(119) BAC considers that both the investment aid and the operating aid received by BSCA are State aid that cannot be regarded as compatible with the internal market. In its opinion, the entry into force of the aviation guidelines further supports this conclusion.

(i) Investment aid

(120) BAC believes that the investment aid received by BSCA constitutes State aid that must be regarded as incompatible with the internal market because it is not proportional to objectives of common interest (Brussels airport was not congested) and is not limited to the minimum necessary.

(ii) Operating aid

1. Presence of State aid under Article 107(1) TFEU

(121) According to BAC, the opening decision basically focused on the different treatment in the financing of these activities between Charleroi airport and other undertakings within the same Member State, and other airports such as Brussels airport. In that regard, BAC considers that the reimbursement by the Region to BSCA of the costs of these services constitutes State aid and discrimination between BAC and BSCA within the Belgian State, because BAC had to bear these costs alone.

2. Compatibility of State aid measures under Article 107(3)(c) TFEU

(122) Point 137 of the Guidelines on State aid to airports and airlines (84) (hereinafter ‘aviation guidelines’) provides that a number of conditions must be met in order for past operating aid to be regarded as compatible with the internal market. According to BAC, the operating aid received by BSCA does not meet these conditions.

(a) The aid does not contribute to a well-defined objective of common interest

(123) Although Charleroi airport and Brussels airport are in competition in the same catchment area, the aid granted to BSCA has led, in BAC's opinion, to a duplication of airport capacity available in Belgium. The capacity of Charleroi airport has therefore been increased, even though the capacity of Brussels airport was not saturated. Accordingly, the total number of passengers using Charleroi and Brussels airports was 25,4 million in 2012, i.e. still less than the maximum capacity of Brussels airport alone.

(b) Lack of need for State intervention

(124) BAC points out that the annual traffic at Charleroi airport exceeded 1 million passengers in 2001-2002 and 3 million passengers in 2008-2009. In view of the categories laid down by the aviation guidelines, BSCA should have been able to cover the majority, if not all, of the costs incurred at Charleroi airport during the period covered by the Commission investigation.

(125) According to BAC, no operating aid should have been granted to BSCA since the aviation guidelines entered into force given that the annual passenger traffic has significantly exceeded the threshold of 3 million since 2009.

(c) The aid is not appropriate and its amount is disproportionate

(126) According to BAC, the amounts paid by BSCA for the following services could have been more appropriate: the amount for the airport infrastructure to be placed at its disposal and the amount for the services provided by SOWAER. This is also true of the reimbursement by the Region for certain services. In BAC's opinion, the State aid granted to BSCA was not limited to the minimum necessary and less distortive policy instruments were available to the Region and SOWAER.

(d) The aid has negative effects on competition and trade

(127) Firstly, BAC points out that, contrary to the recommendation in point 131 of the aviation guidelines, the BSCA business plan did not study the effect of the development of its activities on traffic at Brussels airport.

(128) Moreover, BAC draws the Commission's attention to the fact that the case in question cannot be compared with that of Groningen airport, in which the Commission regarded the operating aid as compatible with the internal market. In that case, the Commission recognised the need to relieve congestion at Schiphol airport and the fact that the airports were far enough apart. These two elements are not relevant in the present case.

(129) This aid, which has enabled BSCA to artificially reduce the amount of its airport charges, has had the following negative effects on BAC: a significant fall in its use by passengers and a reduction in the frequency and even the loss of certain routes also served by Charleroi airport.

(130) In terms of the fall in the volume of passengers at Brussels airport, BAC points out that its origin essentially lies in the absorption of its customers by BSCA. Therefore, according to BAC, although the majority of European airports saw passenger numbers increase between 2005 and 2013, these numbers stagnated at Brussels airport, whilst at the same time the volume of passengers at Charleroi airport rose.

(131) BAC considers that the absorption of its customers also explains the loss of routes at Brussels airport and the reduced frequency of certain flights. In particular, it sees a correspondence between the flights lost from Brussels airport following the introduction of equivalent flights at Charleroi airport.

(132) BAC recommends that the Commission states, in its future decision on this aid and in accordance with the thresholds laid down by the new aviation guidelines, (i) that no more operating aid or investment aid can be granted to BSCA from the entry into force of the aviation guidelines, and (ii) that the services at Charleroi airport are charged at a level sufficient to cover the marginal costs generated.

4.1.2. Brussels Airlines

(a) Existence of aid granted to BSCA

(i) Economic activity

(133) Brussels Airlines submits that fire, maintenance, safety and security services, and services associated with landing, take-off and infrastructure do not fall within its public service tasks but form part of the economic activity of managing an airport and should not be subsidised in a discriminatory manner. They cannot be regarded as services of general economic interest. Brussels Airlines submits that other industries in the Region finance their own fire services, as does Brussels airport. As the Region covers the safety and security costs at Charleroi airport, BSCA does not recover these costs from airlines, whereas no compensation has been given to Brussels airport for these costs. Passengers departing from Brussels airport are also subject to the Belgian Civil Aviation Authority fee, whereas passengers departing from Charleroi airport are not.

(ii) Advantage

(134) Brussels Airlines does not believe that the Region/SOWAER were behaving as a private operator in a market economy when giving support to BSCA. BSCA's profitability appears inflated due to subsidies, grants and compensatory measures, without which it would have a consistently negative profit margin. Brussels Airlines also questions whether the combined profitability of BSCA and SOWAER reflects market-driven practices. Brussels Airlines submits that the Region is not acting as a private investor given that such an investor would not invest in a structurally loss-making company.

(iii) Distortions of competition

(135) Between 2004 and 2012, whilst the number of short-haul passengers using Charleroi airport tripled, the number using Brussels airport stagnated, given that this figure was the same in 2012 as in 2004. Brussels Airlines adds that the number of passengers that it carried fell from […] million to […] million. Given these findings and the fact that, when viewed as a whole, airport passenger numbers increased by 34 %, Brussels Airlines concludes that Charleroi airport benefited from all the growth. Brussels Airlines notes that from 2004 to 2007 other European airports experienced strong growth (over 20 %), but the growth at Charleroi airport is not explained solely by the increase in traffic, but also by the fact that a large number of passengers who previously used Brussels airport appeared to choose Charleroi airport instead. Brussels Airlines puts this loss at […] million passengers per year to the benefit of Charleroi airport, i.e. a loss of revenue estimated at over EUR […] million per year.

(b) Legal basis on which to assess the compatibility of the aid to BSCA

(136) According to Brussels Airlines, the Commission does not have any legal basis for authorising operating aid that (i) was granted prior to the entry into force of the aviation guidelines and (ii) was incompatible with the internal market at the time when it was granted. Retroactive application of the aviation guidelines would be contrary to the general principles of law and, in particular, as in this case, where the conditions for authorising operating aid are comparatively less strict than in the past.

(137) Firstly, the principles of legal certainty and non-retroactivity of European legislation rule out the possibility of a Union regulation taking effect before its publication, save in exceptional circumstances. In this particular case, Brussels Airlines submits that no exceptional circumstances exist.

(138) Secondly, the Commission notice on the determination of the applicable rules for the assessment of unlawful State aid indicates that the Commission shall always assess the compatibility of unlawful State aid with the common market in accordance with the substantive criteria set out in any instrument in force at the time when the aid was granted. Therefore, in the opinion of Brussels Airlines, the Commission cannot depart from its own rules without contravening the general principles of law (equal treatment, legitimate expectations). Brussels Airlines submits that there is consequently no legitimate reason not to apply this notice in the present case.

(139) Lastly, operating aid is by nature incompatible with the internal market. According to Brussels Airlines, this principle was clearly set out in the 2005 aviation guidelines.

(140) Brussels Airlines considers that the Commission's approach in this case is all the more unacceptable because: — the Commission previously prohibited the measures from which Charleroi airport has benefited, — in its 2012 extension decision, the Commission extended the scope of the measures covered by the investigation procedure, — according to the 2012 extension decision, the measures investigated are clearly incompatible with the internal market.

(141) Consequently, Brussels Airlines submits that the Region and BSCA were perfectly well aware of the regulations in force on State aid. The prohibition of this aid does not therefore infringe the principle of legitimate expectations. On the contrary, it would be particularly unfair to retroactively justify their unlawful behaviour to the detriment of third parties, and especially to the detriment of those who have complied with the rules. The balance of interests at stake clearly means that this aid must be prohibited.

(142) According to Brussels Airlines, by retroactively applying the aviation guidelines to past operating aid that is clearly incompatible, the Commission is implicitly acknowledging this incompatibility.

(c) Compatibility of the aid granted to BSCA based on the new aviation guidelines

(i) Objective of common interest

(143) Brussels Airlines draws the Commission's attention to the fact that the positive effects expected of State aid policies, such as the development and accessibility of the regions, are uncertain.

(144) The phenomenon of regional airports absorbing traffic from established airports has several other negative consequences according to Brussels Airlines: — Firstly, the fact that capacity is created whilst other capacity still exists results in the inefficient duplication of infrastructure. In support of this argument, Brussels Airlines points out that, during the period in question (2000-2012), the capacity available at Brussels airport was sufficient to accommodate more passengers. As an example, in 2011 the capacity of Brussels airport was a maximum of 28 million passengers, although the airport was being used by only 18,8 million passengers. At the same time, Charleroi was being used by 5,9 million passengers, whereas its capacity was between 6 and 7 million. The total capacity of the two airports in 2011 was 24,7 million, i.e. a total capacity below the maximum capacity of Brussels airport alone. — Secondly, Brussels Airlines points out that the development of activities at Charleroi airport, to the detriment of Brussels airport and Brussels Airlines, has seemingly had a negative social and economic impact. Brussels Airlines compares the direct and indirect added value of Brussels and Charleroi airports from 2007 to 2009. The added value of Charleroi airport is apparently EUR 38 million, whereas that of Brussels airport is EUR 358 million. Brussels Airlines also refers to the number of jobs created directly and indirectly by the airports between 2007 and 2009. Whereas employment at Charleroi airport increased over this period by 589 FTE (full-time equivalents), the number of jobs at Brussels airport fell by 1 057. Whilst the number of passengers at Charleroi airport substantially increased between 2007 and 2009, unlike at Brussels airport, the level of direct and indirect employment did not increase to the point of compensating for the loss of jobs at Brussels airport. — Finally, according to Brussels Airlines, the absorption phenomenon has had a negative impact on the profitability of traditional airlines to the benefit of the low-cost airlines, whose profitability is mainly due to subsidies. Brussels Airlines states that, whereas the average profitability of the AEA (Association of European Airlines) was low and even negative over the entire period in question (profits before interest and taxes were EUR 0,9 billion in 2000, with a loss of EUR 0,4 billion in 2012), the figure for Ryanair was substantial (profits before interest and taxes were EUR 84 million in 2000 and EUR 617 million in 2012). However, according to Brussels Airlines, this profitability was increased by the subsidies received from the airports. Brussels Airlines states that, without this aid (calculated at EUR 720 million in 2011), Ryanair's profitability would have been substantially lower, and even negative.

(145) In addition, Brussels Airlines points out that the operating aid was granted to Charleroi airport even though (i) this airport is located in the same catchment area as Brussels airport and (ii) the latter still had available capacity. Consequently, according to Brussels Airlines, a business plan based on cargo and passenger traffic forecasts should have identified the potential impact of this airport's development on traffic at Brussels airport. Brussels Airlines stresses that such an assessment was never made. In any event, if such an assessment had been made, it would have shown that an increase in traffic at Charleroi airport would be to the detriment of traffic at Brussels airport. Brussels Airlines states that, in its view, this was in fact the outcome: an increase in market share for Charleroi airport correlated to a drop in market share for Brussels airport and to a reduction in the frequency and/or to the withdrawal of several Brussels Airlines routes. Brussels Airlines therefore reasserts that the operating aid granted to BSCA did not contribute to the achievement of an objective of common interest. In fact, on the contrary, these measures resulted in the misuse and wastage of resources.

(ii) Need for aid

(146) Brussels Airlines points out that, in order to benefit from operating aid, the aviation guidelines require the annual traffic of an airport not to exceed 3 million passengers. Brussels Airlines stresses that this threshold was exceeded in 2009. Moreover, Brussels Airlines notes that the operating aid granted to BSCA did not evolve between 2002 and 2008 although, in theory, BSCA should have been capable of covering an increasing proportion of its operating costs. In addition, from 2009 Charleroi airport should have been able to cover its operating costs and was not eligible to receive further operating aid.

(iii) Inappropriateness of the aid

(147) According to Brussels Airlines, even if it were proven that Charleroi airport still needed the operating aid in 2008, it was in fact clear that the public financing of BSCA through State aid was an inappropriate policy given that Charleroi airport was not profitable. Moreover, Brussels Airlines points out that the measures in question were all inappropriate because the Region did not, to its knowledge, previously attempt to compare its aid measures with measures that were less likely to hinder competition.

(iv) Distortion of competition

(148) Brussels Airlines notes that Charleroi airport is located in the same catchment area as Brussels airport and that the latter still had available capacity during the period in question. Moreover, Brussels Airlines points out that, while the number of passengers has increased at Charleroi airport, the number at Brussels airport has stagnated and even declined in recent years, despite the fact that air traffic has risen on the whole in all European countries.

4.1.3. Board of Airline Representatives (BAR)

(a) Comments received following the 2012 extension decision

(149) BAR submits that terminal charges (fees), safety costs and certain security costs, and firefighting costs at Brussels airport are borne by its users, while at regional airports these are borne by the airport or regional authorities. In BAR's opinion this constitutes a substantial advantage for regional airports.

(b) Comments received following publication of the Guidelines on State aid to airports and airlines

(i) Distortion of competition caused by the operating aid granted to Brussels South Charleroi Airport (BSCA)

(150) BAR briefly notes the nature of the aid in question: operating aid received by BSCA and paid by the Region, ‘in all likelihood transferred to Ryanair, at least in part’.

(151) BAR complains that the Commission, by announcing that it wanted to apply the principles set out in the aviation guidelines ‘to all cases concerning operating aid … to airports even if the aid was granted before 4 April 2014’, infringed the principle of legal certainty and adopted an opposite approach to the one recommended in 2002 in its notice on the determination of the applicable rules for the assessment of unlawful State aid, given that, according to BAR, said notice states that aid must be assessed ‘in accordance with the texts in force at the time when the aid was granted’. Moreover, BAR considers that this change in Commission policy also infringes the principle that reasons must be given, because the Commission does not explain why developments in the aviation sector would have an impact on the assessment of past operating aid, or why only the latter type of aid is covered and not also past start-up or investment aid. In this respect, BAR points out that, if the Commission were to find that aid granted in the past was compatible with the internal market even though the opposite had been found previously, this would infringe not only the general principles referred to above, but also the principles of sound administration and legitimate expectations.

(152) According to BAR, the aid measures in question, including those granted in the past to BSCA, are not compatible with the internal market, even when assessed in the light of the provisions of the aviation guidelines, for the following reasons: — The aid measures are not necessary: BSCA has exceeded the threshold of 1 million passengers, given that it handles 6 million passengers, and must therefore be able to bear its operating costs. In addition, the operating aid granted in the past cannot be regarded as compatible, given that BSCA had 3 million passengers, or necessary, given that BSCA should have been able to bear its operating costs. — The aid is and was anti-competitive: according to BAR, given that BSCA is located in the same catchment area as Brussels airport, which had spare capacity, the Region should have taken account of this when granting the aid, which did not happen.

(ii) Additional comments on the level playing field

(153) According to BAR, if BSCA considers that aid for the provision of certain public services at the airport must be authorised, then these services must be compared to the same services provided at Brussels airport. However, BAR points out that certain services provided at Charleroi airport are regarded as public services whereas they are not at Brussels airport.

(154) BAR stresses that the collection of airport charges must not lead to a situation of discrimination between users. In particular, BAR refers to the reductions enjoyed by Ryanair on the airport charges and not enjoyed by other airlines established at this airport, and to the fact that the airport charges at Brussels airport are much higher.

(155) BAR notes that, since Brussels airport was privatised, its services are no longer expressly regarded as public services. These services constitute ‘regulated activities’ for which the charges paid by airport users or passengers are controlled according to a formula.

(156) In addition, BAR draws the Commission's attention to the question of cross-subsidisation given that Ryanair operates at both Charleroi airport and Brussels airport. If such cross-subsidisation were found to exist, this would clearly represent a distortion of competition.

4.1.4. Association of European Airlines (AEA)

(a) Comments received following the 2012 extension decision

(157) The AEA submits that subsidies to regional airports are acceptable only if they benefit all airport users without discrimination and do not create distortions between airports within the same catchment area. The AEA acknowledges that airports may adapt their infrastructure to meet the needs of specific users as long as principles of transparency, cost-relatedness and non-discrimination are observed.

4.1.5. Air France

(a) Comments received following the 2012 extension decision

(158) Air France asks the Commission not to approve what, in its view, is operating aid distorting competition between airlines and between airports. Air France believes that the Commission should comprehensively compare the fees charged at Charleroi airport and those charged at airports in the same catchment area, in particular Brussels airport.

(159) Air France also questions the retroactive application of the aviation guidelines to cases involving operating aid for airports, even where this aid was paid prior to the publication of said guidelines, for a number of reasons: — According to Air France, the retroactive application of the aviation guidelines favours non-virtuous operators by legitimising conduct that did not comply with the rules applicable at the time. By contrast, this approach penalises operators who did comply with the previous guidelines by refraining from claiming public funds. — The retroactive application of the aviation guidelines to operating aid granted to airports is contrary to general principles of law and European case-law.

(160) Air France claims that the new aviation guidelines will have the effect of favouring new operators to the detriment of incumbent operators. By allowing a new airline to pay only the incremental cost associated with its activity, they will discriminate against incumbent operators at the airport, who will be subject to higher fees.

(161) Lastly, Air France notes that, although the condition of non-discriminatory accessibility to the infrastructure of an airport may seem easy to fulfil in theory, the situation is quite different in practice, with certain operating models being consciously disadvantaged.

4.1.6. BSCA

(a) Comments received following the 2012 extension decision

(162) BSCA calls on the Commission to close its investigation due to the absence of any State aid granted to itself or its trading partners.

(163) As a preliminary remark, BSCA considers that the time that has passed since the start of the case may have created legitimate expectations for BSCA and its users. BSCA notes that the Commission was previously informed, during its initial investigation that led to the 2004 decision, about the mechanism introduced by the Region and BSCA in 1991 under the concession agreement and its subsequent amendments. BSCA therefore objects to the extension of the scope of the measures examined by the Commission.

(164) BSCA draws the Commission's attention to the importance of regional airports in terms of economic and social development, regional accessibility and tourism. It considers that the liberalisation of air transport has created a new category of passenger taking city trips and short-haul flights for family reasons, together with new low-cost business models meeting this new demand. BSCA therefore takes the view that competition between Charleroi airport and Brussels airport is only very limited. In this respect, BSCA stresses the limited impact on Brussels airport of the launch in the past of a route between Dublin and Charleroi airport (85). BSCA explains its success by the dynamic policy implemented by the Walloon authorities in recent years and also by the flexibility of its infrastructure and the drive of the airport teams.

(165) In terms of services of general interest, BSCA notes that since 1991 it has received compensation for services of general interest, as defined by Article 25 of the schedule of conditions concluded with the Walloon public authorities. BSCA disputes the analysis made by the Commission in its 2012 extension decision, refuting the non-economic nature of these activities. The airport manager considers that this represents, firstly, a reversal of position by the Commission in relation to its established decision-making practice and, secondly, a lack of understanding of the international and European regulations on transport safety and security. BSCA reminds the Commission that these services of general interest, which were previously provided by the administration, were transferred with the intention of ensuring sound management and flexibility. The compensation paid by the Walloon authorities is therefore capped and cost-based and does not create any advantage for BSCA. An audit system has been established in order to prevent any overcompensation.

(166) With regard to the capital increase, BSCA notes that the Commission did not question this during the initial investigation and takes the view that this complies with the market economy private investor principle. The airport manager adds that this increase was decided on the basis of a credible and realistic business plan and that it was justified by its needs due to the considerable development of its activities. In this respect, BSCA stresses that the Commission noted even in 2004 that the expected results for 2003 were higher than those taken into account in the 2001 business plan. Likewise, the number of passengers passing through Charleroi airport and the operating income in 2011 exceeded the estimates in this same business plan. Lastly, in BSCA's opinion, the development of its activities in partnership with Ryanair enabled SOWAER to profit from the good results achieved by BSCA, given that it made a substantial capital gain when it sold some of its shares in 2009.

4.2. Comments from interested parties on the measures granted to Ryanair

4.2.1. Britannia

(Comments received following the 2002 opening decision)

(167) The airline Britannia considers that it is normal for airports to be able to provide marketing support and reductions according to the volume of passengers supplied by airlines, especially in the case of airports that are not yet well established. However, these advantages must remain proportional, realistic and limited in duration. Britannia is worried about the inequality created between competing airlines in this specific case. The airport charges are unequal and unrealistic, even though the low-cost airlines use the runways, terminals and safety and security facilities in the same way as other airlines.

4.2.2. Scandinavian Airlines

(Comments received following the 2002 opening decision)

(168) SAS points out that the deregulation of European airspace has led to increased competition among the traditional airlines and has also allowed the creation of new airlines, which have developed new business concepts. It is of fundamental importance that this competition complies with a regulatory framework applied transparently and without discrimination.

4.2.3. KLM Royal Dutch Airlines

(Comments received following the 2002 opening decision)

(169) KLM explains that low-cost airlines and traditional airlines offer different products and that each one has its own ‘raison d'être’ at both commercial and operational level. Low-cost airlines generally avoid large airports, where the logistics can be complicated and usage costs high. Instead they choose regional platforms allowing them to operate rapid rotations at a reduced cost. These developments should not be called into question, but they should not be based on aid. According to KLM, the advantages received by Ryanair at Charleroi airport go well beyond what is permitted under Article 107(1) TFEU, and the consideration offered by Ryanair, consisting of basing a number of aircraft at Charleroi airport, changes nothing in this state of affairs.

4.2.4. Air France

(Comments received following the 2002 opening decision)

(170) Air France considers that the reduction in the fees charged to Ryanair and its absorption by the Region and BSCA create a disadvantage for Ryanair's competitors who provide links on the intra-Community market. The reduction in the landing fee allows Ryanair to reduce its operating costs and in fact makes it more competitive than its competitors, not only for the flights that it operates into or out of Charleroi airport but also throughout the Ryanair network. The compensation commitment made by the Region is also regarded as an advantage guaranteeing stability of operating conditions to Ryanair, given that ‘practical experience of using any airport platform demonstrates that the commercial and regulatory environment is never rigid. Airport charges can therefore easily rise if the airport manager is forced to finance specific measures, possibly with the aim of accommodating other carriers wishing to establish themselves at Charleroi airport. In addition, the development of environmental measures can alter the conditions of operation of an airport’.

4.2.5. Austrian Airlines

(Comments received following the 2002 opening decision)

(171) According to Austrian Airlines, the arrival of low-cost airlines has resulted in a subsidies race between airports and regions wanting to be served by these carriers. These developments have called into question the principle of infrastructure availability payments, even though this is one of the basic rules in the civil aviation world. The aid granted is not degressive, it is independent of the success achieved by Ryanair in the links that it serves and it benefits one airline only, which leads to discrimination. Austrian Airlines concludes that ‘cooperation’ such as that observed between Ryanair and the Region causes significant distortions of competition between airlines and is largely incompatible with the smooth operation of the internal market for aviation.

4.2.6. Association of Residents and Inhabitants of Municipalities Close to Charleroi-Gosselies Airport (ARACH)

(Comments received following the 2002 opening decision)

(172) The Association is concerned that the financial aid granted to Ryanair will lead to ‘unbridled development of the airport’ within an urban site, and that in these terms ‘as both citizens and taxpayers, we are concerned about the questionable State aid granted to a private company, as this involves improper use of the Walloon Region's budgetary resources’.

4.2.7. Interested Party A

(Comments received following the 2002 opening decision)

(173) Interested Party A states that it is ‘very concerned’ about the subsidies granted by the public authorities, which will affect the conditions of competition between the various modes of transport. ‘Ryanair is therefore benefiting in particular from public subsidies for the Charleroi-London link, while Eurostar, operated jointly by SNCB, British railway operators and SNCF, is not benefiting from them. Both means of transport are, however, in direct competition for the Brussels-London link. It is up to the railway operators alone to advertise the link, purchase the rolling stock and engines, pay infrastructure and tunnel tolls, etc. Equal treatment between competitors is therefore upset’.

4.2.8. Interested Party B

(Comments received following the 2002 opening decision)

(174) Interested Party B points out that the advantages granted to Ryanair reduce its cost structure and enable it to charge lower fares. These practices affect the conditions of competition, whether these companies operate out of Charleroi airport or Brussels airport and whatever the route served. Competition between low-cost airlines is not merely competition that must be analysed on a route-by-route basis. For many travellers, the destinations of Venice or Barcelona are wholly exchangeable. Competition therefore applies to every route.

(175) This company explains that the direct costs out of Brussels airport are EUR 32,14 per passenger compared with EUR 5 for Ryanair operating out of Charleroi airport (86).

(176) Even though the ground handling services are more limited for Ryanair than for other airlines, this interested party points out that a considerable number of ground handling services are still necessary for all airlines. The fact that the ground handling market is open to competition at Brussels airport means that these fees should not normally be much higher at Brussels airport than at Charleroi airport. Ground handling fees are, generally speaking, higher at small airports than at large airports, given that companies cannot usually reach the critical size needed to make economies of scale. This interested party estimates that Ryanair saved EUR 17 million in 2003 on ground handling fees and landing fees. In its opinion, it also appears that BSCA has not taken account of Council Directive 96/67/EC (87): the airport should reach two million passengers a year quite quickly and BSCA will need to apply the Directive at this threshold and open the ground handling market to other operators.

(177) BSCA has allegedly acted not as a private investor in a market economy but for political and social reasons, on the instructions of the Region. The 15-year contract will probably not allow BSCA to establish itself as a profitable business and it is expected to continue to experience operational problems. The prospect of a return on the investment could be undermined if Ryanair withdraws (88).

(178) BSCA allegedly receives contributions from the Region, such as 65 % of the revenue from the airport charges and the placing at its disposal of the infrastructure free of charge, even though the Region pays a contribution to SOWAER. In principle, each payment from the Region should be limited to the compensation for the costs associated with the public service obligations imposed on BSCA, and the situation is not very clear in this regard.

(179) For this company, which acknowledges having also on occasion benefited from ‘marketing’ advantages for the launch of new destinations, but never from reductions in airport charges or ground handling costs, the advantages granted to Ryanair at Charleroi airport go well beyond the bounds of current practice. It considers, however, that it took just as significant commercial risks by setting itself up at Brussels airport at a time when competition from Sabena was very strong.

(180) The fact that other airport managers grant advantages to Ryanair does not prove that Charleroi airport has acted as a private investor in a market economy. The company refers to the Steinike & Weiling judgment (89).

4.2.9. Brussels International Airport Company, now Brussels Airport Company (hereinafter ‘BAC’)

(Comments received following the 2002 opening decision)

(181) According to BAC, BSCA has not behaved like a private investor given that the advantages granted differ in their extent from those granted by other airports (90). The fact that Ryanair receives advantages from other airports is not at all relevant, as those could also constitute State aid.

(182) The interested party draws the Commission's attention to several factors that must be taken into account when analysing the potential profitability of BSCA and that appear to exclude medium-term profits:

(183) BSCA benefited from a recapitalisation by the Region, totalling EUR 4 million, in December 2002. — BSCA benefited from ‘an exemption from half of its fee due to the Region for the period 2001-2006. This advantage totals EUR 1 million per year, which BSCA will, however, have to pay back from 2007 onwards’. — The Commission should take account of the costs of the Charleroi airport expansion project, calculated at EUR 95 million, and the methods of financing. If this project is not paid for by BSCA, the conditions under which the Region places this infrastructure at the disposal of BSCA should be checked. This interested party doubts that, given the current state of its infrastructure, the airport is in a position to cater for sufficient passengers to ensure the financial balance of BSCA. — The Region provides BSCA, free of charge, with the equipment and staff needed for all the security operations at Charleroi airport, namely passenger and baggage screening prior to embarkation, although, ‘as a general rule, security costs are borne by the airport users, either through a security fee payable to the airport operator or through a tax where these services are provided by the public authorities’.

4.2.10. Interested Party C

(Comments received following the 2012 extension decision)

(184) Interested Party C believes that the advantages granted by the Region to BSCA and Ryanair harm competition and that Charleroi airport and Brussels airport operate in the same market.

(185) Interested Party C criticises the relationship between the Region, BSCA and Ryanair and the resulting differences in charges levied on airlines at Brussels airport and Charleroi airport. Notably, (i) maintenance costs are not passed on to users but are compensated by the Region, (ii) landing fees favour Ryanair, […].

(186) Interested Party C further submits that Ryanair does not pay for services that are part of normal airport management, such as fire services, expansion and construction of infrastructure and passenger fees.

4.2.11. Brussels Airlines

(a) Existence of aid

(i) Selective advantage

(187) According to Brussels Airlines, Ryanair has benefited from a selective advantage compared to other airlines.

(188) The aid granted by the Region and SOWAER to BSCA reduces the latter's operating costs, enabling it to charge lower fees to airlines including Ryanair, in turn reducing the latter's operating costs. In particular, given that the Region covers the safety and security costs of Charleroi airport, BSCA does not recover these from the airlines, whereas Brussels airport has not benefited from any compensation in this respect. Brussels Airlines believes that the Region's comprehensive financial support programme for BSCA must be taken into account when assessing the commercial relationship between BSCA and Ryanair.

(189) Ryanair has also benefited from direct financial measures such as start-up aid and contributions to marketing activities. Brussels Airlines questions whether this aid complies with the conditions laid down by the 2005 guidelines as also the principles of proportionality and transparency.

(190) Brussels Airlines considers that the cumulative effect of all the measures is to make it impossible to believe that BSCA is acting as a private investor, and it invites the Commission not to examine the measures separately, but as a whole.

1. Benchmarking.

(191) According to Brussels Airlines, the fees charged by B