EN Official Journal of the European Union L 134/46

COMMISSION DECISION (EU) 2016/789

of 1 October 2014

on the State aid SA.21121 (C29/08) (ex NN 54/07) implemented by Germany concerning the financing of Frankfurt Hahn airport and the financial relations between the airport and Ryanair

(notified under document C(2014) 6853)

(Only the English 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) (1) thereof,

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 provisions cited above (2) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) Between 2003 and 2006, the Commission received complaints from various parties alleging that Ryanair plc (‘Ryanair’ (3)) as well as the Frankfurt Hahn airport operator Flughafen Frankfurt-Hahn GmbH (hereinafter: ‘FFHG’) had been granted unlawful State aid by the company Fraport AG and the Länder (Federal States) of Rhineland-Palatinate and Hesse. The complainant provided further information on 22 September 2003 and 1 June 2006.

(2) By letters dated 25 September 2006 and 9 February 2007, the Commission requested information from Germany. Germany responded by letters dated 20 December 2006 and 29 June 2007 respectively.

(3) By letter dated 17 June 2008, the Commission informed Germany of its decision to initiate the procedure provided for in Article 108(2) of the Treaty with regard to the financing of FFHG and its financial relations with Ryanair (the ‘2008 opening decision’). Germany transmitted its comments on 27 October 2008.

(4) The 2008 opening decision was registered under case number SA.21121 (C29/08). The 2008 opening decision was published in the Official Journal of the European Union (4) on 17 January 2009. The Commission invited interested parties to submit their comments on the measures in question within 1 month of the date of publication.

(5) The Commission received comments from Deutsche Lufthansa AG (‘Lufthansa’), the Federal Association of German Air Carriers (Bundesverband der Deutschen Fluggesellschaften, ‘BDF’), Ryanair, Société Air France SA (‘Air France’) and the Association of European Airlines (‘AEA’). It forwarded the comments to Germany by letter dated 16 April 2009. Germany was given the opportunity to respond to them within 1 month and transmitted its comments and more information on 1 July 2009.

(6) By letter of 4 March 2011, Lufthansa provided further information with regard to the 2008 opening decision addressing new alleged State aid measures.

(7) By letter dated 18 March 2011 the Commission forwarded the complaint to Germany and requested further information on the new allegations concerning State aid measures. Germany replied by letters dated 19 May 2011 and 23 May 2011.

(8) However, those replies were incomplete. Therefore, by letter dated 6 June 2011 the Commission sent a reminder pursuant to Article 10(3) of Council Regulation (EC) No 659/1999 (5). Germany responded by letters dated 14 June 2011 and 16 June 2011.

(9) By letter dated 13 July 2011 the Commission informed Germany of its decision to initiate the procedure provided for in Article 108(2) of the Treaty with respect to the credit line provided to FFHG by the cash pooling facility of Land Rhineland-Palatinate, the loan provided to FFHG by Investitions-und Strukturbank of Land Rhineland-Palatinate (‘ISB’) and the guarantee for the ISB loan provided to FFHG by Land Rhineland-Palatinate (the ‘2011 opening decision’). The 2011 opening decision was registered under case number SA.32833 (2011/C). The 2011 opening decision was published in the Official Journal of the European Union on 21 July 2012 (6).

(10) By letter dated 20 February 2012 the Commission requested further information regarding the 2008 opening decision. Germany responded by letter dated 16 April 2012. By letter of 27 July 2012, the Commission again requested further information. Germany replied by letter dated 4 September 2012.

(11) By a letter dated 25 February 2014 the Commission informed Germany of the adoption of the Commission guidelines on State aid to airports and airlines (7) (the ‘2014 Aviation Guidelines’) on 20 February 2014. The Commission informed Germany that those guidelines would become applicable from the date of their publication in the Official Journal of the European Union. It gave Germany the opportunity to comment on those guidelines and their possible application to the present case within 20 working days. By letter dated 17 March 2014 the Commission reminded Germany that, in case it would not receive any comments within the deadline of 20 working days, the Commission would consider that Germany had no comments.

(12) By letters dated 23 March 2014 and 4 April 2014 the Commission requested further information from Germany. Germany replied by letters dated 17 April 2014, 24 April 2014 and 9 May 2014.

(13) The 2014 Aviation Guidelines were published in the Official Journal of the European Union on 4 April 2014. They replaced the 1994 Aviation Guidelines (8) as well as the 2005 Aviation Guidelines (9).

(14) On 15 April 2014 a notice was published in the Official Journal of the European Union inviting Member States and interested parties to submit comments on the application of the 2014 Aviation Guidelines in this case within 1 month of their publication date (10). Lufthansa and Transport & Environment submitted observations. By letter dated 26 August 2014, the Commission forwarded those observations to Germany. By letter dated 3 September 2014, Germany informed the Commission that it had no observations.

(15) By letter dated 17 June 2014, Germany agreed exceptionally to have this decision adopted and notified in English only.

2. CONTEXT OF THE MEASURES

2.1. CONVERSION OF THE AIRPORT AND ITS OWNERSHIP STRUCTURE

(16) Frankfurt Hahn airport is located in Land Rhineland-Palatinate, approximately 120 km west of the city of Frankfurt/Main. Frankfurt Hahn airport was a US military airbase until 1992. Subsequently, it was converted into a civil airport. It holds a 24-hour operating licence.

(17) Holding Unternehmen Hahn GmbH & Co. KG (‘Holding Hahn’), a public private partnership between Wayss & Freytag and Land Rhineland-Palatinate, acquired ownership of the infrastructure of Frankfurt Hahn airport from Germany on 1 April 1995. Between 1995 and 1998, this public private partnership developed the airport with the goal of developing there an industrial and commercial area. According to Germany, when the partnership between Wayss & Freytag and Land Rhineland-Palatinate did not turn out to be successful, on 1 January 1998, Flughafen Frankfurt/Main GmbH (‘Fraport’) (11) started getting involved in the project and eventually took over the operation of the airport.

(18) According to Germany, Fraport, who was already operating and managing the international Frankfurt Main airport, located approximately 115 km from Frankfurt Hahn airport, got involved for several strategic reasons. Firstly, Germany stated that Frankfurt Hahn airport was the only airport in the proximity of Frankfurt Main airport which had the potential of becoming a fully-fledged international airport. As Frankfurt Main airport was already at its full capacity at that moment, there was the potential for a second profitable airport in the region. Secondly, Frankfurt Hahn airport was then the only German airport with a 24 hour operation licence, especially useful for cargo and freight flights. Thirdly, the runway was fully equipped and could be used in all weather conditions. Furthermore, Germany submitted that the owners of Schiphol airport were also thinking about acquiring Frankfurt Hahn airport, and hence by taking over the operation of Frankfurt Hahn airport it was possible for Fraport to keep out an unwanted competitor.

(19) Fraport purchased 64,90 % of the shares in the operator Flughafen Hahn GmbH & Co. KG Lautzenhausen (‘FFHG & Co KG’) for the price of […] (*). Payment of part of the purchase price (EUR […]) was due on 31 December 2007, under certain conditions (12). In August 1999, Fraport acquired 73,37 % of the shares of Holding Hahn and 74,90 % of the shares of its general partner Holding Unternehmen Hahn Verwaltungs GmbH for the price of EUR […]. Thereby Fraport effectively became the new partner of Land Rhineland-Palatinate.

(20) Fraport's focus at Frankfurt Hahn airport was to systematically develop the airport's passenger and cargo business. In that respect, Fraport was one of the first undertakings to apply a business model which aimed especially at attracting low-cost airlines. On that basis, Fraport concluded a new profit and loss transfer agreement with Holding Hahn upon conversion of the latter into a German limited liability company (Gesellschaft mit beschränkter Haftung,‘GmbH’). The conversion and the conclusion of that agreement took place on 24 November 2000.

(21) Subsequently, Holding Hahn and FFHG & Co KG merged to form Flughafen Hahn GmbH. Land Rhineland-Palatinate held 26,93 % and Fraport 73,07 % of the shares in the new company. Later, the business name of the company was again changed to Flughafen Frankfurt-Hahn GmbH (‘FFHG’). In 2001, the two shareholders, Fraport and Land Rhineland-Palatinate, injected fresh capital into FFHG (see detailed description in Section 3).

(22) Until 11 June 2001, 100 % of the shares in Fraport were held by public shareholders (13). On 11 June, Fraport was floated on the stock exchange and 29,71 % of its shares were sold to private shareholders, with 70,29 % of shares remaining with the public shareholders.

(23) In November 2002, Land Rhineland-Palatinate, Land Hesse, Fraport and FFHG concluded an agreement on the further development of Frankfurt Hahn airport. That agreement provided for a second increase of the authorised capital. On that occasion, and Land Hesse acceded to FFHG as a third shareholder. Fraport then owned 65 % of the shares, Land Hesse and Land Rhineland-Palatinate held 17,5 % each. That ownership structure remained unchanged until 2009, when Fraport sold all of its shares to Land Rhineland-Palatinate, which has, since then, held a 82,5 % majority share. The remaining 17,5 % are still held by Land Hesse.

2.2. PASSENGER AND FREIGHT TRAFFIC DEVELOPMENT AND AIRPORTS IN THE VICINITY

(24) The passenger traffic at the airport increased from 29 289 in 1998 to 4 million in 2007 and decreased to approximately 2,7 million in 2013 (see Table 1). The airport is currently served by Ryanair, Wizz Air (14) and other airlines. Ryanair's passenger share amounted to approximately [80-100 %] in 2013. Table 1 Passenger development at Frankfurt Hahn airport in 1998 to 2013 Year Number of passengers Number of Ryanair passengers 1998 29 289 0 1999 140 706 89 129 2000 380 284 318 664 2001 447 142 397 593 2002 1 457 527 1 231 790 2003 2 431 783 2 341 784 2004 2 760 379 2 668 713 2005 3 079 528 2 856 109 2006 3 705 088 3 319 772 2007 4 015 155 3 808 062 2008 3 940 585 3 821 850 2009 3 793 958 3 682 050 2010 3 457 540 [2 766 032 -3 457 540 ] 2011 2 894 363 [2 315 490 -2 894 363 ] 2012 2 791 185 [2 232 948 -2 791 185 ] 2013 2 667 529 [2 134 023 -2 667 529 ]

(25) Frankfurt Hahn airport has also experienced growth in air freight. The air freight at the airport increased from approximately 16 000 tonnes in 1998 to approximately 286 000 tonnes at its peak in 2011, with a subsequent decrease to approximately 151 000 tonnes in 2013 (see Table 2). The total freight, including freight forwarders, handled at the airport amounted to approximately 447 000 tonnes in 2013. Table 2 Cargo development at Frankfurt Hahn airport in 1998 to 2013 Year Total air freight in tonnes Total freight including freight forwarder in tonnes 1998 16 020 134 920 1999 43 676 168 437 2000 75 547 191 001 2001 25 053 133 743 2002 23 736 138 131 2003 37 065 158 873 2004 66 097 191 117 2005 107 305 228 921 2006 123 165 266 174 2007 125 049 289 404 2008 179 375 338 490 2009 174 664 322 170 2010 228 547 466 429 2011 286 416 565 344 2012 207 520 503 995 2013 152 503 446 608

(26) The following airports are located in the proximity of Frankfurt Hahn airport: (i) Frankfurt Main airport (~ 115 kilometres from Frankfurt Hahn airport, ~ 1 hour 15 minutes travelling time by car) is an international hub airport with a wide variety of destinations, ranging from short to long-haul. It is predominantly served by network carriers offering connecting traffic, although it also provides point-to-point connections and charter flights. Besides passenger traffic (approximately 58 million in 2013), Frankfurt Main airport also handles air freight (approximately 2 million tonnes in 2013). Figure 1 shows the development of traffic at Frankfurt Main and Frankfurt Hahn airports in 2000-2012. (ii) Luxembourg airport (~ 111 kilometres from Frankfurt Hahn airport, ~ 1 hour 30 minutes travelling time by car) is an international airport providing a wide variety of destinations. In addition to passenger traffic (approximately 2,2 million in 2013), it also served 673 500 tonnes of air freight. (iii) Zweibrücken airport (~ 128 kilometres from Frankfurt Hahn airport, ~ 1 hour 35 minutes travelling time by car). (iv) Saarbrücken airport (~ 128 kilometres from Frankfurt Hahn airport, ~ 1 hour 35 minutes travelling time by car). (v) Köln-Bonn airport (~ 175 kilometres from Frankfurt Hahn airport, ~ 1 hour 44 minutes travelling time by car). Figure 1 Passenger traffic development at Frankfurt Main and Frankfurt Hahn airports in 2000-2012

2.3. OVERVIEW OF INVESTMENTS UNDERTAKEN BY FFHG AND ITS FINANCIAL RESULTS

(27) Table 3 provides an overview of investments undertaken by FFHG from 2001 to 2012, amounting in total to approximately EUR 216 million. Table 3 Overview of investments undertaken from 2001 to 2012 In 1 000 EUR 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total 2001-2012 Investments into infrastructure and equipment Anlagenzugänge inkl. Umbuchungen Land 3 174,00 6 488 2 994 4 284 3 086 8 613 593 […] Terminal 2 519 3 310 251 Cargo Hangar 3 850 3 222 Office building 2 428 […] Other infrastructure investments 10 194 1 152 13 275 […] […] […] Apron 1 008,30 5 684 3 394 10 224 2 848 […] […] Other infrastructure 1 502,20 3 848 2 071 2 692 3 911 1 761 1 558 2 608 384 […] […] […] Immaterial assets (e.g. IT) 6,1 14,50 28 219 487 45 170 121 20 […] […] […] 7 108 Equipment 8 208,89 1 097,09 12 308,42 1 814,00 2 294,54 20 232 7 550 3 823 359 […] […] […] 75 550 Total 13 899 19 650 31 761 8 871 17 592 25 123 41 390 12 673 763 17 289 19 346 7 930 216 287

(28) Table 4 provides an overview of the annual financial results of FFHG from 2001 to 2012. Table 4 Annual financial results of FFHG in 2001 to 2012 In 1 000 EUR 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Profit and loss statement Revenues 10 077,61 14 908,11 22 574,22 29 564,18 36 859,08 43 479,85 41 296,34 45 383,60 42 036,70 43 281,58 43 658,38 40 983,45 Other revenues (including compensation for public policy remit) 7 771,31 5 514,63 3 686,87 3 039,35 3 618,93 6 097,29 5 436,58 4 858,16 11 540,36 14 554,55 9 313,99 21 390,92 Total Revenue 17 848,92 20 422,75 26 261,09 32 603,53 40 478,01 49 577,14 46 732,92 50 241,76 53 577,06 57 836,14 52 972,37 62 374,37 Costs of material – 7 092,39 – 10 211,13 – 12 560,46 – 14 601,17 – 17 895,97 – 24 062,81 – 22 491,85 – 25 133,61 – 24 979,59 – 27 650,17 – 20 017,99 – 21 871,65 Costs of personnel – 9 185,12 – 9 672,37 – 10 734,62 – 11 217,21 – 12 101,84 – 13 337,28 – 14 433,17 – 15 758,34 – 15 883,08 – 17 893,60 – 18 228,23 – 18 349,10 Other costs (including marketing) – 5 692,81 – 11 434,31 – 10 521,27 – 11 454,36 – 14 058,15 – 12 885,28 – 9 897,46 – 9 630,21 – 7 796,81 – 8 029,40 – 6 760,92 – 6 643,00 EBITDA – 4 121,41 – 10 895,06 – 7 555,27 – 4 669,21 – 3 577,94 – 708,22 – 89,56 – 280,39 – 4 917,58 – 4 262,96 – 7 965,23 – 15 510,62 EBITDA (excl other revenues) – 11 892,72 – 16 409,69 – 11 242,13 – 7 708,56 – 7 196,87 – 6 805,51 – 5 526,13 – 5 138,56 – 6 622,78 – 10 291,59 – 1 348,76 – 5 880,30 Depreciation – 5 325,63 – 5 674,68 – 6 045,39 – 7 699,33 – 7 973,46 – 10 527,90 – 10 191,89 – 11 855,19 – 12 482,28 – 11 827,19 – 13 297,31 – 12 733,48 Financial results (interest received — interest paid) – 2 896,64 – 3 013,42 – 4 006,57 – 4 105,53 – 4 548,42 – 4 588,16 – 5 235,30 – 5 693,02 – 4 915,39 – 2 778,06 – 5 063,04 – 8 177,54 Extraordinary revenues and costs – 431,54 – 206,00 – 10,46 0,00 0,00 0,00 0,00 0,00 0,00 – 272,55 0,00 0,00 Taxes – 580,13 – 204,74 – 215,18 – 323,82 – 228,44 – 242,33 – 245,00 – 238,66 – 257,45 – 240,85 – 231,03 – 277,52 Coverage of losses by Fraport trough the profit and loss transfer 13 355,35 19 993,90 17 832,87 16 797,89 16 328,26 16 066,61 15 761,75 18 067,26 5 621,37 0,00 0,00 0,00 Annual result (profit/loss) 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 – 7 114,17 – 10 855,69 – 10 626,14 – 5 677,92

3. DESCRIPTION OF THE MEASURES

3.1. POSSIBLE STATE AID GRANTED TO FFHG

3.1.1. MEASURE 1: 2001 PROFIT AND LOSS TRANSFER AGREEMENT

(29) FFHG and Fraport concluded an agreement according to which Fraport was entitled to all profits generated by FFHG. In return, Fraport was obliged to assume all the losses of FFHG. Land Rhineland-Palatinate and Fraport concluded an agreement on 31 August 1999 in which Fraport committed to conclude a Profit and Loss Transfer Agreement (‘PLTA’). The corresponding notarial agreement was concluded on 24 November 2000 and the 2001 PLTA took effect on 1 January 2001 (‘2001 PLTA’) (15).

(30) Fraport had the right to terminate the 2001 PLTA by giving six months' notice, but only from 31 December 2005. If not terminated, the agreement was tacitly prolonged at the end of each calendar year for another year, but no longer than until 31 December 2010.

(31) The conclusion of the 2001 PLTA was approved by Fraport's supervisory board and shareholders (16). The duration of the 2001 PLTA was later extended until 2014 by an agreement of 5 April 2004 (‘PLTA 2004’). By the time the 2001 PLTA was replaced by the 2004 PLTA (‘2004 PLTA’, see recital 45), Fraport had assumed losses of EUR […] million.

3.1.2. MEASURE 2: 2001 CAPITAL INCREASE

(32) A report for the holding committee of Fraport (17) noted on 19 January 2001 that the losses accumulated by FFHG between 1998 and 2005 would presumably amount to EUR […] million, and therefore be more than twice as high as forecasted in 1997. In addition, two of FFHG's major freight clients shifted or reduced their business from Frankfurt Hahn airport at the same time, which resulted in a substantial decrease of freight traffic volume, namely by 45 % in the first semester of 2001.

(33) Following that report, Fraport mandated a consultant, the Boston Consulting Group (‘BCG’), as well as its own Strategic Department Acquisitions and Holdings (‘SD’) in the beginning of 2001 to develop a strategy for FFHG. Both BCG and SD concluded that a positive long-term development of FFHG was only possible with a substantial improvement of the infrastructure, as a prerequisite to further increase traffic volume. SD also pointed out that such a substantial extension of FFHG would be financially risky, and that even in case of the most positive scenario, a positive annual result (net annual profit after tax) would presumably be reached at the earliest in 2013.

(34) Based on the BCG study and its own analysis, SD drafted a development programme for FFHG, which envisaged investments of EUR 172 million until 2007. Those investments consisted of an ‘emergency’ programme, valued at EUR 27 million, covering the extension of the runway to 3 400 meters and the planning costs for the plan approval procedure (‘Planfeststellungsverfahren’) to extend the runway to 3 800 meters, as well as the additional costs of the commenced construction of the new passenger terminal.

(35) However, in 2001 FFHG had an equity-to-debt ratio of only 4 % (18). In addition, as of 31 December 2005 Fraport had a right to terminate the 2001 PLTA. Under those conditions, FFHG could not finance the ‘emergency’ programme through further debt, but needed fresh capital.

(36) The capital increase was decided by a resolution of Fraport's supervisory board on 14 December 2001 and subsequently by a resolution of FFHG's shareholders on 9 January 2002. Any increase of the authorised capital of a limited liability company, such as FFHG, requires the approval of all participating shareholders.

(37) Following that approval, Fraport and Land Rhineland-Palatinate increased the authorised capital by EUR 27 million from EUR 3,5 million to EUR 30,5 million. On 9 January 2002 Fraport contributed EUR 19,7 million and Land Rhineland-Palatinate EUR 7,3 million. The capital increase was intended to finance the extension of the runway and investments into other infrastructure to increase the profitability of the airport.

3.1.3. MEASURE 3: 2004 CAPITAL INCREASE

(38) On 27 November 2002, it was agreed by Fraport, Land Rhineland-Palatinate, Land Hesse and FFHG that Land Hesse would become the third shareholder of FFHG and would as such contribute EUR […] million at the time when additional capital will be required to finance the investments. It was also agreed to create a close cooperation between Frankfurt Main airport and Frankfurt Hahn airport.

(39) It was agreed that further investments were necessary to increase the profitability of Frankfurt Hahn airport. Those investments concern for example the extension of the runway to 3 800 meters. A draft shareholder agreement between Fraport, Land Rhineland-Palatinate, and Land Hesse was prepared on 22 March 2004. The final shareholder agreement regarding the decision to realise this 2004 capital increase was signed by Fraport, Land Rhineland-Palatinate, and Land Hesse on 30 March 2005 and registered in the commercial registry on 19 May 2005

(40) The three parties agreed on a capital increase of EUR 19,5 million for FFHG's authorised capital, thereby continuing the investment programme proposed in 2001 by SD (see recitals 33-34). Land Rhineland-Palatinate and Land Hesse agreed to this capital increase subject to the condition that a new PLTA between FFHG and Fraport would be concluded, covering the period until 31 December 2014. The shareholders also agreed that any further debt FFHG was going to incur had to be secured by Fraport, Land Rhineland-Palatinate and Land Hesse at a ratio corresponding to the distribution of capital in FFHG. On that basis Fraport, Land Rhineland-Palatinate and Land Hessen committed to re-finance the infrastructure investments of FFHG.

(41) Between 2004 and 2009, fresh capital of EUR 19,5 million was injected into FFHG in several instalments. Fraport's share in the capital increase amounted to EUR 10,21 million, Land Rhineland-Palatinate's to EUR 0,54 million, and Land Hesse contributed EUR 8,75 million.

(42) In addition, both Land Hesse and Land Rhineland-Palatinate committed and injected according to the payment schedule (see Table 5 below) another EUR 11,25 million as capital reserve, to be paid by the former between 2007 and 2009, and by the latter between 2005 and 2009.

(43) Therefore, the total amount of capital increase decided in 2005 was EUR 42 million.

(44) The payments were due according to the following schedule in Table 5 (in thousand EUR): Table 5 Payment schedule of capital injections Fraport 2005 2006 2007 2008 2009 Total Payments on capital contributions 2 554 1 915 1 915 1 915 1 915 10 214 Capital reserve 0 0 0 0 0 0 Total equity 10 214 Land Hesse 2005 2006 2007 2008 2009 Total Payments on capital contributions 4 000 4 000 750 0 0 8 750 Capital reserve 0 0 3 250 4 000 4 000 11 250 Total equity 20 000 Land Rhineland-Palatinate 2005 2006 2007 2008 2009 Total Payments on capital contributions 537 0 0 0 0 537 Capital reserve 1 821 2 357 2 357 2 357 2 357 11 249 Total equity 11 786

3.1.4. MEASURE 4: 2004 PLTA

(45) As it had been a condition for approval of the capital increase, FFHG and Fraport extended the duration of the 2001 PLTA until 2014 by an agreement of 5 April 2004. The new PLTA agreement became however only effective after the approval of Fraport's shareholder assembly. As agreed by the shareholders of FFHG with respect to the capital increase, it was laid down in this 2004 PLTA stated that any further debt accrued by FFHG had to be compensated by Fraport, Land Rhineland-Palatinate and Land Hesse at a ratio which corresponded to their equity.

(46) Under the 2004 PLTA, Fraport took over approximately EUR […] million worth of losses until 2009. Therefore, under the two successive PLTA's together, a total of EUR […] million of losses, accrued between 2001 and 2009, were compensated by Fraport. Out of this sum, EUR […] million concern depreciation of assets and EUR […] million the interest payments on loans to finance infrastructure.

(47) In 2009, Fraport sold its entire share in FFHG to Land Rhineland-Palatinate and thereby also terminated the PLTA.

3.1.5. MEASURE 5: COMPENSATION OF FFHG FOR SECURITY CHECKS

(48) Land Rhineland-Palatinate collects an airport security tax from all departing passengers at Frankfurt Hahn airport. The Land does not carry out the security checks itself, but has subcontracted that task to the airport, which in turn has subcontracted that task by agreement on to a security company. As consideration for carrying out the security checks, the Land transfers the entire revenue from the security tax to the airport.

3.1.6. MEASURE 6: DIRECT GRANTS BY LAND RHINELAND-PALATINATE

(49) According to the financial reports for Land Rhineland-Palatinate holding companies (19), the Land subsidised FFHG in the following amounts as summarised in Table 6. Table 6 Direct grants by Land Rhineland-Palatinate Year Direct Grants (EUR) 1997 […] 1998 […] 1999 […] 2000 […] Total 1997-2000 […] 2001 […] 2002 […] 2003 […] 2004 […] Total 2001-2004 […]

(50) The direct grants before 12 December 2000 by Land Rhineland-Palatinate to FFHG amount to […] million, whereas the direct grants by Land Rhineland-Palatinate to FFHG between 2001 and 2004 amount to EUR […] million.

3.2. POSSIBLE STATE AID GRANTED BY FFHG TO RYANAIR AND ALL OTHER AIRLINES TRANSPORTING PASSENGERS

(51) In 1999, FFHG attracted its first low-cost carrier, Ryanair. FFHG concluded three agreements with Ryanair in 1999, 2002 and 2005. Furthermore, FFHG introduced new airport charges in 2001 and 2006.

3.2.1. MEASURE 7: 1999 RYANAIR AGREEMENT

(52) The first agreement with Ryanair entered into force with retroactive effect as of 1 April 1999, and had a duration of 5 years (the ‘1999 Ryanair agreement’). Ryanair commenced operating from Frankfurt Hahn airport into London Stansted on 22 April 1999, when all essential conditions of the agreements had already been agreed upon.

(53) A Deckungsbeitragsrechnung (break-even analysis) for the 1999 Ryanair agreement had been submitted by the management board of FFHG to the Supervisory Board in its meeting of 5 May 1999. According to Germany, FFHG's Supervisory Board did not vote on the 1999 Ryanair agreement or the break-even analysis, since the conclusion of the agreement was deemed to be operational day-to-day business being within the sole competence of FFHG's Management Board.

(54) Table 7 summarises the charges to be paid by Ryanair under Annex 1 of the 1999 Ryanair agreement. Table 7 Charges to be paid by Ryanair under Annex 1 of the 1999 Ryanair agreement Charge/fee/tax type EUR Turnaround fee (per flight comprising landing charge, ramp handling and passenger clearance) (20) […] Passenger fee (per arriving passenger) […] Air security tax (per departing passenger) […] De-icing fluid including hot water (per litre) […]

(55) Under Annex 3 of the 1999 Ryanair agreement, FFHG additionally received a […] % commission on each ticket sold (cash or credit card) or issued by FFHG's ticket counters, a […] % commission on excess baggage charges collected by FFHG, EUR […] for each prepaid ticket processed by Ryanair and a […] % commission for each car rental booked through FFHG.

(56) Ryanair was entitled to marketing support amounting to an annual maximum of EUR […], which was to be paid by FFHG in quarterly instalments and only for the first 3 years of operation. The marketing support had to be used exclusively for advertisements concerning routes departing from Frankfurt Hahn airport. Ryanair had to provide supporting invoices and detailed proof of how the money was spent.

3.2.2. MEASURE 8: 2001 SCHEDULE OF AIRPORT CHARGES

(57) On 16 October 2001, Frankfurt Hahn airport's 2001 schedule of airport charges was approved and published by the Land Rhineland-Palatinate's Transport Department. It entered retroactively into force on 1 October 2001 (21).

(58) As Frankfurt Hahn airport's business strategy was focused on low cost carriers, which typically operate Boeing 737 or Airbus A 319/320 aircraft with a maximum take-off weight (‘MTOW’) of approximately 50 to 80 tonnes, it introduced a zero landing and take-off charge for aircraft between 5,7 and 90 tonnes MTOW.

(59) Table 8 summarises the charges per aircraft for central ground handling infrastructure services to be paid by airlines under the 2001 schedule of airport charges. Table 8 Charges for central ground handling infrastructure services to be paid by airlines under the 2001 schedule of airport charges Charge per aircraft in EUR MTOW up to 90 tonnes included in the take-off and landing charge MTOW of more than 90 tonnes 50,00

(60) The passenger charge was set at EUR 4,35 per arriving passenger. The passenger security fee based on the number of passengers aboard the aircraft when departing is EUR 4,35 per passenger, payable to Land Rhineland-Palatinate's Highways and Transport Department — Air Transport Section.

(61) For each approach of an aircraft under Instrument Flight Rules, an Air Traffic Control approach charge has to be paid to the airport operator. That charge for commercial or non-commercial flights is included in the landing and take-off charge if the flight is operated for purposes other than training and instruction. It hence is zero for aircraft to which the zero landing and take-off charge applies.

3.2.3. MEASURE 9: 2002 RYANAIR AGREEMENT

(62) The second agreement with Ryanair is dated 14 February 2002 (the ‘2002 Ryanair agreement’) and was submitted to FFHG's Supervisory Board held on 16 November 2001. The minutes of that meeting report that the majority of the members of the Supervisory Board approved it.

(63) The copy of the 2002 Ryanair agreement that was transmitted to the Commission is not signed. According to Germany, although that agreement was never signed, it has nevertheless been applied by the parties since 14 February 2002.

(64) According to Germany, the 2002 Ryanair agreement replaced the 1999 Ryanair agreement, and it was concluded for a period of […] years (until […]). The passenger fee however remained identical as in the initial agreement of 1999. Ryanair has the option to prolong the agreement on similar terms and conditions until […].

(65) The 2002 Ryanair agreement is based upon the Standard Ground Handling Agreement of the International Air Transport Association, which has been adapted to the needs of the parties. It consists of the following elements: (i) The Main Agreement (ii) Annex A — Description of Ground Handling Services; (iii) Annex B — 1.0 Location, agreed services and charges for Frankfurt Hahn airport; (iv) Second Annex B — 1.0 Location, agreed services and charges for Frankfurt Hahn airport; (v) Annex 3 and Appendixes 1-3 (22) to the second Annex B — 1.0; (vi) Annex C — Airport charges; (vii) Annex D — Description of the ground handling service package ‘Hahn-Smart’ (viii) Third Annex B — Location, agreed services and charges for Frankfurt Hahn airport — ‘Hub Agreement’ (ix) Annex E — Marketing Agreement

(66) The Main agreement, Annex A and Annex B — 1.0 are simply copies of the standard form. The parties have not filled in any of the fields, as this part of the standard form was not considered applicable.

(67) The second Annex B — 1.0 has been filled in by the parties, in so far as names of the parties, bank accounts and the price for de-icing fluid (EUR […] per litre) and hot water (EUR […] per litre) are concerned.

(68) Annex 3 and its Annexes 1-3 concern ‘further strategic agreements’ between the parties. They relate to the technical arrangements for ground handling, ticketing and branding space at the airport.

(69) Annex D stipulates that for ground-handling the charges summarised in Table 9 apply, under the condition of a turnaround-time not exceeding 30 minutes. Table 9 Charges for ground-handling if maximal 30 minutes turnaround Aircraft with a MTOW Unit EUR Up to 5,7 tonnes Handling […] Up to 14 tonnes Handling […] Up to 20 tonnes Handling […] Up to 90 tonnes Handling […] More than 90 tonnes Handling […]

(70) The blank fields for aircraft of ‘up to’ and ‘more than’ […] tonnes appear to indicate that […] charged for aircrafts between […] and […] tonnes (23).

(71) Annex E (i.e. Hahn Smart Agreement) confirms that analysis. It stipulates in point 1: ‘[…]’

(72) The airport fee level was frozen until 30 April 2004 and thereafter was to be adjusted corresponding to the German Consumer Price Index, if the latter increased by more than […] % compared to the previous year.

(73) Annex E also foresees the payment of marketing support. Ryanair is entitled to the following marketing support: (i) one-off payments of EUR […] for each new route departing from Frankfurt Hahn airport and established after 13 February 2002, and (ii) rebates on the airport charges dependent on the number of aircrafts based at Frankfurt Hahn airport and on the number of landing passengers as summarised in Table 10. Table 10 Rebates on airport charges Number of aircraft based at Frankfurt Hahn airport Marketing support per passenger (EUR) Up to 2 […] 3 to 4 […] 5-8 […] (24)

(74) Annex E also provides that VAT will be added to every payment or price in the agreement, in so far as turnover tax law is applicable.

(75) […].

(76) In conclusion, according to the 2002 Ryanair agreement the airline pays the charges summarised in Table 11. Table 11 Overview of airport charges to be paid by Ryanair Charge/fee/tax type EUR Passenger fee (per arriving passenger) […] Air security tax (per departing passenger) […] De-icing fluid (per litre) […] Hot water (per litre) […] Revenue for prepaid tickets processed by Ryanair […]

3.2.4. MEASURE 10: 2005 RYANAIR AGREEMENT

(77) On 4 November 2005, an amendment to the agreement of 2002 was agreed, the ‘Agreement Ryanair/Flughafen Frankfurt-Hahn GmbH Delivery of aircraft 6 to 18 — year 2005 to year 2012’ (the ‘2005 Ryanair agreement’). On 18 November 2005, the conclusion of the 2005 Ryanair agreement was approved by the supervisory board of FFHG.

(78) The relevant parts of the 2005 Ryanair agreement are: (i) […]; (ii) […]; (iii) […]; (iv) […].

(79) The 2005 Ryanair agreement is valid until […]. The other elements of the 2002 Ryanair agreement, in particular the Main Agreement and Annex E (i.e. Hahn Smart-Agreement), were also prolonged until […].

(80) Table 12 shows the number of Ryanair aircraft to be based at Frankfurt Hahn airport and the envisaged passenger volume under the 2005 Ryanair agreement: Table 12 Ryanair aircrafts and passenger growth foreseen under the 2005 Ryanair agreement Year 2006 2007 2008 2009 2010 2011 2012 No of aircraft […] […] […] […] […] […] […] Passengers (Mio) […] […] […] […] […] […] […]

(81) Table 13 provides an overview of the rebate system on airport charges introduced by the 2005 Ryanair agreement. Table 13 Amended airport rebates introduced by the 2005 Ryanair agreement In EUR Total average rebate per passenger Average passenger fee Rebate on all inbound passengers […] […] […] Additional rebate on all departing passengers above […] Mio and up to […] Mio per year […] […] […] Additional rebate on all departing passengers above […] Mio per year […] […] […]

(82) […].

3.2.5. MEASURE 11: 2006 SCHEDULE OF AIRPORT CHARGES

(83) The 2006 schedule of airport charges was approved for Frankfurt Hahn airport by the Land Rhineland-Palatinate's Transport Department on 26 April 2006 (25) and entered into force on 1 June 2006. It follows the same basic principles as the 2001 schedule of airport charges (see above recital 57 and following).

(84) The changes compared to the previous schedule concern the take-off and landing charges, the passenger fee and the marketing support. The 2006 schedule of airport charges maintains the two fundamental principles of the 2001 schedule of airport charges: (i) Air traffic control charges and ground handling charges are included in the take-off and landing charges; (ii) Aircraft with a MTOW of more than 5,7 tonnes do not have to pay take-off and landing charges (or air traffic control charges or ground handling charges) at all.

(85) The 2006 schedule introduces, however, two limitations to those principles. First of all, only passenger aircraft can claim those advantages. Secondly, the advantages are limited to aircraft with a turn-around time of less than 30 minutes.

(86) Furthermore, the passenger charges are set per departing passenger, and as a function of the total number of passengers transported by the airline (departing and arriving) to which the airplane belongs. Table 14 provides an overview of the passenger charges to be paid under the 2006 schedule of airport charges depending on the total number of departing and arriving passengers. Table 14 Passenger charges under the 2006 schedule of airport charges Total number of departing and arriving passengers Passenger charge per departing passenger in EUR Minimum amount of overall airport charges to be paid in EUR Less than 100 000 5,35 100 001 -250 000 4,40 267 500,00 250 001 -500 000 3,85 550 000,00 500 001 -750 000 3,45 962 500,00 750 001 -1 000 000 3,15 1 293 750,00 1 000 001 -1 500 000 2,90 1 575 000,00 1 500 001 -2 000 000 2,68 2 175 000,00 2 000 001 -3 000 000 2,48 2 680 000,00 3 000 001 -5 400 000 2,48 per passenger 1 to 3 000 000 2,24 per passenger 3 000 001 to 5 400 000 Not applicable. 5 400 001 -10 000 000 2,48 per passenger 1 to 3 000 000 2,24 per passenger 3 000 001 to 5 400 000 2,21 per passenger 5 400 001 to 10 000 000 Not applicable. More than 10 000 000 2,48 per passenger 1 to 3 000 000 2,24 per passenger 3 000 001 to 5 400 000 2,21 per passenger 5 400 001 to 10 000 000 2,19 per passenger Not applicable

(87) Table 15 shows the amount of marketing support that can be granted to airlines using the airport. Table 15 Marketing support Total number of departing passengers Minimum number of destinations and frequency from Frankfurt Hahn airport Marketing support in EUR 5 000 -100 000 […] […] 100 001 -250 000 […] […] 250 001 -500 000 […] […] 500 001 -750 000 […] […] 750 001 -1 000 000 […] […]

(88) Moreover, marketing support is regulated in a separate document available on the web site of Frankfurt Hahn airport. One-time marketing support is granted under the following conditions: (i) eligible are flights to destinations which have not been served from Frankfurt Hahn airport in the last 24 months; (ii) the maximum support is 33,3 % of the proven marketing costs for a new destination; (iii) the airline has to demonstrate the medium-term profitability of the new destination through appropriate supporting documents; (iv) FFHG can request the reimbursement of the marketing support in the event that the airline does not fulfil its obligations with respect to the new destination.

3.3. MEASURES OUTSIDE THE SCOPE OF THE 2008 OPENING DECISION (MEASURE 12)

(89) Germany committed to inject into FFHG's equity EUR […] million to refinance FFHG's loans.

(90) Those funds refinance infrastructure measures irrevocably decided by the public authorities prior to 31 December 2012, but which were not covered through the PLTAs, capital increases or other grants.

4. GROUNDS FOR OPENING THE PROCEDURE AND INITIAL ASSESSMENT

4.1. POSSIBLE STATE AID GRANTED TO FFHG

4.1.1. MEASURE 1: 2001 PLTA

(91) With regard to the 2001 PLTA, the Commission found in the 2008 opening decision that the annual losses were assumed by Fraport, a company which is predominantly publicly owned. The Commission therefore established that it needed to examine whether Germany could be regarded as having been involved in the conclusion of the 2001 PLTA.

(92) The Court of Justice held in Stardust Marine (26) that the resources of an undertaking incorporated under private law, whose shares are in majority publicly owned, constitute State resources. The Commission considered that the conclusion of the agreement was also to be considered as imputable to the State as it would have been impossible to do so without taking into account the requirements of the public authorities.

(93) Furthermore, in contrast to the arguments raised by Germany, the Commission expressed doubts that a market economy investor would have concluded such an agreement as the agreement clearly seemed to constitute an advantage for FFHG in relieving it from a financial burden which otherwise it would have had to shoulder.

(94) The Commission also considered that the measure was selective as only FFHG's losses were covered and that the measure concerned distorted or threatened to distort competition within the market of airport operators and affected trade between Member States.

(95) The Commission thus took the preliminary view that the measure at issue might constitute State aid in the form of operating aid.

(96) Since Germany did not provide any evidence or argue that such operating aid could be considered compatible with the internal market pursuant to Article 107(3)(c) of the Treaty, and in the light of the 2005 Aviation Guidelines, the Commission raised serious doubts that that aid could be deemed compatible.

4.1.2. MEASURE 2: 2001 CAPITAL INCREASE

(97) In the 2008 opening decision, the Commission found that Fraport and Land Rhineland-Palatinate had increased FFHG's capital by EUR 27 million, contributing EUR 19,7 million and EUR 7,3 million respectively. Concerning the existence of aid, the Commission pointed out that Fraport's as well as Land Rhineland-Palatinate's resources constitute State resources, according to the criteria established in the case Stardust Marine (27). Furthermore, the Commission took the preliminary view that Fraport's decisions are also likely to be imputable to the State.

(98) Moreover, the Commission indicated that it was not convinced that the market economy operator test (MEOT) for the capital increase was fulfilled. The Commission has accepted in principle that an assessment carried out by one or more independent audit companies can serve as proof that a transaction has taken place at market value (28). However, the Commission had doubts whether the report handed in by PwC on account of Fraport sufficed to exclude the presence of an advantage.

(99) The doubts were due to the content of the MEOT carried out by PwC as it was purely qualitative and did not assess the cost of disengagement by Fraport. The report also did not quantify or explain in detail the ‘high risks’ identified by BCG and Fraport's SD, and generally limited the assessment to Fraport, without considering whether Land Rhineland-Palatinate acted like a market economy investor. For those reasons, the Commission could not exclude that the capital increase provided an advantage to FFHG.

(100) The Commission also concluded that the measure was selective as only FFHG was granted the 2001 capital increase and that it distorted or threatened to distort competition within the market of airport operators and affected trade between Member States.

(101) The Commission therefore took the preliminary view that the measure at issue might constitute State aid in the form of investment aid and raised doubts as to its compatibility with the internal market, notably in view of Article 107(3)(c) of the Treaty and the 2005 Aviation Guidelines.

4.1.3. MEASURE 3: 2004 CAPITAL INCREASE

(102) With regard to the second capital increase, the Commission noted that in 2004, FFHG's existing shareholders increased its authorised capital by EUR 10,75 million, Fraport contributing a share of EUR 10,21 million and Land Rhineland-Palatinate a share of EUR 0,54 million. In addition, Land Hesse entered as new shareholder, contributing another EUR 8,75 million. Furthermore, both Land Rhineland-Palatinate and Land Hesse committed to contribute each EUR 11,25 million as capital reserve.

(103) The Commission adopted mutatis mutandis the same reasoning for this capital increase as for the one in 2001 (see Section 4.1.2) for the existence of aid and raised the same doubts as to its compatibility with the internal market.

4.1.4. MEASURE 4: 2004 PLTA

(104) According to the 2008 opening decision, Fraport took over losses of FFHG amounting to at least EUR […] million under the 2004 PLTA. The Commission applied mutatis mutandis the same reasoning as the one advanced in relation to the 2001 PLTA, see recital 91 and following. In relation to the MEOT submitted by PwC, the Commission doubted its reliability given that the assessment was largely qualitative. Hence, the Commission considered that the 2004 PLTA constitutes operating aid and expressed doubts as regards its compatibility with the internal market, in particular in light of the 2005 Aviation Guidelines.

4.1.5. MEASURE 5: COMPENSATION OF FFHG FOR SECURITY CHECKS

(105) The Commission indicated in the 2008 opening decision that airport security services are not of an economic nature and do not fall within the scope of the rules on State aid (29).

(106) The Commission then observed that the economic analysis of PwC seemed to indicate that Land Rhineland-Palatinate over-compensated FFHG for carrying out security checks. In that regard the Commission pointed out that that advantage was financed through State resources and had the potential to distort competition and affect trade between Member States. Hence, the Commission considered that the overcompensation constituted State aid within the meaning of Article 107(1) of the Treaty.

(107) With regard to the compatibility assessment of that operating aid, the Commission applied mutatis mutandis the same reasoning as the one advanced in relation to the 2001 PLTA, see recital 95 and following. Another possible legal basis assessed for compatibility with the internal market was Article 106(2) of the Treaty. However, Germany did not provide any indication that a public service obligation had been imposed on FFHG. Therefore, the Commission did not find a legal basis to declare the overcompensation arising from the security charge compatible with the internal market.

4.1.6. MEASURE 6: DIRECT GRANTS BY LAND RHINELAND-PALATINATE

(108) The Commission noted in its 2008 opening decision that the direct grants granted in the years 2001 to 2004 appear to have been granted without consideration, from State resources (namely the general budget of Land Rhineland-Palatinate) and in a selective manner (only to FFHG). The Commission considered that those grants have the potential to distort competition and affect trade between Member States. Hence, the Commission took the preliminary view that they constituted State aid within the meaning of Article 107(1) of the Treaty in the form of investment aid.

(109) The Commission also raised doubts as to the compatibility of the aid with the internal market, notably in view of Article 107(3)(c) of the Treaty and the 2005 Aviation Guidelines.

4.2. POSSIBLE STATE AID GRANTED BY FFHG TO RYANAIR AND ALL OTHER AIRLINES TRANSPORTING PASSENGERS

4.2.1. MEASURE 7: 1999 RYANAIR AGREEMENT

(110) Concerning the 1999 Ryanair agreement, the Commission generally pointed out in the 2008 opening decision that a reduction or system of reductions granting preferential treatment to a specific business was likely to fall within the scope of Article 107 of the Treaty.

(111) The Commission considered that, as FFHG is a predominantly publicly owned undertaking, its resources constitute State resources. The Commission pointed out in relation to the 1999 Ryanair agreement that although the supervisory board did not vote on that agreement, neither did it pass any motion or take any action suggesting that it was opposed to it. Therefore, the Commission noted that it had no indications allowing it to conclude that the 1999 Ryanair agreement was not imputable to the State.

(112) Furthermore, the Commission raised doubts as to whether a private market investor would have concluded the 1999 Ryanair agreement. The Commission noted in this respect that the charges imposed by FFHG on Ryanair did not cover FFHG's full costs and therefore appeared to confer an advantage to Ryanair.

(113) The Commission also pointed out that the costs of the new terminal of approximately EUR […] million had not been taken into account in the MEOT submitted by Germany. As a preliminary observation, the Commission rejected Germany's argument that in 1999 HHN was anyway in need of a new passenger terminal, and that the capacity of 1,25 million passengers per year was far above the expected passenger volume to be generated by Ryanair, since Ryanair was the only major passenger air carrier at Frankfurt Hahn airport in 1999. For those reasons, the Commission raised doubts as to the MEOT handed in by Germany.

(114) The Commission also considered that the 1999 Ryanair agreement is a selective and specific measure as only Ryanair received such conditions in the negotiations with FFHG, and that the measure concerned distorts or threatens to distort competition within the market of airlines and affects trade between the Member States.

(115) Therefore, the Commission took the preliminary view that, since it appeared that it did not fulfil the MEOT and was imputable to the State, the 1999 Ryanair agreement would constitute State aid within the meaning of Article 107(1) of the Treaty. Furthermore, the Commission did see not legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market.

4.2.2. MEASURE 8: 2001 SCHEDULE OF AIRPORT CHARGES

(116) In the 2008 opening decision, the Commission also analysed whether the 2001 schedule of airport charges possibly constituted State aid to Ryanair. It considered in that respect that, as companies in which the public authorities have a predominant share, FFHG's and Fraport's resources constitute State resources and that their conduct would also be imputable to the State.

(117) The Commission expressed doubts as to whether the fee structure of the 2001 schedule of airport charges was set in a manner which would allow the airport to run profitably as Germany had not provided a MEOT for this schedule. As Ryanair seemed to have been the only passenger airline using the airport between 2001 and 2003, and retained more than 95 % of the passenger volume until 2006, the results of the MEOT for the 2002 Ryanair agreement, which was based on the 2001 schedule of airport charges and introduced an additional marketing support, served as a benchmark. Based on the information provided, the Commission doubted whether the MEOT for the 2001 schedule of airport charges was fulfilled.

(118) The Commission considered that the measure was selective as only airlines that use Frankfurt Hahn airport benefited from the 2001 schedule of airport charges and that it distorted or threatened to distort competition and affected trade between the Member States.

(119) Therefore, concerning the 2001 schedule of airport charges, the Commission took the preliminary view that it might constitute State aid within the meaning of Article 107(1) of the Treaty. Furthermore, the Commission did not find legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market.

4.2.3. MEASURE 9: 2002 RYANAIR AGREEMENT

(120) Regarding the question of State resources, the Commission applied the same reasoning mutatis mutandis as for the 1999 Ryanair agreement, discussed in Section 4.2.1 (recital 110 and following). Concerning imputability of the measure, the 2002 Ryanair agreement was formally approved by the Supervisory Board of FFHG, which is dominated by members nominated by the public authorities. Hence, the Commission took the preliminary view that the 2002 Ryanair agreement was imputable to Germany.

(121) Furthermore, the Commission expressed doubts as to whether a market economy investor would have concluded the 2002 Ryanair agreement. In this respect, the Commission doubted the calculation presented by Germany. Furthermore, the Commission raised doubts regarding the calculation of costs since the costs for general airport infrastructure and general airport administration handed in by Germany were based on marginal, rather than average costs. Also, the level of airport charges was frozen until 30 April 2004, and thereafter was to be adjusted corresponding to the German Consumer Price Index only if this index increased by more than […] % compared to the previous year.

(122) Concerning selectivity, distortion of competition and effect on trade, the Commission applied the same reasoning mutatis mutandis as for the 1999 Ryanair agreement, see Section 4.2.1 (recital 110 and following).

(123) The Commission therefore took the preliminary view that the 2002 Ryanair agreement might constitute State aid within the meaning of Article 107(1) of the Treaty. Furthermore, the Commission did not see any legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market.

4.2.4. MEASURE 10: 2005 RYANAIR AGREEMENT

(124) Regarding the question of State resources, the Commission applied the same reasoning mutatis mutandis as for the 1999 Ryanair agreement discussed in Section 4.2.1 (recital 110 and following). On the question of whether there was an economic advantage, the Commission expressed doubts with regard to the MEOT presented by Germany since there was insufficient information for verifying the calculations and because the investments induced by increasing passenger numbers were not in any way taken into account or allocated to Ryanair.

(125) The Commission furthermore indicated that although the 2005 Ryanair agreement, differed from the 1999 and 2002 Ryanair agreements, by introducing a kind of contractual penalty system if Ryanair did not generate the contractually determined passenger volume, it doubted whether those sanctions were effective.

(126) Concerning selectivity, distortion of competition and effects on trade, the Commission applied the same reasoning mutatis mutandis as for the 1999 Ryanair agreement, see Section 4.2.1 (recital 110 and following).

(127) The Commission concluded that the 2005 Ryanair agreement would also constitute State aid within the meaning of Article 107(1) of the Treaty. The Commission did not find any legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market.

4.2.5. MEASURE 11: 2006 SCHEDULE OF AIRPORT CHARGES

(128) With regard to the 2006 schedule of airport charges, Germany had only partially provided an economic justification in the form of a MEOT to the Commission. The Commission indicated in its 2008 opening decision that with the incomplete information it was unable to verify whether, as Germany argued, economies of scale justified the differentiation in passenger charges. Furthermore, the economic justifications given for the 2006 schedule of airport charges left several questions open, such as which costs are included in the cost coverage and why the marketing support was not included in the economic justification of the schedule.

(129) The Commission considered that the measure was selective as only airlines using Frankfurt Hahn airport benefited from the 2006 schedule of airport charges and that the measure concerned distorted or threatened to distort competition and affected trade between the Member States.

(130) Therefore, concerning the 2006 schedule of airport charges, the Commission took the preliminary view that it might constitute State aid within the meaning of Article 107(1) of the Treaty. Furthermore, the Commission did not see any legal grounds for declaring such a permanent operating aid for an airline compatible with the internal market.

5. COMMENTS FROM GERMANY

(131) Germany submitted extensive observations and economic analysis in the course of this procedure.

5.1. GENERAL REMARKS

(132) In its comments, Germany first of all provided some general background considerations concerning Frankfurt Hahn airport. Germany insisted that the Frankfurt Hahn airport project was meant to become a profitable private company from the moment of its conversion. Therefore, Fraport strategically got involved with a view to the airport's long-term profitability. With its low-cost carrier business model, considerably simplified infrastructure and low capital costs, Frankfurt Hahn airport has been a pioneer in Europe, according to Germany. However, Germany argued that the necessary time framework for reaching positive operative results in that kind of infrastructure project would be approximately 20 years. Germany pointed out that Frankfurt Hahn airport has had a positive result in EBITDA for the first time in 2006, so already 8 years after its market entry, which would prove its economic viability. According to Germany, Frankfurt Hahn airport was the fastest growing airport in Germany.

(133) Furthermore, Germany is of the opinion that the measures concerning Frankfurt Hahn airport were taken exclusively according to the market economy investor principle. According to Germany, if a private undertaking of the same size and in a comparable situation would also have undertaken the financing based on a commercial logic, this would exclude any advantage. Germany argued that the Commission should only assess whether the respective measure is commercially defendable and not whether it will without reasonable doubt be successful. Also, Germany referred to the principle of equality of public and private undertakings under which funds that the State is offering to an undertaking in accordance with market conditions will not be considered State aid. All in all, according to Germany, the measures for Frankfurt Hahn airport had all been granted in line with market conditions; the MEOTs which Germany presented would prove this. Germany then elaborated on those general remarks with regard to the respective measures assessed in the 2008 opening decision.

5.2. ALLEGED STATE AID GRANTED TO FFHG

5.2.1. MEASURE 1: 2001 PLTA

(134) Germany argued that the State aid rules are not applicable to the 2001 PLTA since it was concluded in August 1999, i.e. before the judgment by the Court of Justice in the case Aéroports de Paris (30) on 24 October 2002. According to Germany, the judgment at first instance by the General Court became definitive only after the judgment of the Court of Justice was delivered and only when it was clarified that airports were considered as undertakings and therefore fell within the scope of application of the State aid rules. That approach would have been confirmed later on in the Leipzig-Halle judgment (31).

(135) Germany stated furthermore that no State resources had been employed. In that regard, Germany elaborated that the losses taken over by Fraport did not burden the budget of the State. Furthermore, Germany argued that the decisions taken by Fraport were not imputable to Germany since the public shareholders were not able to exercise a determining influence. In this regard, Germany emphasised that it would have to be verified in each individual case whether resources of a company were actually controlled by the State. According to Germany, the fact that a majority of shareholders was public is not sufficient to assume that the 2001 PLTA involves State resources.

(136) According to Germany, the shareholders cannot determine the behaviour of the management board in the case of a German stock company, an Aktiengesellschaft, such as Fraport. In Germany's view, Fraport is an independent incorporated company listed at the stock exchange and the public regional bodies do not exercise continuing control over its funds. Germany explained that according to Section 76 of the Aktiengesetz (the German stock corporation act, ‘AktG’), the management board has a far-reaching decision-making powers independently of the shareholders. Germany argued that in the cases Stadtwerke Brixen AG (32) and Carbotermo (33) cases, the Court of Justice already recognised the nature of the German listed company and the considerable independence enjoyed by their management board vis-a-vis its shareholders. In that respect, the public authorities could not control Fraport's day-to-day business.

(137) In that regard, Germany explained that Fraport was not in any way incorporated into the structures of public administration, that Fraport was not accountable to Germany for its actions and was in no way subordinated to the public administration. Even though Germany recognised that the public shareholders were involved in the decision-making at the general meeting of shareholders during which the 2001 PLTA was decided, Germany argued that this did not mean that the public shareholders had done anything more than exercise their lawful rights and obligations as shareholders.

(138) In addition, Germany stated that the 2001 PLTA did not confer any advantage on FFHG. It referred to the MEOT undertaken by PwC in that regard, which considered that any market economy investor would also have concluded that agreement. Furthermore, Germany stated that the risks and benefits of the 2001 PLTA were evenly distributed and that it also made sense from a tax law point of view. Overall, Germany depicted the 2001 PLTA as a perfectly normal measure in a corporate group to apply global or sectorial structural policy.

5.2.2. MEASURE 2: 2001 CAPITAL INCREASE

(139) Germany explained that the 2001 capital increase was necessary since an external financing of the investments into its infrastructure would have strained the annual results of FFHG too much in the short-term.

(140) Germany stated that the 2001 capital increase was decided by the supervisory board of FFHG on 14 December 2001 and led to a change in the articles of association of FFHG on 9 January 2002. Therefore, Germany disputed that the rules of State aid are applicable to that measure and referred here also to its reasoning concerning the 2001 PLTA (see recital 134).

(141) Germany furthermore argued that the funds invested by Fraport (EUR 19,7 million out of EUR 27 million) were not State resources since the State had no control over Fraport. In that respect Germany referred to its argumentation on State resources concerning the 2001 PLTA (see recital 136). In addition, Germany stated that the capital increase could also not be imputable to Germany and referred to its explanations on imputability concerning the 2001 PLTA (see recital 134). Germany added that the approval by FFHG's shareholders of the 2001 capital increase could not be a determining factor for its imputability to the State. In Germany's opinion, the actions of the undertaking who handed out the possible aid must be imputable, not those of the undertaking benefitting from the aid. Since FFHG was the undertaking benefitting from the aid, its approval of the capital increase would not make the granting of aid imputable to Germany. According to Germany, nor could the approval of Fraport's supervisory board be taken as an indication for imputability since at that time the supervisory board was already constituted on par of representatives of the employees and the shareholders with a right of codetermination, meaning that there were 10 representatives of the employees and 10 representatives of the shareholders.

(142) Germany also argued that no advantage was conferred on FFHG by the 2001 capital increase. Fraport as well as the Land Rhineland-Palatinate had acted like any market economy investor would have in this matter.

(143) Germany disagreed with the doubts raised by the Commission in relation to the MEOT regarding Fraport's 2001 capital increase decision. Germany submitted all additionally demanded internal documents to the Commission. According to Germany, the decision taken by Fraport in 2001 for a capital increase was based furthermore on an assessment of the measure by the BCG and two general studies ordered by Fraport on the development of air traffic. Germany emphasised that Fraport had increased the capital since the assessment of BCG stated that reaching profitability would not be possible at Frankfurt Hahn airport without further construction and infrastructure measures. The MEOT had taken into account all those documents.

(144) Following the doubts raised by the Commission in relation to the MEOT carried out by PwC, Germany submitted a second, supplementary assessment from PwC to complement and refine the first MEOT. That refined assessment comes to the same conclusion as the first one, namely that the MEOT is fulfilled. Germany rejected Commission's doubts that PwC had not assessed a disengagement of Fraport and that therefore, without knowing the cost of disengagement, it would be impossible to verify whether Fraport had acted like a market economy investor. Germany argued that the cost of disengagement did not make a difference in the assessment. Moreover, Germany pointed out that Fraport had considered disengagement, but that it would not have been possible during the next 5 years due to the 2001 PLTA. Furthermore, the PwC's assessment showed that the investment would have positive results for Fraport in the long run.

(145) Following the 2008 opening decision Germany also submitted a MEOT also in relation to the behaviour of Land Rhineland-Palatinate and its decision to contribute to the capital increase of FFHG with EUR 7,3 million. According to the assessment, also carried out by PwC, Land Rhineland-Palatinate had acted like a market economy operator since the investment measures decided in 2001 were necessary and therefore the capital increase was commercially defendable.

5.2.3. MEASURE 3: 2004 CAPITAL INCREASE

(146) Germany argued that also after the Aéroports de Paris judgment the State aid rules would not be applicable to the 2004 capital increase. According to Germany, the 1994 Aviation Guidelines were in force at that moment and under those Guidelines infrastructure measures at airports were not relevant to the application of State aid rules.

(147) Germany argued that, in contrast to the Commission's description in the 2008 opening decision, the 2004 capital increase was agreed on 30 March 2005 and has been registered with the commercial registry on 19 May 2005. Furthermore, the basic agreement on this capital increase goes back to an agreement in the year 2002. Germany explained that this agreement foresaw the establishment of an airport system between Frankfurt-Main airport and Frankfurt Hahn airport under Council Regulation (EEC) No 2408/92 (34). According to Germany, the assessment of the 2004 capital increase would have to be assessed against this background.

(148) Germany pointed out that according to the MEOT submitted by PwC, supported by supplementary assessments after the 2008 opening decision, Fraport, Land Rhineland-Palatinate and Land Hesse have all acted like market economy investors concerning the 2004 capital increase. Concerning the argumentation for Fraport, Germany referred to its arguments made in relation to the 2001 capital increase (see recital 140 and following). In the first as well as in the supplementary MEOT PwC concluded, according to Germany, that the 2004 capital increase, as well as the conclusion of a new PLTA were to be seen as advantageous for Fraport at the time, qualitatively as well as quantitatively. This was according to Germany justified by the finding of PwC that Fraport's Return on invested capital (hereinafter: ‘ROIC’) when investing into FFHG was above an alternative return of an equivalent capital investment.

(149) In respect to Land Rhineland-Palatinate, Germany pointed to PwC's conclusion that also the Land acted like a market economy investor since the ROIC for the Land was, similarly as for Fraport, above a comparable alternative investment.

(150) In relation to the behaviour of Land Hesse, Germany argued that the restricted growth possibilities for Frankfurt Main airport deriving, inter alia, from the night flight curfew made further development of Frankfurt Hahn airport necessary in the eyes of Land Hesse. Otherwise Frankfurt Main airport would have faced severe economic consequences. Germany pointed out that this development was necessary in order to comprehensively exploit the existing growth opportunities in the framework of the 24 hours-flight permission for Frankfurt Hahn airport together with the envisaged introduction of the airport system Frankfurt Main airport — Frankfurt Hahn airport. Hence, the involvement of Land Hesse in the capital increase was unavoidable, according to Germany.

5.2.4. MEASURE 4: 2004 PLTA

(151) Germany stated that the 2004 PLTA could only be seen in the light of the capital increase and the changes in the shareholder structure in 2004, especially since Land Rhineland-Palatinate and Land Hesse made the redistribution of FFHG shares subject to the conclusion of the 2004 PLTA between Fraport and FFHG until 2014.

(152) Germany referred to its arguments made in relation to the 2004 capital increase and argued that the State aid rules were also not applicable to the 2004 PLTA (see recital 146 and the following).

(153) Concerning the involvement of State resources, Germany referred to its explanations for the 2001 PLTA (see recital 134 and the following). Hence, in Germany's opinion the resources of Fraport were not State resources since Fraport was not subject to State control.

(154) Germany also argued that for the decision of the 2004 PLTA to be approved, a majority of 75 % was needed, whereas the public shareholders only held approximately 70 % of the shares and were therefore in fact not able to control the decisions of Fraport. Moreover, the remaining 30 % of Fraport's shares were dispersed shareholdings. The vote was taken with 99,992 % positive votes, so also the market economy investors did vote for the 2004 PLTA.

(155) As regards the existence of an economic advantage, Germany referred again to the explanations for the 2001 PLTA (see recital 137), according to which a distribution of profits and losses is an absolutely normal measure within a group of companies. Furthermore, according to PwC, any market economy investor would have taken the same decision of concluding the 2004 PLTA since at that moment a profit was to be expected from the year 2008/2009 onwards. Germany submitted further that on the basis of the doubts expressed by the Commission, PwC tested those measures again in the supplementary assessment according to qualitative calculations and came to the same conclusion.

(156) Germany asserted further that the 2004 PLTA was a condition for the 2004 capital increase and, given the expectation of a positive development as from 2008/2009, it was in the interest of Fraport to conclude the 2004 PLTA for at least 5 years. Also, Germany explained that Fraport would have been allowed to take all profits of FFHG until at least 31 December 2024 while being able, in the opposite scenario, to cancel the agreement by 31 December 2010. Therefore, Germany submitted that Fraport would have been able to benefit 100 % from the agreement and to steer FFHG's day-to-day business, while holding only 65 % of its shares. Germany also took the view that the MEOT is supported by the fact that the private investors, making up 30 % of the shareholders of Fraport at that moment, also approved the decision.

5.2.5. MEASURE 5: COMPENSATION OF FFHG FOR SECURITY CHECKS

(157) In this regard, Germany declared that no State resources were involved in the measure. Germany referred to the Preussen-Elektra (35) judgment of the Court of Justice and stated that there can only be State aid where payments are being made by a public or private body designated or established by the State. Germany explained further that in the case of the fees for security checks, those were paid by the airlines to the Land Rhineland-Palatinate and only forwarded to FFHG by the Land as compensation for the security checks which FFHG conducted on behalf of the Land. Hence, according to Germany, in this sense, the fees never became part of the funds of the Land.

(158) Germany explained that according to §5 Luftsicherheitsgesetz (Air Security Law), it is the State that checks passengers and their luggage in order to protect the security of air traffic against terroristic attacks. Germany asserted further that the authorities charge fees per passenger for this activity to the airlines. Germany stated that the level of the security charge depends on the individual circumstances of the airport and range from EUR 2 up to EUR 10 per passenger. At Frankfurt Hahn, the fee amounts to EUR 4,35 and is therefore appropriate in comparison to other airports.

(159) This security task can also be transferred by the authorities to an airport operator, which is what happened in this case where the security checks are being performed by FFHG who in turn entrusted an external security company.

(160) In addition, Germany stated that the security checks fall within the scope of the public policy remit and do not constitute an economic activity.

(161) Germany shares the opinion of the Commission in this regard, that there should be no overcompensation for the services performed by FFHG. However, Germany emphasised that FFHG was not overcompensated since it has to bear all the costs for the security checks.

5.2.6. MEASURE 6: DIRECT GRANTS BY LAND RHINELAND-PALATINATE

(162) Germany clarified that Land Rhineland-Palatinate has made the following payments to FFHG between 2001 and 2004. First, Land Rhineland-Palatinate supported FFHG in some of its infrastructure investments and granted EUR […] to FFHG for this purpose in 2001. According to Germany, those grants were based on decisions taken already in the years 1999 and 2000. Germany argued that at the moment those decisions were taken, State aid rules did not apply to airports as undertakings within the meaning of Article 107(1) of the Treaty.

(163) Second, Germany stated that the financing of personnel costs for security checks was partially taken over by Land Rhineland-Palatinate for the years 2001 (60 % of total costs), 2002 (50 %), 2003 (40 %) and 2004 (30 %).

(164) Third, Germany admitted that Land Rhineland-Palatinate had co-financed two scientific studies which had been ordered by FFHG, but which were mainly in the general public interest according to Germany. Germany stated that Land Rhineland-Palatinate had subsidised the first study on the regional economic effects of Frankfurt Hahn airport at 90 % of total costs, and the second study on the development potentials of the freight carrier business at 70 % of the total costs. Germany argued that Land Rhineland-Palatinate had given those subsidies only because of its own interest in the studies and could just as well have ordered the studies itself. Germany did not see how any advantage was conferred on FFHG through this partial financing since the studies are in the public general interest, neither how this financing might distort competition. As far as those studies were of interest to FFHG, FFHG had also contributed to them financially.

5.3. POSSIBLE STATE AID GRANTED BY FFHG TO RYANAIR AND ALL OTHER AIRLINES TRANSPORTING PASSENGERS

5.3.1. MEASURE 7: 1999 RYANAIR AGREEMENT

(165) Concerning the 1999 Ryanair agreement, Germany generally remarked that from the beginning Frankfurt Hahn airport built only very basic infrastructure so that this airport could be a cost-efficient and innovative partner for low-cost airlines. According to Germany, also at other European airports the so-called ‘anchor clients’ are the natural drivers of the initial development of the airport. For Frankfurt Hahn, the anchor client, i.e. the client through whom a foothold in the market could be obtained, was Ryanair.

(166) Germany argued that when the first agreement with Ryanair was concluded, the concept of a low-cost carrier airport was still in its infancy. Therefore, through this agreement an incentive was given to Ryanair to start flying to the rarely frequented Frankfurt Hahn airport. Germany stated that committing such a big airline to Frankfurt Hahn airport led to the acquisition of more airline agreements for the airport (‘follow-on principle’). Through the so-called ‘domino-effect’, this ultimately also led to an increase in the profits for the non-aviation sector.

(167) Germany argued that, given these dynamics, airlines such as Ryanair had a great bargaining power, since many other small regional airports tried to conclude agreements with Ryanair at that time.

(168) Furthermore, Germany stated that no State resources were granted through the 1999 Ryanair agreement. Moreover, Germany argued that the contractual relationship between the operator of the airport and the airline was conferring no advantage unto the airline. In Germany's view, the responsibility for the conclusion of this agreement must be attributed exclusively to the management board since the conclusion of the 1999 Ryanair agreement represented day-to-day business and the supervisory board had taken no decision in this matter. In Germany's view, the Commission cannot consider the conclusion of the 1999 Ryanair agreement as imputable to Germany because the supervisory board did not do anything to prevent it. Such actions do not lie within the responsibilities and tasks of the supervisory board, according to Germany. Also, the criteria mentioned by the Court of Justice in Stardust Marine would be led ad absurdum if the fact that a supervisory body of a publicly held company did not act would be enough to conclude on the imputability of the measure to the State. Therefore, according to Germany the agreement was not imputable in any way to the State.

(169) Moreover, Germany argued that the 1999 Ryanair agreement did not confer any advantage on Ryanair since any market economy investor would have also concluded such agreement. Germany especially emphasised that this agreement did not induce any losses, contrary to what the Commission argued in its 2008 opening decision, but produced an enormous amount of revenues which by far surpassed the costs incurred.

(170) In this regard, Germany emphasised that Frankfurt Hahn airport used the ‘single-till-approach’, according to which the revenues of aviation and non-aviation flow into a single pool (‘single till’). Therefore, according to Germany aeronautical and non-aeronautical revenues generated by the airlines and its passengers at the airport have to be taken into account. As Germany stated before, PwC concluded that a market economy investor with a long-term strategy would have signed the 1999 Ryanair agreement, in particular if one considered Frankfurt Hahn airport's situation in 1999. According to Germany, at that time Frankfurt Hahn airport was facing high fixed costs for maintenance of the air and ground infrastructure, whereas the capacity utilisation of the airport was low. Thus, Germany argued, the possibility to generate additional passenger volume was an opportunity to limit losses and acquire clients with growth potential.

(171) Germany is of the opinion that costs which were decided on before the conclusion of the agreement, such as the costs for the general airport infrastructure and general airport administration (in other words costs that arose irrespective of the 1999 Ryanair agreement), should not be included in the profitability analysis of the 1999 Ryanair agreement, and PwC supports Germany in this opinion. Germany argued especially that it would only be possible for an airport with an existing network of clients to have his clients partially bear the costs of infrastructure measures and that Frankfurt Hahn airport was not in such a position.

(172) Furthermore, Germany argued that if one were to consider the actual costs for building the new terminal, at most the envisaged passenger volume to be generated by Ryanair could be taken into account. Germany took the view that a depreciation period of 25 years would then be appropriate, which would mean a depreciation of EUR […] per year. Even in case of a depreciation period of 15 years, as suggested by the Commission, Germany argued that this would mean a depreciation of EUR […] per year, so that the overall break-even analysis would still be positive. Therefore, taking into account the time for initiation of Frankfurt Hahn airport, Germany took the view that this would have sufficed for a market economy investor to conclude the agreement.

5.3.2. MEASURE 8: 2001 SCHEDULE OF AIRPORT CHARGES

(173) The 2001 schedule of airport charges could not be seen as State aid according to Germany. Germany argued that there was no granting of State resources and refers in this regard to its explanations concerning the 1999 Ryanair agreement (see Section 5.3.1 and especially recital 167). Germany stated that the 2001 schedule of airport charges had generated revenues for FFHG and it was not necessary or possible that the schedule of airport charges would lead to coverage of all costs incurred by FFHG. For such a result, according to Germany, the revenues from the non-aviation sector needed be taken into account as well under the single-till-approach (see recital 169).

(174) Germany furthermore disputed that the measure was imputable to the State because of the approval of the airport charges by the Rhineland-Palatinate Transport department. This approval did not mean any economic or political dependence, but was simply a regulatory formality requested under German law which every airport, whether publicly owned or not, has to fulfil according to the law. The reason for this law is to protect the airlines from any possible abuse of the monopolistic power of the airport to set prices for its use.

(175) Moreover, Germany argued that no advantage was granted to Frankfurt Hahn airport through the 2001 schedule of airport charges. It agreed with the Commission that the results of the private market investor test for the 2002 Ryanair agreement, which is based on the 2001 schedule of airport charges and introduces an additional marketing support, can serve as a benchmark. On this basis, since the MEOT is positive for the 2002 Ryanair agreement, Germany argued that no other result can apply to the 2001 schedule of airport charges. Concerning the doubts raised by the Commission in relation to the MEOT, Germany referred to its argumentation in relation to MEOT for the 2002 Ryanair agreement (see recital 178 and following).

(176) Furthermore, Germany expressly disagreed with the Commission as to the assessment concerning the selectivity of the 2001 schedule of airport charges. Germany argued that the 2001 schedule of airport charges was of a general nature and applied to all airlines using the airport, and that hence it could not be selective or specific. According to Germany, the 2001 schedule of airport charges included no differentiations which would give an advantage to one airline over the other and they did not contain any kind of rebate system either. Therefore, Germany took the view that no airline was granted a selective advantage.

(177) Finally, Germany argued in relation to the 2001 schedule of airport charges that this schedule was in accordance with market conform behaviour and as such would not be able to distort competition between airports or the competition on the internal market.

5.3.3. MEASURE 9: 2002 RYANAIR AGREEMENT

(178) Germany considered, in contrast to the 2008 opening decision, that the 2002 Ryanair agreement did not generate any losses, but instead provided a source of income for FFHG. Concerning the question of imputability of the 2002 Ryanair agreement and the use of State resources, Germany referred to its explanations concerning the 1999 Ryanair agreement (see recital 167 and following). Furthermore, Germany added that in 2002, at the time of conclusion of the agreement, FFHG's shares were already being held mainly by Fraport, whose resources are not State resources and whose actions are not imputable to the State, as Germany already pointed out in relation to the 2001 PLTA (see recital 134 and following).

(179) According to Germany, the supervisory board of FFHG, who approved the conclusion of the 2002 Ryanair agreement, was not dominated by the State. In this regard, Germany contended that the presentation of FFHG's supervisory board members in recital 18 of the 2008 opening decision was erroneous. Germany stated that according to FFHG's articles of association, Fraport had six representatives and Land Rhineland-Palatinate had eight, out of which three were representatives of local authorities. According to Germany, the members had however different numbers of votes and the majority of votes was always with the private company Fraport. This was due to the fact that Fraport's representatives had 12 votes each, while the representatives of the Land only had 5 votes each and those of the local authorities even had only one vote. Therefore, according to Germany, Fraport had 72 votes while the representatives of the Land and local authorities only had 28 votes. Since the supervisory board decides by simple majority, Germany took the view that it would not have been possible to conclude the 2002 Ryanair agreement without the votes of Fraport and therefore the conclusion of the agreement is not imputable to the State.

(180) Furthermore, Germany rejected the doubts of the Commission concerning the conferral of an advantage and the MEOT submitted by PwC on this matter. Germany argued that the figure of […] passengers per flight was not overestimated since already in 2002 […] % of Ryanair flights were carried out by a Boeing 737-800 and the average load factor of those flights was […] %, meaning that the number of passengers per plane was in fact on average […] per Ryanair flight. Therefore, Germany took the view that the estimation of the number of passengers of […] was reasonable and not too high, especially since FFHG had taken into account that the change by Ryanair from Boeing 737-200 to Boeing 737-800 would come very quickly.

(181) As regards the Commission's doubts relating to the cost for general airport infrastructure and general airport administration, Germany referred to its argumentation in relation to the 1999 Ryanair agreement (see recital 171 and following). It also referred to its statements for the 2001 schedule of airport charges (see recital 176) as regards the selectivity of the measure.

5.3.4. MEASURE 10: 2005 RYANAIR AGREEMENT

(182) In relation to the question of State resources and imputability, Germany referred to its statements for the 1999 and 2002 Ryanair agreements (see recitals 167 and following, and recitals 178 and following). Furthermore, Germany stated that, at the moment of conclusion of the 2005 Ryanair agreement, the supervisory board of FFHG was constituted in a way that the public authorities were not able to exercise a determining influence on the decision. At that moment Fraport held 156 votes while Land Rhineland-Palatinate and Land Hesse held 42 votes each. Therefore, Germany argued that the State could not have a determining influence as it only possessed 84 out of 240 votes.

(183) Furthermore, Germany took the view that no advantage was conferred on Ryanair through this agreement. Germany stated that in contrast to the Commission's suggestion in the 2008 opening decision, PwC had been provided with all relevant figures since it could otherwise not have conducted this comprehensive, neutral and independent MEOT. Germany moreover rejected the doubts of the Commission that the investments induced by Ryanair were not allocated appropriately. Germany stated that PwC had made a second evaluation in its supplementary assessment where it explained that a major part of the costs related to investments of a general nature which the airport made independently of the services provided to Ryanair. As far as costs are induced by the handling of Ryanair passengers, these are according to Germany allocated to Ryanair.

(184) Germany also rejected the doubts of the Commission concerning the effectiveness of the penalty system which was introduced in the 2005 Ryanair agreement. Germany stated that this penalty system reflects market conform behaviour. Germany argued that additional sanctions to the ones agreed upon would have been unnecessary and inappropriate since Ryanair had no exclusive rights to use the airport and was also assuming a risk.

(185) Moreover, Germany stated that the agreement was not a selective measure since the agreed airport charges were based on the general 2006 schedule of airport charges. Germany also argued that any losses incurred by FFHG were not generated by the 2005 Ryanair agreement but by the necessary investments for Frankfurt Hahn airport, whereas the investments induced by Ryanair had been covered by the revenue generated by the 2005 Ryanair agreement.

5.3.5. MEASURE 11: 2006 SCHEDULE OF AIRPORT CHARGES

(186) In relation to the 2006 schedule of airport charges, Germany argued generally that these airport charges had been developed exclusively based on economic considerations taking into account the business model of Frankfurt Hahn airport as a low cost carrier airport, i.e. with the expectation that the costs of operation would be covered in the short term and in the long term a sustainable profit would be generated.

(187) Concerning the questions of State resources and imputability, Germany referred to its argumentation made in relation to the 1999, 2002 and 2005 Ryanair agreements (see recitals 167 and following, 178 and following and 182 and following) and in relation to the 2001 schedule of airport charges (see recital 173 and following).

(188) Germany argued that no advantage was conferred upon Ryanair through the 2006 schedule of airport charges. Firstly, Germany justified the different passenger charges which were created in order to provide an incentive to low cost carriers while covering the operational costs of the airport. A reduction of charges according to the volume of passengers, Germany argued, is a common approach at national and international airports, as was already accepted by the Court of Justice. When such volume based reductions are granted, these must be justified on the basis of objective and non-discriminatory criteria and this was the case at Frankfurt Hahn airport, according to Germany. Since the threshold for acquiring rebates was very low, namely 100 000 passengers per year, these rebates were also supporting smaller airlines.

(189) Secondly, Germany argued that the economic justification of the airport charges relied on the single-till-approach, referring to its statements concerning the 1999 Ryanair agreement (see recital 169). Germany also justified the differentiation according to turn-around-times (hereinafter: TRT) of under or over 30 minutes by explaining that TRT of more than 30 minutes are in fact more cost-intensive. Germany also stated that even though the airport charges were not covering 100 % of the costs, a MEO would still have chosen this schedule of charges since cost-coverage of an infrastructure such as an airport could not be achieved in such a short time. However, FFHG was expecting that through the 2006 schedule of airport charges more passengers would be generated and that by 2008 full cost coverage would be achieved. According to the assessment made by PwC for this schedule of airport charges, this was economically realistic at the moment of introduction of the airport charges, as was also confirmed by PwC's supplementary assessment.

(190) In relation to the marketing support granted under the 2006 schedule of airport charges, Germany argued that this is in fact not an integral part of the schedule. Germany also argued that any market economy investor would have made the same marketing support available for airlines since there are high economic risks attached to the opening of a new route. This support is exclusively given for newly offered routes, meaning routes which have not been served at all or within the last 24 months. The amount of the support is based on the number of departing passengers served within 1 year. On the basis of criteria such as the temporary routes offered at Frankfurt Hahn airport, the weekly connections and the duration of continuous flight operation, it is ensured that support is in fact leading to an expansion of the network of flights offered by the airlines.

(191) Germany argued that the marketing support cannot be seen as a one-sided performance by the airport. According to Germany, the promotion of new routes led to a higher profit for the airport since higher passenger numbers would create higher non-aeronautical revenues. Furthermore, Germany explained that the fixing of the amounts of support was based on reasonable considerations.

(192) Germany also rejected the doubts of the Commission that the risk of marketing was higher for airlines which are not yet active at Frankfurt Hahn airport. For airlines with high passenger numbers servicing an attractive network, Germany argued, requires higher marketing costs which in turn justifies a higher marketing support from the airport, also given that higher passenger numbers increase the profits for the airport. In any case, the amount of support would be no more than one third of the real marketing costs, thereby ruling out any discrimination between airlines already serving Frankfurt Hahn airport and other airlines. Moreover, Germany reasoned that bigger airlines will generally have a larger marketing budget, so the support given will actually be lower in relation to the whole budget than in case of a smaller airline.

(193) Finally, Germany submitted that the MEOT carried out by PwC established that this marketing support was given in a way that was conforming to the market.

(194) As regards selectivity of the measure and distortion of competition on the internal market, Germany referred to its statements concerning the 2001 schedule of airport charges (see recitals 176 and following).

(195) Germany thus argued that the 2006 schedule of airport charges did not involve State aid. Should the Commission establish that the airport charges did constitute State aid, Germany argued in the alternative that the aid was compatible with the internal market.

5.4. COMPATIBILITY OF THE MEASURES WITH THE INTERNAL MARKET

5.4.1. COMPATIBILITY OF INVESTMENT AID TO FINANCE AIRPORT INFRASTRUCTURE

(196) According to Germany, if it would be considered that measures 1 to 6 involved State aid within the meaning of Article 107(1) of the Treaty, insofar as they were aimed at financing airport infrastructure at Frankfurt Hahn airport this aid could be deemed compatible on the basis of Article 107(3) of the Treaty and the 2005 Aviation Guidelines.

5.4.1.1. Contribution to a well-defined objective of common interest

(197) Concerning the well-defined objective of common interest, Germany submitted that the financing of airport infrastructure at Frankfurt Hahn airport was always aimed at the objective of improving the regional economic structure of the economically underdeveloped and scarcely populated Hunsrück region.

(198) In this regard, Germany stated that, firstly, the objective of supporting FFHG was to help overcome the weak structural economy of the Hunsrück region. Germany asserted that Frankfurt Hahn airport is surrounded by a number of areas considered as regions in need of support within the framework of the Gemeinschaftsaufgabe‘Verbesserung der regionalen Wirtschaftsstruktur’ (36), a task shared by the federal and local governments. In this regard, Germany submitted that the four regions around the airport, namely Landkreis Bernkastel-Wittlich, Birkenfeld, Cochem-Zell and Rhein-Hunsrück-Kreis, are on average only half as densely populated as the rest of Land Rhineland-Palatinate. Germany pointed out that for those districts whose economy is shaped by small and medium sized enterprises, employment is the main anchor against a further decrease of the regional economy and Frankfurt Hahn airport plays an important role as an employer and client.

(199) Secondly, Germany argued that Frankfurt Hahn airport plays an important role in the strategic development of incoming (~ 33 % of passengers corresponding to approximately 1 million passengers in 2005) and outgoing tourism (~ 67 % of passengers) for the Land Rhineland-Palatinate. Germany stated that 88 % of the incoming passengers are staying several nights in the region. Germany submitted that the Frankfurt Hahn airport's incoming tourists generated approximately 5,7 million overnight stays in 2005 (37). According to Germany the number of overnight stays further increased, with Land Rhineland-Palatinate welcoming 8,2 million guests in 2011 which generated 21,5 million overnight stays. Germany pointed out that the number of guests from Eastern and Southern European countries, in particular, has increased and that a large number of flights are operated from those countries to Frankfurt-Hahn. This has resulted in about 198 000 jobs being generated by tourism in Rhineland-Palatinate, according to Germany. The catalysed income and employment effects stem especially from incoming tourism, in which Frankfurt Hahn airport plays a central role as the gateway for tourists into the Hunsrück region, but also into Rhineland-Palatinate more generally, as Germany explained. Germany stated that between 1990 and 2001 the number of tourists has increased by 70 % for the Hunsrück region and by 35 % for Rhineland-Palatinate. According to Germany, during the same period, the number of tourists coming from abroad has increased by 163 % in the Hunsrück region. Since 88 % of incoming tourists from Frankfurt Hahn stay at least one night and more than 80 % of those even stay two to 10 days, they generate a total benefit of about EUR 133,7 million per year. Furthermore, Germany argued that outgoing tourism (67 %) also generates income for Frankfurt Hahn airport through non-aeronautical revenues.

(200) Thirdly, Germany stated that, taking into account all parts of the airport activities, Frankfurt Hahn airport created 3 063 jobs in the region Hunsrück in 2012 out of which 74 % were full-time positions. According to Germany, 90 % of those employees also live in this region. Germany argued furthermore that through Frankfurt Hahn airport, a movement of young, qualified employees towards other regions is being prevented as well as an economic and social decline of the regional communities and their infrastructure. Furthermore, Germany pointed out that the presence of Frankfurt Hahn airport does not only produce the mentioned direct effects for the labour market, but also substantial indirect effects through an increasing number of economic and touristic activities. In this respect, Germany referred to the positive secondary effects for the re