EN Official Journal of the European Union L 59/22

COMMISSION DECISION (EU) 2016/287

of 15 October 2014

on State aid SA.26500 — 2012/C (ex 2011/NN, ex CP 227/2008) implemented by Germany for Flugplatz Altenburg-Nobitz GmbH and Ryanair Ltd

(notified under document C(2014) 7369)

(Only the German text is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

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

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 (1) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) A complaint from Bundesverband der Deutschen Fluggesellschaften e.V. (Federal association of German airlines; hereinafter: ‘BDF’) of 27 August 2008 informed the Commission of alleged unlawful State aid in favour of Flugplatz Altenburg-Nobitz GmbH and Ryanair Ltd (hereinafter ‘Ryanair’). The complaint was registered under State aid number CP 227/2008.

(2) On 9 August 2010, the Commission forwarded the complaint and requested information from Germany. Germany provided the information requested by letter dated 30 September 2010.

(3) On 8 April 2011 the Commission requested information from Air Berlin and Ryanair. Air Berlin provided the information requested on 10 May 2011. Ryanair provided the information requested on 20 June 2011. By letter dated 11 August 2011, the Commission forwarded a translated version of these comments and annexes to Germany. On 28 September 2011, Germany informed the Commission that it would not provide any comments at that stage.

(4) By letter dated 26 January 2012, the Commission informed Germany of its decision to initiate the procedure provided for in Article 108(2) of the Treaty on the Functioning of the European Union (TFEU) (2) (hereinafter ‘opening decision’) with regard to investment and operating aid in favour of Flugplatz Altenburg-Nobitz GmbH, reduced airport charges for airline companies and marketing agreements with Ryanair.

(5) The Commission decision to initiate the procedure was published in the Official Journal of the European Union (3). The Commission invited interested parties to submit their comments on the alleged aid measures.

(6) On 21 February 2012, the Commission requested additional information from Germany. Germany provided its comments on the opening decision and answers to the Commission's request on 24 February 2012, 30 March 2012 and 2 April 2012.

(7) On 13 April 2012, the Commission received comments from two interested parties (Ryanair and Airport Marketing Services (4) — hereinafter ‘AMS’).

(8) On 20 April 2012, as some answers to its request for information from 21 February 2012 were missing, the Commission requested further information from Germany. Germany replied on 11 May 2012.

(9) On 25 June 2012, the Commission received further comments from interested parties (Ryanair, Ryanair's subsidiary AMS, and a consultancy firm acting for Ryanair). The Commission transmitted these comments to Germany by letter dated 22 August 2012. Germany requested a translation of the documents and then transmitted its comments on 4 December 2012.

(10) By letter dated 29 November 2012, the Commission requested further information from Germany. Germany responded on 17 January 2013.

(11) On 10 April 2013, Ryanair provided further comments (5), which were forwarded to Germany on 3 May 2013.

(12) On 14 November 2013, the Commission requested further information from Germany. Germany answered on 14 January 2014. As the answers from Germany were incomplete, the Commission sent a reminder to Germany on 19 March 2014. Germany answered on 22 April 2014.

(13) On 20 December 2013, Ryanair provided further comments, which were forwarded to Germany on 8 January 2014. On 27 January 2014, Germany commented on Ryanair's comments.

(14) On 17 January 2014 and 31 January 2014, Ryanair provided further comments, which were forwarded to Germany on 7 March 2014. On 7 April 2014, Germany declared not to have any comments regarding Ryanair's contribution.

(15) By a letter dated 25 February 2014, the Commission informed Germany of the adoption of the 2014 Aviation Guidelines (6) on 20 February 2014 and of the fact that those guidelines would become applicable to the case at hand from the time of their publication in the Official Journal of the European Union. It also gave Germany the opportunity to comment on the guidelines and their application within 20 working days of their publication in the Official Journal.

(16) By letters dated 24 February 2014, the Commission also informed the third parties of the adoption of the 2014 Aviation Guidelines on 20 February 2014 and of the fact that these guidelines would become applicable to the case at hand from the time of their publication in the Official Journal of the European Union. It also gave the third parties the opportunity to comment on these guidelines and their application within 20 working days of their publication in the Official Journal.

(17) The 2014 Aviation Guidelines were published in the Official Journal of the European Union on 4 April 2014. They replaced the 1994 Aviation Guidelines (7) as well as the 2005 Aviation Guidelines (8).

(18) 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 to this case within one month of their publication date (9).

(19) On 29 April 2014, the Commission sent a request for information to Germany, which replied on 7 May 2014.

(20) On 6 May 2014, Deutsche Lufthansa AG provided comments on the case in the context of the adoption of the new guidelines. The non-confidential version of these comments was forwarded to Germany on 8 May 2014. Germany provided its comments regarding this submission on 15 May 2014.

(21) On 7 May 2014, the complainant provided comments on the case in the context of the adoption of the new guidelines, the non-confidential version of which was transmitted to Germany on 21 May 2014. Germany answered on 28 May 2014.

(22) On 10 September 2014, the Commission requested further information from Germany and from Ryanair. Germany and Ryanair replied on 16 September 2014.

(23) On 12 September 2014, Ryanair and a consultancy firm acting on its behalf provided comments on this case, the non-confidential version of which was transmitted to Germany on 19 September 2014. Germany provided its comments regarding this submission on 6 October 2014.

2. BACKGROUND TO THE INVESTIGATION

2.1. THE FIRST CONVERSION OF THE AIRPORT TO LOW-COST AVIATION SERVICES

(24) Since 1992 the publicly owned company Flugplatz Altenburg-Nobitz GmbH (10) has owned and operated the Leipzig-Altenburg airport (formerly named Altenburg-Nobitz airport, hereinafter ‘AOC’) located in the southern part of the Land of Thuringia, Germany. AOC was a former Russian military airfield, abandoned at the beginning of the 1990s. Flugplatz Altenburg-Nobitz GmbH then became responsible for the construction and operation of the airfield AOC. According to the articles of incorporation, the objective of the company is to improve the economically relevant infrastructure in order to strengthen the economic power of eastern Thuringia and western Saxony.

(25) The closest airports to AOC are the following: (a) Leipzig-Halle airport, located around 85 km and 1h 10 min travelling time by car from AOC; (b) Dresden airport, located around 113 km and 1h 16 min travelling time by car from AOC; (c) Erfurt airport, located around 140 km and 1h 37 min travelling time by car from AOC; (d) Hof-Plauen airport, located around 122 km and 1h 37 min travelling time by car from AOC.

(26) Since it started its activity as a civil airport, AOC has handled fewer than 150 000 passengers per annum. Table 1 provides an overview of passenger numbers at AOC since 2000. Table 1 (11) Number of passengers at AOC from 2000 to 2013 (12) Year Total number of passengers (13) Passengers from scheduled flights (14) 2000 27 876 — 2001 27 345 — 2002 26 811 — 2003 71 006 51 289 2004 93 946 76 742 2005 118 442 101 846 2006 105 213 90 551 2007 147 100 124 411 2008 138 400 126 972 2009 140 800 133 411 2010 119 000 112 985 2011 15 000 9 328 2012 5 400 — 2013 5 000 —

(27) Eurowings offered nine flights in 2000; Air Berlin operated 62 flights in 2001, 57 flights in 2002 and thereafter ceased to operate from AOC.

(28) On 3 March 2003, the operator of AOC, Flugplatz Altenburg-Nobitz GmbH, and Ryanair concluded an agreement for airport services for a duration of 10 years.

(29) In the peak years (2008-2010), Ryanair offered up to four destinations from AOC. Ryanair first offered daily flights to London and from 2007 flights to Barcelona/Girona. The company also served Edinburgh in 2009 and opened a route to Alicante in 2010. From 1 May 2003, Ryanair was the only company providing scheduled air services to and from AOC.

(30) Ryanair ceased its services at AOC on 31 March 2011. Since then, no other airline has operated scheduled flights from AOC, as also confirmed by the AOC website.

2.2. THE SECOND CONVERSION OF THE AIRPORT TO GENERAL AVIATION

(31) Following the recommendations of the consulting firm KE-Consult GbR (15) in 2010 (hereinafter ‘the KE-Consult study’), the airport started to develop general aviation activities, focusing on business flights and profiting from the proximity of the growing business region of Chemnitz-Zwickau. The airport stopped the low-cost aviation business and also became a training centre for flying and security staff.

(32) The main reasons for this conversion are the following (16): (a) The high dependence of the airport on public contributions, provided mainly by the Land of Thuringia and shareholders of Flugplatz Altenburg-Nobitz GmbH: a report drawn up by the company's management in 2011 states that since 1992 approximately EUR 21 million had been invested in the airport, of which EUR 17 million by the Land of Thuringia and approximately EUR 4 million by the shareholders of Flugplatz Altenburg-Nobitz GmbH. Nevertheless in both financial years 2009 and 2010 a funding gap (17) arose of approximately EUR 270 000. Because of missing shareholders' contributions, the liquidity situation of the airport was jeopardised at the time, which endangered the future of the company. (b) According to the articles of incorporation of Flugplatz Altenburg-Nobitz GmbH, the low-cost aviation business was to benefit the economic development of the region. Nevertheless the return on investment in the airport was negative: the positive fiscal effect created by AOC for the municipalities and the financing public bodies was lower than the contributions paid to the airport (18). (c) Changes in the shareholders' structure: Stadtwerke Altenburg GmbH (SWA) gave up its participation on 31 December 2010, for which Stadt Altenburg had a preferential buying right. (d) In 2009 the government of the Land of Thuringia changed and the new government proved to be more reluctant to provide further contributions to the airport. The new government in particular rejected decisions taken by the former government to provide the airport with marketing contributions for the 2009-2012 period. As the public shareholders refused to pay further marketing contributions to Ryanair, in the 2010/2011 winter season, only one route to/from London was operated with financial support from regional companies. The shareholders and the board of directors of Flugplatz Altenburg-Nobitz GmbH then refused to grant the EUR 420 000 required by Ryanair as its marketing fee for the 2011 summer flight plan. Ryanair then decided to move its regional hub to Magdeburg/Cochstedt and to end its activities at AOC in March 2011.

(33) A number of conversion options were envisaged by the airport's management. The most viable was the offering of new routes and charter flights for 2012 without any marketing contributions: to that effect, negotiations with Rheinjet for flights to Barcelona were initiated in 2011. Following Ryanair's decision on 26 July 2011 to fly from Leipzig-Halle, the market situation changed for AOC and such new routes were abandoned.

(34) Therefore, in 2011 new activities were decided for the conversion of the airport: (a) development of business travel transport, which should be more profitable because of lower security requirements; (b) establishment of companies interested in the aviation business; (c) establishment of start-up companies, (d) set-up of photovoltaic facilities (a photovoltaic installation was built in 2012), renting of parking places and facilities, events organisation.

(35) These measures should, according to the management, permit the medium-term own financing of the company through a substantial cost reduction, as up to EUR 520 000 per annum could be saved, which would eventually reduce the funding gap of the airport. The airfield would be maintained and contribute to regional business development.

3. THE MEASURES UNDER ASSESSMENT AND THEIR CONTEXT

3.1. OVERVIEW OF THE PUBLIC CONTRIBUTIONS RECEIVED BY FLUGPLATZ ALTENBURG-NOBITZ GMBH

(36) Between 1992 and 2010, approximately EUR 21 million was invested in Flugplatz Altenburg-Nobitz GmbH, of which approximately EUR 17 million by the Land of Thuringia and approximately EUR 4 million by its public shareholders (19).

(37) Over the 2000-2011 period, Flugplatz Altenburg-Nobitz GmbH received two types of public contributions, from its shareholders and from other public organisations, mainly the Land of Thuringia (20). According to Germany and the financial reports of Flugplatz Altenburg-Nobitz GmbH, the Land of Thuringia mainly financed infrastructure investments, whereas the shareholders contributed to the financing of operating losses. Table 2 lists the total public contributions received by the airport, which were provided with the following main objectives: (a) financing of investments, mainly infrastructure investments; (b) financing of operational activity (loss covering); (c) financing of marketing measures, under various agreements with Ryanair; (d) financing of public remit activities. Table 2 (21) Overview of total public contributions received by Flugplatz Altenburg-Nobitz GmbH (in thousands of EUR) Financial year Shareholders' contributions Other public contributions (22) Total 2000 256 321 577 2001 256 655 911 2002 256 226 482 2003 960 561 1 521 2004 1 280 395 1 675 2005 914 690 1 604 2006 769 404 1 173 2007 1 057 780 1 837 2008 925 2 032 2 957 2009 957 1 416 2 373 2010 1 147 367 1 514 2011 302 0 302 Total 9 079 7 847 16 926

3.2. FINANCING OF INFRASTRUCTURE INVESTMENTS IN 2000–2011

(38) Germany states that, between 2000 and 2011, Flugplatz Altenburg-Nobitz GmbH undertook infrastructure investments for a total of EUR 6 474 035, for which Table 3 provides a detailed breakdown. Among these investments is the extension of the runway in 2003/2004 for a total amount of EUR 687 882 and the construction of a new terminal in 2009 for EUR 1 003 571 (the terminal was only opened in 2010 (23)). Table 3 (24) Overview of infrastructure investments and their financing at AOC from 2000 to 2011 (in EUR) Year Infrastructure measure Public contributions Own resources (25) Total amount of the investment 2000 Weather — acquisition of a central computer, additional equipment, etc. 13 914 9 276 23 190 Technical acceptance of RT 1000C direction finder 3 590 2 393 5 983 Water supply (connection, modification) (2) 10 205 6 803 17 008 2001 Reconstruction of the runway and parts of the taxiway 72 652 8 072 80 724 Acquisition of an air starter 34 495 42 949 77 443 2002 Boundary fence around airfield area (remainder) 26 144 17 429 43 573 Planning costs — planned extension of RESA 22 and threshold 22 46 183 5 131 51 314 2003 Extension of RESA 22, reconstruction of the runway (1st payment 2003, 2nd payment 2004) 314 550 187 882 687 882 2004 Extension of RESA 22, reconstruction of the runway (2nd payment 2004) 185 450 2006 Airport beacon, acquisition of software, acquisition of five radio alarm receivers, installation of emergency exit gate, extension of terminal, purchase of 27 biometric transponders, weather station cable extension, 28 787 12 337 41 124 acquisition of a fire engine (1st instalment 2006) 193 526 82 940 276 466 2007 Acquisition of a fire engine (2nd instalment 2007) 387 052 165 879 552 931 Acquisition of a jet sweeper 230 040 153 360 383 400 2008 Safety monitoring network 11 430 4 899 16 329 Uni-mower 5 514 3 676 9 190 Acquisition of land 56 144 24 062 80 206 Reconstruction of the runway — safety upgrade 1 816 538 778 516 2 595 054 (26) 2009 Renovation/reconstruction of terminal 702 500 50 672 753 172 (27) Marking work on the apron 4 429 1 898 6 327 Runway repair in front of threshold 04 336 853 0 336 853 2010 Renovation/reconstruction of terminal 0 250 399 250 399 (27) Marking work on the apron 0 0 0 Runway repair in front of threshold 04 0 144 366 144 366 2012 GripTester (flight safety) 28 770 12 330 41 100 TOTAL 4 508 766 1 965 269 6 474 034

(39) As described in detail in Section 3.4.2, the extension of the runway and the provision of service areas for rental car companies were an obligation of AOC under the Ryanair services agreement. Financial reports of Flugplatz Altenburg-Nobitz GmbH for the relevant years state that the runway was extended (28).

(40) At its meeting of 23 June 2000, the board of Flugplatz Altenburg-Nobitz discussed, in the context of the development of the airport, a non-detailed 10-year investment programme amounting to a total investment of approximately EUR 20 million.

3.3. FINANCING OF OPERATING LOSSES OF FLUGPLATZ ALTENBURG-NOBITZ GMBH IN 2000-2011

(41) In the 2000-2011 period, Flugplatz Altenburg-Nobitz GmbH accrued annual losses from the operation of AOC, as described in Table 4. Table 4 (29) Overview of annual losses of Flugplatz Altenburg-Nobitz GmbH and their financing (in thousands of EUR) Financial year Operating result without public contributions and public remit costs (30) Investments (31) Depreciation Net financial result (32) Net result 2000 – 244 204 1 509 – 19 + 34 2001 – 591 77 1 469 – 24 – 31 2002 – 214 61 1 393 0 + 51 2003 – 1 161 509 620 + 2 – 64 2004 – 1 192 428 612 – 1 0 2005 – 671 92 445 – 12 – 272 2006 – 496 2 613 531 – 26 – 253 2007 – 719 1 071 533 – 1 – 301 2008 – 511 664 645 – 2 – 460 2009 – 906 2 354 821 + 7 – 562 2010 – 1 150 1 296 965 – 2 – 567 2011 – 424 8 907 – 13 – 437

(42) Germany provided the data reported in Table 5 on shareholders' annual contributions dedicated to the coverage of operating losses of Flugplatz Altenburg-Nobitz GmbH (33); in total, these capital contributions amount to EUR 8,9 million. Table 5 Shareholders' contributions for operating purposes (in EUR) 2000 200 000-300 000 (34) 2001 200 000-300 000 (34) 2002 200 000-300 000 (34) 2003 300 000-400 000 (34) 2004 475 000-575 000 (34) 2005 700 000-800 000 (34) 2006 925 000-1 025 000 (34) 2007 1 250 000-1 350 000 (34) 2008 1 125 000-1 225 000 (34) 2009 1 125 000-1 225 000 (34) 2010 1 325 000-1 425 000 (34) 2011 425 000-525 000 (34) Total 8 897 000

(43) Since the beginning of the period in question, financial reports from Flugplatz Altenburg-Nobitz GmbH indicate that the financial situation of the airport is highly dependent on shareholder contributions. The 2002 financial report states that the existence of the company would be in danger without financial contributions from shareholders and that further shareholder contributions were needed. Several other financial reports (years 2003 and 2004) also state that the company can only survive thanks to the shareholder capital contributions (35). The annual outlook in the financial report for the year 2003 already foresees that shareholder capital contributions will be needed in the next financial period. In 2006, an imminent insolvency could only be avoided through shareholder contributions, according to the financial statement of 2006.

(44) Germany states that the public remit costs relate to personnel costs for air traffic control, fence control, administration, check-in, training and pilots and were financed both by own capital of Flugplatz Altenburg-Nobitz GmbH and the Land of Thuringia, as set out in Tables 6 and 7. Table 6 Financing of public remit costs at Flugplatz Altenburg-Nobitz GmbH (36) (in EUR) Year Total public remit costs Equity Financing by the Land of Thuringia 2000 276 420 106 031 170 389 2001 278 773 127 043 151 730 2002 292 270 134 801 157 469 2003 412 325 247 279 165 046 2004 461 067 293 713 167 354 2005 685 406 529 734 155 672 2006 683 415 527 017 156 398 2007 732 355 597 858 134 497 2008 700 772 599 954 100 818 2009 718 416 347 598 370 818 2010 657 982 313 933 344 049 2011 598 056 261 654 336 402 TOTAL 6 497 257 4 086 615 2 410 642

Table 7 (37) Distribution of the Land of Thuringia's financing according to the type of public remit cost (in EUR) Year Air traffic control Airport control services Total financing by the Land of Thuringia 2000 170 389 0 170 389 2001 151 730 0 151 730 2002 157 469 0 157 469 2003 165 046 0 165 046 2004 167 354 0 167 354 2005 155 672 0 155 672 2006 156 398 0 156 398 2007 134 497 0 134 497 2008 100 818 0 100 818 2009 100 818 270 000 370 818 2010 94 049 250 000 344 049 2011 86 402 250 000 336 402 TOTAL 1 640 642 770 000 2 410 642

3.4. AIRPORT CHARGES AND PAYMENTS TO RYANAIR UNDER THE AIRPORT SERVICES AND MARKETING AGREEMENTS

3.4.1. The schedule of airport charges at AOC

(45) Table 8 summarises the key terms of the standard schedules of airport charges applied at AOC during the 2002-2010 period (38). Table 8 Schedule of airport charges applicable at AOC between 2002 and 2010 (39) Prices without VAT Landing charges for aircraft with more than 6 001 kg/per 1 000 kg Passenger charges/per passenger Schedule of airport charges from 1 January 2002 EUR 7,78 EUR 2,67 Schedule of airport charges from 18 September 2006 EUR 7,45 EUR 3,00

(46) In January 2011, a new schedule of airport charges was established, with the key terms described at Tables 9 and 10. Table 9 Schedule of airport charges applicable to aircraft since 2011 (40) Schedule of airport charges from January 2011 (Prices without VAT) Up to 30 min turnaround time Over 30 min turnaround time For passenger flights with planned rotations (41) EUR 0 EUR 7,45 For passenger flights without planned rotations and freight flights EUR 7,45

Table 10 Schedule of airport charges applicable to passengers since 2011 (42) Schedule of airport charges from January 2011 (Prices without VAT) Number of passengers less than 50 000 Number of passengers between 50 000 and 100 000 Charge per passenger EUR 6,00 EUR 4,20

3.4.2. The Ryanair airport services agreement of 3 March 2003

(47) On 3 March 2003, Flugplatz Altenburg-Nobitz GmbH (named ‘AOC’ in the agreement) and Ryanair (‘Ryanair Limited’) signed an agreement for airport services for a duration of 10 years. The agreement entered into force with the daily scheduled service to London-Stansted, which was to start on 1 May 2003.

(48) According to this agreement, Ryanair pays AOC: (a) a fee for the operation of passenger air services according to AOC's scale of charges in effect on the day of the service; (b) an amount equal to passenger security taxes and state fees (‘DE tax’) at the rate in force at the time of operation of the flight. The original charge amounts to ‘Four euro and fifty one cents (EUR 4,08)’ (43). The agreement also specifies the intention of both parties to try to reduce the DE tax if the passenger volume through the airport grows. Ryanair is to collect the original charge as a minimum charge in any event.

(49) Germany states that Ryanair paid the fees for the operation of the services according to the AOC standard fee regulation in force at the time, corresponding to a fixed landing fee of […]* per aircraft and a passenger fee of […]* per passenger (without VAT) (44) (fees paid in June 2009).

(50) This airport services agreement of 3 March 2003 stipulates that AOC is obliged in return to: (a) provide a runway meeting specific technical specifications by 31 December 2003, to be completed and extended by 31 May 2004; (b) provide terminal and infrastructure services ([…]*) and services in terms of sales, marketing and public relations (services set out in Annex A to the service agreement); (c) provide handling and related services (services set out in Annex B to the service agreement); (d) ensure the operation of a bus service at standard local fares between AOC and Leipzig-Bahnhof and between AOC and Dresden-Bahnhof; (e) operate a reservations facility (service set out in the Appendix to Annex B to the service agreement).

(51) In addition to the obligation of Flugplatz Altenburg-Nobitz GmbH to provide the runway, Annex A to the agreement sets out several other services to be provided by AOC: (a) terminal and infrastructure services: […]* and other ‘reasonable requirements of Ryanair on an ad hoc basis to ensure that Ryanair can maintain a 25-minute turnaround’; (b) services in terms of sales, marketing and public relations: […]*.

(52) The fees referred to at recital 48 paid by Ryanair include several services as set out in Annex B ‘Handling and related services to be provided by ground handling agents’ to the airport services agreement of 3 March 2003, such as (45): baggage loading and unloading (no cargo); toilet and water service upon request […]*; […]* and supply and application of de-icing materials when required by Ryanair with fluid charged at […]* per litre; passenger check-in, boarding and disembarkation and checking of travel documents.

(53) According to the Appendix to Annex B, ‘Reservations Facility’, to the airport services agreement of 3 March 2003, the handling agent has to establish and operate a passenger service desk, keep reservation staff adequately trained, and pay for computer hardware and telephone, fax, IT and telecommunication devices in air transport (SITA) and all equipment maintenance and replacement costs incurred by the handling agent in the running of the passenger desk. However, […]*.

3.4.3. The marketing services agreements

(54) Flugplatz Altenburg-Nobitz GmbH signed in total three marketing services agreements, the first one with Ryanair and the two following ones with Airport Marketing Services Limited (AMS), and a side letter supplemental to the last agreement of 25 January 2010. Table 11 Marketing agreements between Flugplatz Altenburg-Nobitz GmbH and Ryanair/AMS Agreement Duration Purpose Fees to be paid by AOC to Ryanair Agreement of 7.4.2003 between AOC and Ryanair 15.4.2003-30.4.2013 English language advertisements for the internet and sales promotion and public relations to promote the marketing of air-based tourism in the Altenburg area — A success fee based on the number of departing passengers, to be deducted from the charges for airport services paid by Ryanair — A success fee based on a certain percentage of any increase in fees at the airport Agreement of 28.8.2008 between AOC and AMS 28.8.2008-27.8.2010 Marketing services involving the use of ryanair.com website as primary tool: 150-word paragraph/s within the ‘Top five things to do’ section of the AOC destination page […]* for 2008 […]* for 2009 (46) (both amounts excluding VAT) Agreement of 25.1.2010 between AOC and AMS 25.1.2010-end of one year after the date of launch of the first service Marketing package to be provided for one year […]* per annum (46) (excluding VAT) Side letter of 21.9.2010 between AOC and AMS 21.9.2010-31.3.2011 Supplementary agreement to the original agreement of 25.1.2010 […]* for the winter period 2010

3.4.3.1. The marketing agreement of 7 April 2003

(55) Under the first marketing agreement concluded between Flugplatz Altenburg-Nobitz GmbH (named ‘AOC’ in the agreement) and Ryanair on 7 April 2003, valid as from 15 April 2003 for 10 years, Ryanair is to undertake marketing efforts to promote the Altenburg area. The agreement gives Ryanair the final say as regards all decisions on promotion and advertising, except in relation to AOC's website.

(56) In consideration of the tasks undertaken by Ryanair, Flugplatz Altenburg-Nobitz GmbH is to pay the following fees: (a) a ‘success fee’ per departing passenger, to result in a net charge to be paid by Ryanair per passenger in respect of landing, local air traffic control, lighting, parking (not including overnight parking), ramp and passenger handling, infrastructure and passenger service charge for the passenger air services. AOC is to calculate the net charge per passenger according to the passenger load sheets and to present the calculation to Ryanair at the end of each week. Ryanair is to calculate the success fee and present the calculation to AOC in a 30-day period after the end of each month; the calculation is to be based upon the services of the preceding calendar month. Ryanair may deduct its success fee from AOC's monthly bills of the landing fees. Table 12 Net charge per passenger to be paid by Ryanair to AOC (in EUR) Number of rotations of the services Net charge per departing passenger including all charges (except security) Year 1-5 Net charge per departing passenger including all charges (except security) Year 6-10 […]* […]* […]* […]* […]* […]* […]* […]* […]* (b) a ‘success fee’ based on a certain percentage of any increase in fees at the airport, consisting in: — 100 % of any increase in the security tax levied by the government up to a maximum of 10 % over the existing published rate in a five-year period, and — 100 % of any increase in the existing published fees or additional fees, charges or taxes introduced in the published charges of the airport up to a maximum of 10 % of the existing total published fee paid by Ryanair, in a five-year period.

3.4.3.2. The marketing agreement of 28 August 2008

(57) A second marketing services agreement was concluded between Flugplatz Altenburg-Nobitz GmbH (named ‘AOC’ in the agreement) and Airport Marketing Services on 28 August 2008. According to the agreement, AOC intends to actively promote the city's and the region's facilities and increase the share of inbound passengers on Ryanair's services and hence maximise the airport's non-aeronautical revenues. The agreement is linked to Ryanair's commitment to operate a route from AOC to London Stansted in the summer (daily) and in the winter (four times a week) and one to Girona, three times a week only in the summer.

(58) The agreement has an initial duration of two years. AOC pays EUR […]* for year 1 and EUR […]* for year 2. In return, AOC receives […]*. The agreement does not include any further indication as regards the duration, placement or other details of the link.

(59) Flugplatz Altenburg-Nobitz GmbH has the right to choose its preferred time slots for the marketing measures. However, due to limited availability, these slots cannot be guaranteed. Flugplatz Altenburg-Nobitz GmbH also has the right to choose websites that can be connected via a link on to the Ryanair website. However, this right is limited by the fact that websites cannot include flights, car rental or accommodation and/or any other services that are also offered on the Ryanair website. Moreover, Ryanair has the final say and can refuse to allow publication of the website. Flugplatz Altenburg-Nobitz GmbH also has to check that the services have been provided in line with the agreement.

3.4.3.3. The marketing agreement of 25 January 2010

(60) A third marketing services agreement was concluded between Flugplatz Altenburg-Nobitz GmbH (named ‘AOC’ in the agreement) and Airport Marketing Services on 25 January 2010. According to the agreement, AMS is to offer tourism-related marketing services on the Ryanair website, so that AOC can advertise its business and tourist attractions. The agreement is subject to Ryanair's commitment to operate summer routes — commencing in summer 2010 and for the IATA summer season only (47) — from AOC to London Stansted (seven times a week), Girona (three times a week) and Alicante (twice a week).

(61) The agreement has an initial duration of one year. AOC pays EUR […]* for one year for the following package of marketing services: […]*. The rights and duties of AOC as regards time slots, nature of websites and the final say of Ryanair are identical to those described in the previous agreement.

3.4.3.4. The side letter of 21 September 2010

(62) The side letter of 21 September 2010 was signed between Flugplatz Altenburg-Nobitz GmbH (named ‘AOC’ in the agreement) and Airport Marketing Services. The agreement is supplemental to the original marketing services agreement of 25 January 2010, as AOC wishes to purchase further advertising services (48) for the amount of EUR […]* for the winter 2010 period only. The side letter expires on 31 March 2011.

(63) Advertising services to be provided by AMS according to the side letter consist of ‘the presence of a link to a website designated by Flugplatz Altenburg-Nobitz GmbH displayed on www.ryanair.com UK home page for 12 days for the duration of this side letter’.

(64) According to Germany, payments under this side letter were made by private companies, after they agreed with maintaining Ryanair operations at AOC.

4. GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE AND THE INITIAL ASSESSMENT BY THE COMMISSION

(65) In its opening decision, the Commission raised the following questions regarding the measures under assessment: (a) Measure 1: Financing of infrastructure investments in 2000-2011. Whether payments made for the airport infrastructure during the period 2000-2011 amounting to EUR 6 474 034 in total — including the extension of the runway as stipulated in the agreement of 3 March 2003 between Flugplatz Altenburg-Nobitz GmbH and Ryanair — constitute State aid and, if this is the case, whether this State aid is compatible with the internal market. (b) Measure 2: Financing of operating losses of Flugplatz Altenburg-Nobitz GmbH in 2000-2011. Whether public shareholders acted in line with the market economy investor principle when they granted annual operating aid during the period 2000-2011 for a total amount of EUR 9,079 million to Flugplatz Altenburg-Nobitz GmbH and, if not, whether this State aid is compatible with the internal market. (c) Measure 3: Airport charges and payments to Ryanair under the airport services and marketing agreements. Whether Flugplatz Altenburg-Nobitz GmbH, in accepting a reduction in the revenues for airport services through the mechanism of the marketing fees to be paid to Ryanair/AMS for the period from 1 May 2003 until 31 March 2011, acted as a market economy investor and, if these reductions constitute State aid, whether this aid is compatible with the internal market. In receiving reduced airport charges, the public operator of the airport, Flugplatz Altenburg-Nobitz GmbH, forwent revenues. The marketing payments to Ryanair and AMS were made by the public operator of the airport, except for the last marketing agreement, the side letter of 21 September 2010, for which payments were made by private companies. In this respect, the Commission will exclude from the scope of its analysis this last marketing agreement signed with AMS on 21 September 2010, as its financing was provided by private regional companies which had agreed to the maintaining of Ryanair's activity at the airport.

5. COMMENTS FROM GERMANY

5.1. FINANCING OF INFRASTRUCTURE INVESTMENTS IN 2000–2011 (MEASURE 1)

(66) Germany explains that public contributions to infrastructure investments at the airport directly derived from the logic on which the conversion of the airport was based. Its conversion from a military airfield into a civil airport was justified by the economic development of the regions of eastern Thuringia and western Saxony (49). Paragraph 2(1) of the articles of incorporation of Flugplatz Altenburg-Nobitz GmbH indeed specifies that the objective of the company is to improve the business-related infrastructure in order to strengthen the eastern Thuringia and western Saxony regions from an economic perspective. A report drawn up by the company's managers (50) values annual revenues deriving from foreign passengers transiting through the airport at EUR 10,7 million for the whole region of Central Germany.

(67) According to Germany, the provision of infrastructure is part of the State's powers within the framework of its competence for spatial planning, regional development and regional transport policy. These kinds of infrastructure investments are therefore based not only on exclusively economic reasons for the benefit of an undertaking, but are also part of the State's role in serving the general interest.

(68) Germany adds that the Land only has the right (51) to finance specific activities which are in its direct interest and which would not be feasible without public subsidies. Overcompensation is avoided through an ex post control of the correct use of the funds provided (52).

(69) According to Germany, it is well known that especially regional airports can often not cover their costs and investments through airport charges and that therefore public co-financing can be necessary. In particular, Germany argues that the infrastructure investments had to be financed by public authorities in order to meet the necessary legal requirements in terms of security and safety. AOC, as a regional airport, is not in a position to generate sufficient income through airport charges to finance all infrastructure investments. The company could also not have complied with its legal obligations, including security requirements for the aviation business, without public subsidies.

(70) Germany points out that the reconstruction works on the terminal in 2009 were carried out because of safety requirements, in order to comply with the requirement for separate handling of Schengen and non-Schengen passengers. According to Germany, alternatives to this reconstruction were considered, but, in view of the higher number of passengers and the high costs required for these alternative options, the long term solution of reconstructing the terminal was pursued.

(71) Germany states that the total amount of EUR 6 474 034 invested in infrastructure in the period 2000-2011 (53) exclusively related to non-economic activities. According to Germany, these infrastructure investments do not constitute State aid and are not subject to State aid rules under Article 107 TFEU. Germany further explains that this amount of investments into non-economic activities can be divided into security investments and investments in public and aviation safety. Germany points out that security and policing activities, fire protection measures, public and operational safety, meteorological services and flight security fall within the public policy remit. Germany points out further that a substantial amount of the funds received served to secure the safety of the infrastructure and its renovation, not to construct new infrastructure.

(72) Germany further states that, out of the total amount of investments of EUR 6 474 034, 30 % was financed from Flugplatz Altenburg-Nobitz GmbH's equity and the remainder through the Land of Thuringia. Germany points out that the financing of these infrastructure investments was provided as non-refundable grants and not through loans. The conditions for these grants result from the requirements listed in the Thüringer Landeshaushaltsordnung (54).

(73) Germany also states that conversion projects have also been financed in other Länder wholly through public funding, in line with Article 107(3)(c) TFEU, in order to promote regional economic development. Germany also refers to a previous Commission decision (55) stating that the construction or extension of regional airports in structurally weak areas is compatible with the Treaty on European Union.

Dedicated infrastructure for Ryanair

(74) Regarding the investments required by Ryanair in its service agreement (a landing runway meeting specific technical characteristics, to be provided by 31 December 2003 and to be completed and extended by 31 May 2004 (56)), Germany states that this specific prolongation has not been carried out in full and it was not considered a contractual obligation but a prerequisite for any airline to be able to land at AOC. Germany states that the length of the runway at AOC has been adapted over the years from 2 185 m (7 July 2003) to subsequently 2 235 m (9 September 2004) to finally 2 435 m (9 December 2008). However, the runway was open to all users. According to Germany, the fact that this runway was only used by Ryanair does not change the assessment.

(75) Germany also rejects the argument advanced by the complainant that the runway was extended especially for Ryanair's Boeing 737-800 (107 planes in 2007), since this aeroplane is actually also widely used by other airlines, for example by Deutsche Lufthansa (132 planes in 2007). Furthermore, Germany points out that the suggestion made by the complainant that until 2007 public funds of EUR 28 million have been invested for the modernisation of the airport is erroneous. The complainant would be referring to information in which only estimations about the possible costs were being made. Real investments amounted to EUR 16,7 million according to Germany.

(76) In addition, Germany argues that the obligations required by Ryanair in the service agreement, Annexes A, B and in the Appendix to Annex B are general obligations that an airport has to fulfil in order to be able to provide the service requested by airline companies: Germany states that the services referred to at recitals 50-53 are normal obligations of any airport and that its infrastructure is open to all users. Germany adds that some services mentioned in Annex A to the service agreement, such as press conferences, journalists' trips and travel agency evenings, have not been provided.

State aid assessment

(77) Between 1993 and 1997, the Land of Thuringia invested EUR 12,25 million in the airport's infrastructure. For the years 1998 to 2011, the Land of Thuringia approved fund contributions of EUR 4,5 million to Flugplatz Altenburg-Nobitz GmbH. These funds were provided on the basis of published aid schemes of the Land of Thuringia, the notification of which was not deemed necessary. According to Germany, aid under these schemes is open to all airport operators in Thuringia. Under these aid schemes, public funds are to be granted for infrastructure investments which are necessary for air traffic, are open for use to all potential users and serve the general public interest. These funds are also limited to appropriate and necessary amounts and Germany points out that, since 1997, airports have also been sharing part of the infrastructure costs. Therefore, Germany states that no distortion of competition could arise from these schemes.

(78) As regards infrastructure investments made between 12 December 2000 — the date of the Court judgment in the Aéroports de Paris case — and 9 December 2005 — the date on which the 2005 Aviation Guidelines became applicable — Germany considers that the criteria applicable are unclear: with the application of the 1994 Aviation Guidelines, the infrastructure cannot be considered State aid from the outset. Germany argues in this regard that the 1994 guidelines were applicable until the 2005 guidelines came into force and the Aéroports de Paris judgment does not change this. Therefore, since the 1994 guidelines are binding on the Commission under the principle of legitimate expectations, these should be applied to the infrastructure investments up until 2005. Therefore the measure cannot be classed as State aid: although infrastructure payments were made through public funding, this funding relates to public policy remit activities and does not pertain to an economic activity.

(79) As regards infrastructure investments made after 9 December 2005, Germany considers, firstly, that these do not constitute aid for the reasons mentioned in recitals 66 to 73. Should the Commission nevertheless come to the conclusion that these investments do constitute aid, then Germany claims that it is compatible with the internal market under Article 107(3)(c) TFEU as it fulfils all the requirements of point 61 of the 2005 Aviation Guidelines: (a) As to the first requirement, Germany claims that the infrastructure investments aim at a clear objective of common interest, which is to provide transport infrastructure and regional development in a structurally weak region. In this regard, AOC was the first military airport to be converted for civil use after the reunification of Germany. AOC is also of importance for companies situated in the nearby industrial area. Incoming tourism should furthermore help in improving regional tourism and creating jobs. (b) As to the second requirement, Germany claims that the infrastructure investment is necessary and proportional to the objective set. Germany reiterates that all investments were made to renovate and update the airport. Since the operator, Flugplatz Altenburg-Nobitz GmbH, did not have sufficient funds, public funding was needed. (c) As to the third requirement, Germany is of the opinion that the medium-term prospects for use of the existing infrastructure were satisfactory, at least until 2009. According to three studies carried out in 2007 (57), the operator of the airport was to improve its annual results and achieve an almost balanced operating income by the year 2015, together with the strengthening of the nearby industrial area. One study (58) refers especially to the profitability of low-cost carrier traffic and sets out a possible scenario that AOC could reach 500 000 passengers by 2015, which is even described as a conservative estimate. This proves, according to Germany, that Flugplatz Altenburg-Nobitz GmbH and its shareholders always acted as private investors. (d) As to the fourth requirement, Germany explains that all potential users of the infrastructure have access to it in an equitable and non-discriminatory manner. (e) As to the fifth requirement, Germany states that the development of trade is not affected to an extent that is contrary to the common interest. AOC is an airport with fewer than 150 000 annual passengers, hence a category D airport, and there is no distortion of competition vis-à-vis other airports.

(80) Lastly, Germany considers that the measure does not threaten to distort, or distort competition in the internal market since the infrastructure is open to all users on a non-discriminatory basis. In addition, as a category D airport according to the 2005 Aviation Guidelines, the airport annually counts fewer than 150 000 passengers and as such does not compete with other airports. Competition between AOC and the other airports at Dresden, Erfurt-Weimar and Hof is negligible. Moreover, as the share of AOC only accounts for 0,1 % of the entire traffic of all German airports listed in the ADV (59), Germany states that this airport is not in competition with any European airports, which means that there is no effect on competition in the internal market and on trade between Member States. In this regard, Germany points out that AOC handles only 2 % of the workload units handled at, for example, Leipzig/Halle airport.

Conclusions from the 2010 KE-Consult study on the future development prospects of the airport and its region

(81) When it became apparent that the scenario predicted in the 2007 studies would not materialise, the airport asked the consulting firm KE-Consult to draw up a study on AOC and the adjoining industrial area; the study was submitted in 2010. It concludes that further developments of the airport as a low-cost airport would not be commercially viable and recommends focusing on general aviation. Therefore, in September 2011, the management board of Flugplatz Altenburg-Nobitz GmbH submitted a new development plan for the airport, which was agreed by the supervisory board and the shareholder's meeting. AOC will not be open to low-cost airlines or to any commercial aviation business, but to general aviation and should become profitable through this new business development by 2015.

(82) The KE-Consult study recognises that shareholders of Flugplatz Altenburg-Nobitz GmbH continuously subsidised the company. Given this constantly increasing need for subsidies, the limit of economic efficiency had been reached for shareholders.

(83) The KE-Consult study was conducted to explore possible development prospects for AOC on the basis of the airport's regional, political, economic and fiscal impact. In this respect, various scenarios were elaborated on the discontinuation, the unchanged continuation or the expansion of low-cost carrier aviation as well as the development of the industrial park around the airport.

(84) Only the ‘general aviation’ scenario, which implies the discontinuation of low-cost carrier aviation at AOC, can meet the requirements for microeconomic and fiscal equilibrium. This is the only scenario where the airport only needs the shareholders' obligatory annual additional contribution of EUR 227 000 per shareholder but no other payments. This scenario shows a macroeconomic benefit. Up to 2015, this scenario would cost EUR 0,83 million for the shareholders and can be covered by the mandatory contributions of EUR 227 000 per year. No further subsidisation by shareholders would be necessary after 2015, as long as depreciation continues to fall. The regional economic efficiency is much higher than in all other scenarios. The 2015 fiscal balance for Thuringia and its municipalities is also positive.

(85) All other scenarios, in which low-cost carrier aviation is continued or expanded, are economically not sustainable through the shareholders' mandatory contributions. The fiscal effect for Thuringia would amount to between EUR 115 000 and EUR 375 000 per year, depending on the scenario. In all low-cost carrier scenarios, the positive fiscal effect resulting from AOC and the municipalities would be lower than the contributions needed by the airport and therefore the fiscal income-costs balance is negative.

(86) The additional macroeconomic impact of low-cost carrier aviation will only be achievable if investments of EUR 6,7 to 10 million are provided, in addition to the shareholders' mandatory contributions. The regional economic efficiency in the low-cost carrier scenarios is lower than in the general aviation scenario. Compared with the general aviation scenario, the level of necessary contributions is 11 to 15 times higher in the low-cost carrier scenarios, while the added value effects are only two to three times higher. Whereas the fiscal income-costs balance is positive in the general aviation scenario, it is negative in all low-cost carrier scenarios.

(87) Furthermore, several framework conditions were taken into account: (a) Uncertainty due to monopoly users and external influences: aviation development at AOC is dependent to a large extent, at least in relation to low-cost carrier traffic, on the contracts with relevant airlines and on external influences such as the British tourist tax or the German air traffic tax, which can have an enormous negative impact on the volume of low-cost carrier traffic. (b) Non-approval of further continual subsidies: fair and subsidy-free competition would be jeopardised and this would not be in accordance with the air traffic plan for Germany and the agreements of the political coalition at Land level. (c) Lack of sustainability: in the low-cost carrier scenarios, no improvement of the fiscal and microeconomic balances can be seen. The low-cost carrier business model would only incur an increasing need for subsidies until 2015 and beyond.

(88) The KE study therefore concludes that continuation or expansion of low-cost carrier traffic at AOC cannot be recommended to shareholders and to the Land of Thuringia.

5.2. FINANCING OF OPERATING LOSSES OF FLUGPLATZ ALTENBURG-NOBITZ GMBH IN 2000-2011 (MEASURE 2)

(89) The financial reports of Flugplatz Altenburg-Nobitz state that the airport could not ensure operational activity without public contributions to cover losses. The system set up by the company consisted in annual business plans established every year for the year to come and approved by the shareholders' meeting and then updated during the year in question with the current data registered by the airport (60). This system thus allowed the airport to update the public financial contribution needed to cover the losses.

(90) Germany states that the losses registered since the beginning of the 2000s, which resulted in shareholders' contributions, were not exclusively caused by infrastructure investments: depreciation does not fully explain the losses and financial costs did not account for them either, as the airport had no credit financing. The annual losses of Flugplatz Altenburg-Nobitz GmbH were only partially linked to depreciation costs and Germany also does not directly link these to Ryanair.

(91) Concerning the claims made by the complainant as cited in the opening decision, Germany rejects these claims in their entirety. According to Germany, the complainant does not take into account the single-till approach (61) at AOC. Germany states that in 2009 non-aviation income was at the same level as aviation income. In this regard, Germany rejects the claim that the growing number of passengers implied increasing losses for Flugplatz Altenburg-Nobitz GmbH due to secret payments made to Ryanair. Germany states that the losses incurred were caused by many different factors, which were unrelated to Ryanair.

(92) Germany in particular rejects the claim that the Ryanair route from AOC to London-Stansted had been in direct competition with the Air Berlin route from Leipzig-Halle to London-Stansted, and that this was the reason why Air Berlin discontinued the Leipzig-Halle to London-Stansted route. Germany emphasises that the discontinuation of Air Berlin operating the route to London-Stansted was due to the fact that Leipzig-Halle no longer subsidised Air Berlin and that a ban on night flights was introduced.

(93) Germany considers that annual shareholders' payments to Flugplatz Altenburg-Nobitz GmbH do not constitute State aid, since the requirements of the market economy investor principle are met, according to which all economic advantages afforded to Landkreis Altenburger Land, the main shareholder, have to be taken into account (62). Germany refers to the 2007 study conducted by Prof. Dr Klophaus (63) (hereinafter ‘The Klophaus study’), which mentions ‘lost subsidies’ of Landkreis Altenburger Land: shareholders' payments had a positive economic impact on Landkreis Altenburger Land due to additional tax payments. Total 2006 tax revenues gained through the operation of AOC amount to EUR 7,9 million, of which EUR 1 million is mainly to the benefit of Landkreis Altenburger Land. This sum was to triple by 2015 if the annual number of passengers increased to 500 000. Since the return through tax payments is higher than annual shareholders' payments, Germany concludes that Landkreis Altenburger Land acted as a private investor.

(94) Regarding the argument as to a possible closure of the airport instead of further shareholders' contributions, Germany confirms that Landkreis Altenburger Land acted as a private investor: if the airport had been closed, the airport operator would have been liable to reimburse around EUR 7 million to the Land of Thuringia as this would have been a premature termination of infrastructure usage. In avoiding this reimbursement, shareholders also acted as private investors.

The Klophaus study

(95) The Klophaus study from 2007 draws the following conclusions. It states that the direct, indirect, induced and catalyst effects of AOC for the economy and attractiveness of the region, especially in terms of jobs, are positive and significant. Future prospects for AOC are also positive, according to the study, as AOC has the potential to become the Ryanair base for central Germany, which is what Flugplatz Altenburg-Nobitz GmbH is striving for. Therefore, with so many Ryanair planes stationed at AOC, passenger numbers could potentially grow to 1 million per year in the medium term. This would allow AOC to become a regional airport offering the chance to Altenburger Land to change its international profile and thus improve its economic and business structures. The study states that AOC, as a low-cost airport, will bring significant overall economic benefits.

(96) According to the study's calculations, by 2015 AOC would be expected to provide 658 jobs (a 95,3 % growth compared with 2006). In addition, 881 indirect jobs (157,6 % growth) and 438 induced jobs (184,4 % growth) would be created. The study furthermore emphasises the importance for regions to be nationally and internationally accessible, which has an enormous influence on the economic development of the region concerned.

(97) In this respect, according to the study, not only public contributions for the renovation and expansion of AOC and the related marketing costs, but also tax incomes for the Land of Thuringia and its municipalities should be considered. The study concludes that, not only microeconomic aspects, but also macroeconomic effects should be considered.

5.3. AIRPORT CHARGES AND PAYMENTS TO RYANAIR UNDER THE AIRPORT SERVICES AND MARKETING AGREEMENTS (MEASURE 3)

(98) Germany claims that neither the airport charges nor the marketing services agreements constitute State aid. Germany stresses that there is no link between the airport services agreements and the marketing services agreements, which should be assessed separately; marketing services agreements do not imply a reduction of revenues for the airport, but provide for advertising services.

The Ryanair services agreement

(99) Germany states that the airport took into consideration positive economic expectations arising from the development of the aviation business through Ryanair. In taking the decision to do business with the airline, the shareholders' meeting of 22 April 2003 considered the data (64) set out in Table 13 and concluded that, even in a conservative scenario (one daily flight with a 70 % load factor), a total annual result of […]* could be achieved with Ryanair. Table 13 Expected revenues from Ryanair activities at AOC (65) (2003) (in EUR) Fee per passenger […]* Number of passengers per aircraft, with a load factor of 70 % (66) 104 Monthly revenues expected […]* Monthly expenses for planned investments 12 138 Monthly result expected […]* Annual result expected […]*

(100) Monthly expenses taken into account in Table 13 include personnel costs, de-icing of the runway and snow clearing services. The Commission notes that the document presented to the shareholders' meeting of 22 April 2003 shows a total of annual investments of EUR 902 155. This sum was not taken into account in the forecasts shown in Table 13.

(101) Germany states that, according to the schedule of airport charges in force at the time, Ryanair paid a landing charge of […]* per aircraft and a passenger charge of […]* per passenger (67), charges that apply to all potential airline companies and that Flugplatz Altenburg-Nobitz GmbH considers to be reasonable taking into account the traffic and income generated by Ryanair for AOC.

(102) Germany states that the services to be provided by AOC under Annex A of the agreement of 3 March 2003 with Ryanair were not provided. The services included in Annex B and in the appendix to Annex B ‘Reservations Facility’ of the agreement of 3 March 2003 were provided at no extra charge for Ryanair.

Ryanair marketing agreements

(103) Germany explains that, according to the airport services agreement of 3 March 2003, Ryanair paid airport services fees to AOC according to the standard schedule of airport charges, for a total amount of EUR […]* from 2003 until 2011. According to the marketing agreement of 7 April 2003, AOC paid Ryanair a contribution for marketing services for a total of EUR […]* from 2003 until 2011. The difference in both payments results in a net payment by Ryanair to AOC of EUR […]* throughout the 2003-2011 period. As the total number of passengers in this period was 408 291 (68), Germany concludes that Ryanair paid a net fee to AOC of approximately EUR […]* per departing passenger. Table 14 Invoices from and to Ryanair in the 2003-2011 period (69) (in EUR) Year Incoming invoices from Ryanair Outgoing invoices from the airport Number of passengers 2003 […]* […]* 25 750 2004 […]* […]* 37 160 2005 […]* […]* 50 714 2006 […]* […]* 44 580 2007 […]* […]* 60 678 2008 […]* […]* 62 876 2009 […]* […]* 66 367 2010 […]* […]* 55 641 2011 […]* […]* 4 525 Total […]* […]* 408 291

(104) Germany states that, further to Ryanair's announcement that it would discontinue the routes from AOC in March 2011, the airport operator did not pay any further marketing contributions in February and March 2011.

(105) Germany explains that marketing payments under the agreement of 21 September 2010 between Flugplatz Altenburg-Nobitz GmbH and Ryanair were paid by private companies after they agreed to the maintaining of Ryanair operations at AOC. A report from the managers of the company in 2011 (70) states that the winter aviation season 2010/2011, which comprised only one route to London, had only been made possible through the support of regional companies.

(106) Germany argues that Ryanair provided publicity for AOC and the region on its website. This website is the second most popular European website after the Google website and is therefore priced accordingly. An adword on Google costs per click between EUR 0,05 and EUR 2,00. Germany calculates that 100 000-150 000 annual Ryanair passengers at AOC with an adword price of EUR 1 per click generate an advertising price of EUR 100 000-150 000 per year, assuming that each passenger makes only one click. Since passengers usually make not only one click but several and since there are passengers who already clicked without booking, the German authorities come to the conclusion that the marketing agreement concluded between Flugplatz Altenburg-Nobitz GmbH and Ryanair is based on a reasonable price that does not provide any advantage to Ryanair.

(107) According to Germany, Ryanair organised the advertising measures described in Table 15. Table 15 Marketing payments by AOC to Ryanair Period Amount Objective 2003 EUR 50 000-150 000 […]* Print advertisements in the Leipziger Volkszeitung 2004 EUR 25 000-125 000 […]* Print advertisements in the Leipziger Volkszeitung May 2007-March 2008 EUR 75 000-175 000 […]* Newspaper ads, direct mailing and other publicity measures May 2008-March 2009 EUR 50 000-150 000 […]* Newspaper ads, direct mailing and other publicity measures Total (2003-March 2009) EUR 225 000-325 000 […]*

(108) Germany claims that the success fees do not constitute an advantage for Ryanair, since they are a market-compliant payment for marketing activities undertaken by Ryanair. According to Germany, marketing measures were successful since passenger numbers rose from 25 000 (2002) to 140 000 (2009), which led to a rise in overall income from EUR 316 000 to EUR 1,12 million, while income from airport charges rose from EUR 132 000 to EUR 530 000 and income from parking rose from zero to EUR 263 000.

(109) Germany claims that payments under the marketing services agreements do not constitute State aid, for the following reasons: (a) Germany stresses that, contrary to the assertions of the Commission in the opening decision (71), the relevant ministry had no say in the conclusion of the agreements, except where infrastructure measures were concerned. Paragraph 43 of LuftVZO (72) does not mean that approval by the ministry was necessary. (b) The fact that the local chamber of commerce backed AOC (73) only shows that the private market was in favour of the Ryanair connections. (c) Germany states that marketing payments made by Flugplatz Altenburg-Nobitz GmbH to Ryanair do not constitute start-up aid under the 2005 Aviation Guidelines, but are simply commercial contractual agreements falling outside the field of State aid.

6. COMMENTS FROM INTERESTED PARTIES

6.1. COMMENTS FROM RYANAIR

Imputability to the state

(110) Ryanair argues that State aid to airports should not be imputable to Ryanair. A presumption of transfer of State aid by airports to airlines would be in breach of EU law. This presumption discriminates against public airports, while competition rules should apply without distinction to public and private undertakings. Ryanair claims that the evidence used by the Commission in order to show imputability to the state is not sufficient. The evidence may reflect the public authorities' interest in the airport's commercial relations and future, but does not prove any actual involvement of any of the public authorities in the airport's negotiations and agreements with Ryanair. Evidence that the ministries of the Land of Thuringia were actually opposed to the agreements with Ryanair would indicate that, at the very least, a more robust examination by the Commission of the imputability of the Ryanair agreements to the state is required.

(111) Ryanair submits that the question is not whether the state should have invested its money elsewhere but whether the state confers an advantage on an airline which it would not have obtained otherwise. Ryanair has merely negotiated terms with public airports similar to what it was able to obtain at comparable private airports.

The application of the market economy investor principle

(112) Ryanair submits that it is not an indirect recipient of State aid. As long as the terms of a commercial relationship between Ryanair and an airport can be justified under the market economy investor principle (hereinafter: ‘MEIP’), any recovery obligation cannot extend to Ryanair. Ryanair argues that the MEIP should be applied to any case of an alleged grant of State aid to Ryanair by publicly owned airports. Indeed, according to the airline, there is no economic or legal justification for the exclusion of public airports from the MEIP and the Commission has applied the MEIP to agreements involving financing of major public infrastructure in other modes of transport, such as public seaports. The airport is exercising an economic function in entering into agreements. In addition, private and public sector airports compete in the market and contracts between airlines and airports can be profitable for the latter.

(113) Ryanair thinks that an efficiency assessment should not take into account cash injections for public remit investments, should consider incremental costs and not sunk costs and should, lastly, be made against the benchmark of a typically well-run airport. Ryanair argues that if a regional airport believes that an agreement will help improve its efficiency, a deal could be profitable even if it appears to involve below-cost pricing at the time of signing. Inefficient and underutilised airports can be expected to become profitable only once they achieve economies of scale and network externalities, the time frame for which can last 25 to 30 years. Low-fare airlines are ideally positioned to provide a significant increase in revenues to regional airports, usually without any need for new infrastructure or other investments. In support of this, Ryanair cites the UK Civil Aviation Authority's decision of 27 May 2011 recognising low-fare airlines' less costly reliance on airport services.

(114) Ryanair argues that sunk costs should be disregarded in the application of the MEIP, both in a comparator analysis and in a cost analysis. Ryanair states that a private investor operating AOC from 1992 onwards would have to consider both the infrastructure and the fixed operating costs of the airport as sunk costs. Realistically, there was no way to recover such costs, given the AOC's low commercial appeal and very limited market power. Under such circumstances, the acceptance of any alternative scenario offering better, or simply less onerous, prospects to the airport owner(s) than the counterfactual of doing nothing or closing the airport at a potentially significant cost, would be fully consistent with the market economy investor principle.

(115) Ryanair also stresses that the specific costs linked to Ryanair have to be considered separately from the costs incurred by the airport, but may be overall lower than the revenues deriving from the positive network externalities generated by Ryanair's activities at the airport.

The studies by a consultancy firm acting for Ryanair

(116) Ryanair states that the fee agreement with AOC fulfils the requirements of the market economy investor principle. To that end, Ryanair provided the Commission with two reports prepared by a consultancy firm. These studies compare the deal in question with other fee agreements signed between Ryanair and airports which are either majority privately owned and funded, or operating as market economy investors in a situation that is sufficiently similar to AOC.

(117) Ryanair explains the method applied in the reports for comparing the airports as follows: the analysis was only made based on other Ryanair contracts, because Ryanair has different operating modes compared with most other carriers, namely no use of air bridges, buses or lounges, no transfer flights, turnaround time of 20 minutes and mostly carry-on luggage. In addition, only airports that are operated according to a market economy investor logic were included in the scope of the study. Airports that may have received substantial State aid support were ruled out. As a result, around 15 airports in Ryanair's network meet these criteria and were included in the scope of the study.

(118) The first report considers […]* to be the most appropriate comparator airport. The report states that ‘ideally, the comparator airport that is selected for the purposes of the analysis would be of a similar size to Altenburg Airport. Although it has not been possible to find a comparator airport that is very similar to Altenburg Airport across all relevant dimensions, […]* Airport is sufficiently similar for the purposes of the analysis presented here’. The second report extended the comparator set to […]* airports and compared charges at these airports between 2003/2004 and 2010/2011, on both a per passenger and a per turnaround basis.

(119) The reports conclude that the overall level of charges paid by Ryanair to AOC is on average higher than, or in line with, the comparable level of charges paid by the airline over the period under investigation at the comparator airports. This suggests that the charges paid by Ryanair at AOC under the various agreements are compatible with a level of charges that would have been offered to Ryanair by an airport-owning market economy investor in similar circumstances.

(120) Ryanair claims that airport charges should be regarded at levels corresponding to the marginal costs rather than looking at the average variable costs or average total costs.

(121) Ryanair stresses that AOC's agreements with Ryanair and AMS should be assessed separately and both companies cannot be considered a single beneficiary of the alleged State aid. The agreements were separate, negotiated independently, relate to different services and were not subject to any linkage that would justify their consideration as a single source of alleged State aid. The conclusion of a marketing agreement with AMS was not a condition for the operation of routes by Ryanair to and from an airport. Based on their own perception of their marketing needs, many airports served by Ryanair do not conclude agreements with AMS. Ryanair stresses that the purchase of marketing services at market rates should be considered separately from a related airport-airline contractual agreement.

(122) Ryanair further explains that there is no suggestion that an airline committing to deliver a similar number of passengers and/or aircraft rotations would not have received similar ‘reduced fees’. The Commission also does not examine whether an airline offering similar commitments would have obtained a similar level of fees from a comparable private airport.

(123) As to the value of marketing, Ryanair claims that marketing space on Ryanair's website is a limited resource and demand for that space is high, including from businesses other than airports. The website currently records approximately 4,5 billion page views per year. Even legacy airlines now realise the value of their website for marketing and advertising. On the other hand, many airports make the commercially rational choice to build up a brand by advertising on ryanair.com or on other airline websites. This increased brand recognition can benefit airports in a number of mutually reinforcing and complementary ways. AOC is far less renowned internationally than either Aéroports de Paris or Heathrow Airport, and it therefore needs to invest in advertising to improve its brand recognition and maximise the share of inbound passengers.

(124) Ryanair provides an analysis prepared by the consultancy firm comparing the prices charged by AMS for web marketing services with prices charged for similar services by other travel-related websites. The analysis benchmarks the prices charged by AMS in its first 2005 rate card against comparable services provided by travel websites at that time, and also compares prices in AMS' current (2013) rate card with the prices of comparable services sold by other travel-related websites. The analysis concludes that, in both periods, prices charged by AMS for advertisements on ryanair.com were either lower than the average, or within the mid-range of rate card prices charged by websites in the comparator sets. This conclusion confirms, according to Ryanair, that public airports' arrangements with AMS meet the market economy operator test.

(125) Ryanair also provides evidence of the services provided to the airport through various screenshots which show that services provided under contracts with AMS were monitored. These screenshots were generally provided to the airport contracting with AMS to demonstrate the activation of the purchased services on ryanair.com. Ryanair stresses the value of the AMS services provided to airports and is of the opinion that benefits to airports of entering into deals with AMS should be seriously quantified.

(126) Without prejudice to Ryanair's position that the AMS agreement and the air services agreement (hereinafter ‘ASA’) should be treated separately, Ryanair provides a market economy operator profitability analysis carried out by the consultancy firm encompassing both the air services agreement concluded between Ryanair and the airport and marketing agreements concluded between AMS and the airport. According to Ryanair, this analysis should help the Commission in its approach to considering the ASA jointly with the AMS agreements, by considering how AMS could be incorporated within a joint AMS-ASA profitability analysis.

(127) The consultancy firm concludes that the cash-flow approach is an appropriate method for incorporating the value of AMS within a joint AMS-ASA profitability assessment. This approach captures the aggregated incremental profits that accrue to the airport as a result of signing the ASA, as well as the benefits of advertising through the AMS agreement. Under this approach, expenditure by the airport on AMS could be treated as an incremental operating expense within the discounted cash flow profitability analysis. This approach also takes into account the benefits of both marketing activities arising from the AMS agreements and through the ASA, for the duration of the agreement and beyond the scheduled end of the ASA, as marketing activities contribute towards enhancing brand value, and are likely to generate future business and profits.

(128) As a conclusion from this study, Ryanair stresses that, in so far as the Commission continues to treat ASA and AMS agreements together, it should apply the principles set out by the consultancy firm to the case at issue, in order to properly apply the market economy operator profitability analysis to the investigation of both ASA and AMS agreements.

(129) Furthermore, Ryanair submitted a series of notes prepared by the consultancy firm, and an analysis prepared by Professor Damien P. McLoughlin.

Identifying the market benchmark in comparator analysis for MEO (74) tests (75)

(130) The consultancy firm believes that the Commission's approach of only accepting comparator airports in the same catchment area as the airport under investigation is flawed. The consultancy firm argues that market benchmark prices obtained from comparator airports are not tainted by State aid given to surrounding airports. Therefore, it is possible to robustly estimate a market benchmark for the MEO tests, as: (a) comparator analyses are widely used for MEO tests outside the field of State aid; (b) companies affect each other's pricing decisions only to the extent that their products are substitutes or complements; (c) airports in the same catchment area do not necessarily compete with each other, and the comparator airports used in the reports submitted face only limited competition from State-owned airports within their respective catchment areas (less than one third of commercial airports within the catchment areas of the comparator airports are fully state- owned, and none of them were subject to State aid investigations, as at April 2013); (d) even where comparator airports face competition from state-owned airports within the same catchment area, there may be reasons to believe their behaviour is in line with the MEO principle (for example, where there is a large private ownership stake or where the airport is privately managed); (e) MEO airports will not set prices below incremental cost.

Principles underlying profitability analysis for MEO tests (76)

(131) The consultancy firm argued that the profitability analysis undertaken in its reports and submitted to the Commission follows the principles that would be adopted by a rational private sector investor and reflects the approach apparent from Commission precedents. The principles underlying the profitability analysis are: (a) the assessment is undertaken on an incremental basis; (b) an ex ante business plan is not necessarily required; (c) for an uncongested airport, the single-till approach is an appropriate pricing methodology; (d) only those revenues associated with the economic activity of the operating airport should be considered; (e) the entire duration of the agreement, including any extensions, should be considered; (f) future financial flows should be discounted in order to assess profitability of the agreements; (g) the incremental profitability of Ryanair agreements for the airports should be assessed on the basis of estimates of the internal rate of return or net present value (NPV) measures.

Analysis of Professor Damien P. McLoughlin (77) — Brand-building: why and how small brands should invest in marketing

(132) This paper aims to set out the commercial logic underlying regional airports' decisions to buy advertising on ryanair.com from AMS. It argues that there are a large number of very strong, well-known, and frequently used airports. Weaker competitors must overcome consumers' static buying behaviour to expand their business. Smaller regional airports need to find a way to consistently communicate their brand message to as wide an audience as possible. Traditional forms of marketing communication require expenditure beyond their resources.

Comments regarding payments to AMS

(133) Ryanair disagrees with the Commission's assessment that payments to AMS represent a cost for the airport, as this approach disregards the value of AMS services to the airport. Ryanair furthermore believes that the purchase of valuable marketing services at market rates should be considered separately from a related airport-airline contractual arrangement for the purposes of the market economy operator analysis. To support its analysis, Ryanair submits a study by the consultancy firm comparing benchmark prices charged by AMS as against prices for comparable services offered by other travel websites (78). The study concludes that prices charged by AMS were either lower than the average or within the mid-range of prices charged by comparator websites. Ryanair concludes from this that AMS prices are in line with market prices and the decision by a public airport to purchase AMS services is in line with the market economy operator test. Ryanair further provides evidence of the services provided to airports under AMS contracts, to show the value of these services to airports.

(134) Ryanair asks the Commission to reassess its approach regarding AMS contracts so far. Ryanair believes that AMS arrangements should be considered separately from Ryanair's airport services arrangements and be subject to a separate market economy operator test. Should the Commission insist on including AMS arrangements and Ryanair airport services arrangements in a joint market economy operator test, the value of AMS services to the airport should not be disregarded.

(135) The report by the consultancy firm of 20 December 2013 on AMS prices refers to the conclusions of earlier reports submitted outlining the importance of advertising for small brands, which confirm that Ryanair is a strong pan-European brand capable of attracting a premium for its advertising services. The AMS rates are compared with a sample taken at the same time of website advertising prices with reference to advertisements of equal size for the 2004-2005 period, i.e. when the AMS rate card was first introduced, and for 2013. ryanair.com has more than twice as many monthly visitors as the next most popular travel site, and visitors are more likely to enter into other e-commerce transactions. These unique characteristics combined with high brand awareness allowed the airline to charge a premium.

(136) The comparison took place between advertisements of equal size determined by available data and placed on the homepage of each website. Only rate card prices were compared due to the lack of transparency relating to special offers and discretionary discounts, which are however standard commercial practice. A rate card price is quoted in terms of price per thousand impressions, namely the price to be paid for every thousand times the advertisement is viewed by visitors to the website. Prices for web advertisements vary according to their size, measured in pixels, and location on a webpage. The primary homepage advertising service offered on ryanair.com from 2004 to 2005 was a banner of 468 by 60 pixels. Banners are usually located in the centre top section of a webpage. For the period 2004-2005, the 2005 AMS rate card price for advertising in the form of banners was compared with that of 54 European travel websites.

(137) For 2013, two other types of advertisement are considered: skyscrapers of 120 by 600 pixels and mid page units of 300 by 250 pixels. Skyscraper advertisements are tall and located along the side of a webpage, while mid page units usually sit within online editorial content, making them highly visible. The AMS rate card prices for skyscraper advertisements and mid page units are compared with those of 22 travel websites and 135 other websites. For both periods and across sectors, AMS rates are found to be lower than or within the range of prices charged by websites in the comparator sets.

How should AMS agreements be treated within the profitability analysis as part of the market economy operator test?

(138) Ryanair submitted a report prepared by the consultancy firm concerning the principles that it believes should apply to a market economy operator profitability test encompassing both the air services agreements concluded between Ryanair and airports and the marketing agreements concluded between AMS and the same airports (79). Ryanair emphasises that this does not prejudice its position that AMS agreements and air service agreements should be subject to separate market economy operator tests.

(139) The report states that AMS-associated income should be included on the revenue side in a joint profitability analysis where AMS expenditure is included on the cost side. The report proposes a cash-flow-based method in which expenditure on AMS is treated as an incremental operating expense. The report submits that marketing activities contribute to creating and enhancing brand value, which in turn is likely to generate business and profits over the duration of the marketing agreement, and also beyond. An agreement with Ryanair would attract other airlines to the airport. This would in turn attract commercial operators and increase the airport's non-aeronautical revenues (80). In so far as the Commission undertakes a joint profitability analysis, these benefits should be taken into account by treating expenditure on AMS as an incremental operating expense, with incremental profits calculated net of AMS payments.

(140) In addition, a terminal value should be included in projected incremental profits at the end of the air services agreement in order to record value accruing beyond expiry of the agreement. The terminal value can be adjusted by a conservative assumption as to the probability of the agreement being renewed with Ryanair or similar terms being agreed with other airlines. This will allow an estimation of a lower bound for the benefits arising jointly out of the AMS and air services agreements, taking into account the uncertainty of incremental profits beyond the expiry of the air services agreement.

(141) To support this approach, the report submits a summary of the results of studies on the effect of advertising on brand value. These studies recognise that advertising can build brand value and improve customer loyalty. In particular, advertising on ryanair.com increases brand exposure for an airport. Specifically, smaller regional airports aiming to increase their traffic base can build their brand value by entering into advertising agreements with AMS (81).

(142) The report suggests that the cash-flow approach is to be preferred to a capitalisation approach under which AMS expenditure would be treated as capital expenditure on an intangible asset (namely the brand value of the airport). Marketing expenditure would be capitalised as an intangible asset and then amortised over its useful asset life, with a residual value at the end of the scheduled expiry of the air services agreement. This approach would, however, not capture additional benefits to the airport resulting from signing the air services agreement with Ryanair. Furthermore, estimating intangible asset value is difficult due to brand expenditure and the length of useful asset life.

(143) Finally, the cash-flow approach is argued to be in line with State aid and non-State aid precedents from the Commission. Here, the case of BayernLB (82) is cited, where the Commission indicated it would use a dividend discount valuation model to estimate cash flows and then assign a terminal value based on projected dividend growth, as is the margin squeeze case relating to Telefónica (83), where the Commission incorporated a terminal value into its discounted cash flow analysis.

6.2. COMMENTS FROM AIRPORT MARKETING SERVICES (AMS)

(144) Airport Marketing Services defines itself as a subsidiary of Ryanair with a real commercial purpose, created in order to develop an activity that does not belong to the core business of Ryanair. It is used by Ryanair as an intermediary to sell advertising space on its website. In principle, AMS's marketing agreements with airports are negotiated and concluded separately from Ryanair's agreements with the same airports.

(145) AMS states that it has not been the beneficiary of State aid and that the airport acted in line with the market economy investor principle towards AMS. AMS argues that the market economy investor principle is met since the rates at which advertising space is provided by AMS, and the volumes in which it is acquired, do not discriminate between public and private advertisers. Both public and private bodies compete to access the limited advertising space on ryanair.com.

(146) AMS states that marketing agreements were negotiated with commercial value at market price following a business rationale. Many airports, both regional and hub, choose to advertise on Ryanair's or other websites to increase their brand recognition. This increased brand recognition can benefit airports in a number of ways. For example, it may attract inbound passengers from the airline on whose site the airport is advertising. Inbound passengers generate non-aeronautical income, since foreign passengers are far more likely to spend money at an airport for souvenirs, local products, car rental, restaurants, etc.: revenues which account for almost half of airports' income from non-aeronautical activities.

(147) This is particularly the case for AOC, which had no regular passenger traffic when Ryanair started operating its Altenburg-London route. Activities likely to generate non-aeronautical revenues had not been developed at that time. Marketing activities were therefore particularly important to maximise the share of inbound passengers in the total number of passengers committed to by Ryanair, and to encourage the establishment of non-aviation commercial activities at the airport.

(148) The Ryanair website has especially valuable features for marketing: it is one of the most popular travel websites in the world; the Ryanair brand and website address are well known; its contents are attractive with a bounce rate of […]* only; the average duration of each visit to the website is extremely long and it specifically targets potential passengers to that airport. These website characteristics are reflected in the marketing fees charged to AOC.

(149) AMS states that its marketing fees were established at market price. AMS does not discriminate between airport and non-airport clients. Prices charged by AMS are based on objective criteria and are transparently indicated on its website (84). Prices charged by AMS to AOC were consistent with its rate card. By way of comparison, a one-page advertisement by the airport in the Daily Telegraph newspaper would cost about EUR 2 385 000 for 45 days (GBP 46 000 per day). In addition, the advertisements provided by AMS on Ryanair's website are ‘fixed’, whereas those provided on numerous other internet sites tend to ‘rotate’.

(150) The two-year duration of service provision pursuant to the 2008 marketing agreement with AMS allowed the airport to pay for the advertising services based on website traffic in 2007. Similarly, the 2010 marketing agreement was based on assumptions regarding website traffic in 2009. Historical data available show that the number of visitors to Ryanair's website has increased significantly in recent years.

(151) AMS comes to the conclusion that it has not benefited from State aid and that Flugplatz Altenburg-Nobitz GmbH acted in line with the market economy investor principle towards AMS.

6.3. COMMENTS FROM LUFTHANSA

(152) Lufthansa notes that the 2010 and 2011 annual reports of Flugplatz Altenburg-Nobitz GmbH reveal annual losses amounting to respectively EUR 567 000 and EUR 437 000, showing that the company is still not profitable despite public support. According to Lufthansa, shareholders' annual contributions are made in two different forms: (a) The budget plan of Landkreis Altenburger Land of 2014 states that Flugplatz Altenburg-Nobitz GmbH received annual additional contributions of EUR 228 000 under Section 24 of its Articles of Association. (b) Flugplatz Altenburg-Nobitz GmbH also received non-repayable contributions amounting to EUR 2 406 000 between 2009 and 2011. According to the annual reports, these contributions are safeguarding the company's solvency. These contributions are also provided for 2014, according to the budget plan of Landkreis Altenburger Land (EUR 350 000 for 2014). All in all, shareholders' contributions amounted to EUR 409 000 for 2014 and EUR 174 000 for 2013.

(153) Concerning the current investigations, Lufthansa observes that the infrastructure has obviously been built exclusively for Ryanair, as agreed in the agreement with Ryanair. Lufthansa states that a private investor would only have acted in this way if Ryanair had committed itself in return to serve the airport for a certain number of years.

(154) Lufthansa also claims that public rescue aid was provided to Flugplatz Altenburg-Nobitz GmbH between 2003 and 2011, because the airport charges were not sufficient to cover operating costs. Lufthansa defines the company as ‘a firm in difficulty’ according to the Community guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (85), which were not complied with, since the aid was not notified. This aid is therefore incompatible with the internal market.

(155) With regard to airport charges and marketing support, Lufthansa observes that substantial aid was provided to Ryanair in the form of advantageous charges and marketing support. Lufthansa claims that these advantages are incompatible with the internal market, since the compatibility criteria of the 2005 guidelines could not be applied as these do not apply in cases where permanent and continual operating aid is provided. The 2014 guidelines can also not be applied since they concern only start-up aid to airlines which has been notified or granted after the entry into force of the guidelines. Even if the 2014 guidelines could be applied, the criteria for compatibility of start-up aid to airlines would not be fulfilled.

6.4. COMMENTS FROM BUNDESVERBAND DER DEUTSCHEN FLUGGESELLSCHAFTEN

(156) Regarding the application of the 2014 guidelines, Bundesverband der deutschen Fluggesellschaften (‘BDF’) does not agree with the application of the 2014 guidelines to non-notified operating aid granted before the publication of the guidelines, since such an application would be contrary to the aim of preventing the distortion of competition and creating a level playing field in the internal market. According to BDF, such an application would constitute an advantage for those undertakings which acted in conformity with the guidelines in force before 4 April 2014. The new guidelines would legalise illegal behaviour retroactively in the opinion of BDF. The start-up aid to Ryanair and the investment aid to Flugplatz Altenburg-Nobitz GmbH should therefore be evaluated as non-notified aid on the basis of the law applicable at the relevant time.

7. COMMENTS FROM GERMANY ON INTERESTED PARTIES' COMMENTS

7.1. COMMENTS FROM GERMANY ON THE COMMENTS FROM RYANAIR

(157) As regards the report of the consultancy firm, Germany observes that it implies that Germanwings may have served AOC. However, Germany certifies that Germanwings has never served the airport.

(158) With regard to the comments from Ryanair, Germany states that the authorities of the Land of Thuringia were not involved in the negotiations between the airport and Ryanair/AMS on the conclusion of the agreements.

(159) Regarding the marketing agreements between Ryanair and AOC, Germany fully backs Ryanair's position, according to which these marketing agreements comply with the market economy investor principle and therefore do not involve State aid. In particular, Germany agrees with the conclusion of the last report of the consultancy firm provided by Ryanair on 20 December 2013 and states that payments made to AMS/Ryanair were appropriate to the service provided, in the context of a normal service agreement on a business matter.

7.2. COMMENTS FROM GERMANY ON THE COMMENTS FROM LUFTHANSA

(160) Germany submits that the comments from Lufthansa do not add any new information to the ongoing investigations and that the Commission already has all relevant information in this case.

(161) Germany rejects a number of statements from Lufthansa which are erroneous according to Germany. (a) According to Germany, AOC was not built and operated exclusively for Ryanair. In this regard Germany refers to its comments and to the long-term investment plan for Flugplatz Altenburg-Nobitz GmbH. (b) Also, Germany emphasises that the infrastructure is open for anyone to use on a non-discriminatory basis. Since 2001, Air Berlin and Air Omega have also used the airport regularly. (c) The results of Flugplatz Altenburg-Nobitz GmbH were improved through the contracts with Ryanair. Therefore, a private investor would also have concluded these agreements. (d) Such decisions are usual for undertakings like Flugplatz Altenburg-Nobitz GmbH. For example, it was also checked in 2008 and 2009 whether a pilot training company could start using AOC, but the contract was not concluded because the infrastructure requirements of the company could not be met at that time. Another example is the decision taken in December 2010 not to conclude new agreements with Ryanair. (e) The business model of Flugplatz Altenburg-Nobitz GmbH was changed to general aviation on the basis of the KE-Consult study. This reduced the amount of public contributions needed.

(162) Furthermore, Germany states that, as the supervisory board of Flugplatz Altenburg-Nobitz GmbH decided in December 2013 to include a private investor, public contributions can be reduced further. Moreover, given the new orientation of the airport, which will no longer be served by charter or scheduled flights, AOC should soon fall outside the application of State aid rules.

(163) Germany argues that, according to the 2005 guidelines, AOC belongs to airport category D, with a maximum of 150 000 passengers per annum. Therefore, the airport is too small to compete with other airports, let alone distort competition. There is, accordingly, no effect on trade between Member States. Germany rejects the allegations of Lufthansa regarding alleged aid granted to Ryanair. Germany also rejects the claim that aid was granted to Ryanair through airport charges and marketing support and refers to its earlier comments in this regard.

(164) Lastly, Germany refers to a press release from the European Commission dated 19 January 2005 (86) which confirms that an aid scheme for the construction and development of regional airports in structurally and economically weak regions is compatible with the internal market.

8. ASSESSMENT

8.1. EXISTENCE OF AID

(165) Pursuant to Article 107(1) TFEU ‘… any aid granted by a Member State or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.’

(166) The criteria provided for in Article 107(1) TFEU are cumulative. Therefore, in order to determine whether the measures in question constitute aid within the meaning of Article 107(1) TFEU, all of the following conditions need to be fulfilled. Specifically, the financial support must: (a) be granted by the state or through state resources; (b) favour