EN Official Journal of the European Union L 113/32

COMMISSION DECISION (EU) 2016/633

of 23 July 2014

on State aid SA.33961 (2012/C) (ex 2012/NN) implemented by France in favour of Nîmes-Uzès-Le Vigan Chamber of Commerce and Industry, Veolia Transport Aéroport de Nîmes, Ryanair Limited and Airport Marketing Services Limited

(notified under document C(2014) 5078)

(Only the French text is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

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

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

Having regard to Council Regulation (EEC) No 2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes (2),

Having called on interested parties to submit their comments pursuant to those articles (3) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) By letter dated 26 January 2010, the Commission received a complaint about advantages that the airline Ryanair Limited (‘Ryanair’) was allegedly enjoying at a number of regional and local French airports. In the case of Nîmes Airport, the complaint also mentioned financial support allegedly received by the successive bodies operating the airport, Nîmes-Uzès-Le Vigan Chamber of Commerce and Industry (the ‘CCI’) and Veolia Transport Aéroport de Nîmes (‘VTAN’).

(2) By letter dated 16 March 2010, the Commission sent France a non-confidential version of the complaint and asked it for explanations concerning the measures at issue. France sent answers by letters dated 31 May and 7 June 2010.

(3) By letter dated 2 November 2011, the complainant sent additional information in support of its complaint. The Commission forwarded this information to France and asked it for additional information by letter dated 5 December 2011. On 22 December 2011 France requested an extension of the deadline for replying, to which the Commission agreed by letter dated 4 January 2012. France submitted its comments and answers by letter dated 27 February 2012.

(4) By letter dated 26 April 2012, the Commission informed France of its decision to initiate the procedure (the ‘opening decision’) under Article 108(2) of the Treaty on the Functioning of the European Union (TFEU) on the potential aid to the CCI, VTAN and Ryanair.

(5) By letters dated 29 May and 28 June 2012, France requested two extensions of the deadline for replying to the additional information requests made in the opening decision. On 31 July 2012 France submitted its comments together with the information and documents requested by the Commission in the opening decision.

(6) The Commission decision was published in the Official Journal of the European Union (4) on 10 August 2012. The Commission invited interested parties to submit their comments on the measures in question within one month of the date of publication.

(7) The Commission received comments from interested parties. On 24 September 2012 the CCI, VTAN and the Syndicat Mixte pour l’aménagement et le développement de l’aéroport de Nîmes-Alès-Camargue-Cévennes (‘SMAN’) jointly submitted their comments. Airport Marketing Services Limited (‘AMS’) submitted its comments on 3 October 2012. Ryanair likewise submitted a series of comments on 3 October 2012. Moreover, on 20 July 2012, 10 April 2013, 20 December 2013, 31 January 2014 and 7 February 2014, Ryanair submitted general comments common to all the State aid cases initiated by the Commission with regard to Ryanair.

(8) By letters dated 24 June 2012, 3 May 2013 and 9 January 2014, the Commission sent France the comments made by interested parties. The Commission gave France the opportunity to reply to these comments. France replied to these letters by its own letters dated 13 July 2012, 16 November 2012, 3 May 2013 and 3 February 2014. In its letter of 13 July 2012, it informed the Commission that the comments received required no comment from France, apart from those already submitted on Marseille airport. Moreover, France informed the Commission that it did not wish to reply to the comments made by third parties.

(9) By letter dated 18 October 2012, the Commission asked France to provide further information. France replied on 3 December 2012.

(10) By letter dated 23 December 2013, the Commission again asked France to provide further information. By letter dated 24 December 2013, France requested an extension of the deadline for replying. The Commission agreed to this extension by letter dated 6 January 2014. France requested a further extension of the deadline by letter dated 5 February 2014. The Commission agreed to this extension by letter dated 11 February 2014. By letter dated 19 February 2014, France submitted partial answers. In view of the missing information, the Commission sent a reminder to France by letter dated 19 March 2014. France replied by letter dated 10 April 2014.

(11) By letter dated 20 March 2014, the Commission again asked for further information. France replied by letter dated 25 April 2014. In view of the missing information, the Commission sent a reminder to France by letter dated 13 May 2014. France replied by letter dated 26 May 2014. Finally, the Commission requested further information by letter dated 23 June 2014. France replied by letter dated 1 July 2014.

(12) The Commission sent letters to France and the interested third parties that had submitted comments informing them of its intention to assess the compatibility of the aid measures in question with the internal market based on the ‘Guidelines on State aid to airports and airlines’ (5) (‘the new Guidelines’). The Commission invited the recipients of these letters to comment in this respect, if they so wished. In addition, on 15 April 2014 a notice was published in the Official Journal of the European Union (6) inviting France and interested third parties to submit their comments in this respect.

(13) Air France submitted its comments in this respect on 25 April 2014. Ryanair did likewise on 27 March 2014 and VTAN on 23 April 2014. In addition, the non-governmental organisation Transport & Environment submitted its comments on 12 May 2014. These various comments were forwarded to France, which did not comment on them.

2. FACTS

2.1. AIRPORT CHARACTERISTICS AND TRAFFIC

(14) Nîmes-Garons airport (‘Nîmes airport’) lies 12 km to the south of Nîmes, which is the main town in the department of Gard, within the Languedoc-Roussillon region of France. This airport is open to national and international commercial traffic. Nîmes airport is approximately 60 km from the airports of Montpellier and Avignon, 90 km from Marseille-Provence airport and 120 km from Béziers-Cap d’Agde airport.

(15) According to France, the main runway, which measures 2 040 m × 45 m, is capable of handling Code C aircraft (A319, A320, A321, B737-800) without any restrictions for European legs. France puts the airport’s theoretical capacity at a maximum of 700 000 passengers.

(16) Until 2011 Nîmes airport was mainly a military aerodrome, with civil aviation forming only a secondary activity. It therefore had an airbase and a civilian base. The airbase was closed on 2 July 2011, since when Nîmes airport has been mainly a civilian airport, with its military use becoming secondary.

(17) From 1965 to 2000, the only passenger traffic was on the Nîmes/Paris route operated by Air France. However, use of this route fell when a TGV high-speed rail service started operating. In November 2001 Air France stopped operating the Nîmes/Paris route. The airline Air Littoral took over this route, which it operated until July 2003.

(18) Since June 2000 Nîmes airport has been used by the airline Ryanair, initially for one scheduled route to London Stansted. In 2005 the London Stansted route was replaced by a route to London Luton, with a new route to Liverpool being launched. In 2006 Ryanair started operating two new routes: one to Charleroi and the other to East Midlands. From 2007 the number of flights to Liverpool was drastically cut, and the route to East Midlands was permanently withdrawn in 2009. Ryanair currently operates international flights from Nîmes to Liverpool, London Luton, Charleroi and Fez.

(19) Ryanair became the main operator at Nîmes airport in 2001, and since 2003 has been the only operator offering scheduled services from this airport.

(20) Nîmes airport’s passenger traffic in recent years is summarised in Table 1 in this recital. Table 1 Traffic at Nîmes airport (1999-2012) by number of passengers 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total passengers 297 150 277 521 319 378 231 122 134 444 156 581 206 128 226 887 225 701 224 458 180 027 176 521 192 474 184 850 195 319

2.2. SUCCESSIVE AIRPORT OPERATORS AND OWNERS

(21) Operation of the civilian area of the airport was initially entrusted to the CCI by Order of 15 March 1965 (‘the 1965 Order’) in the form of a public equipment concession for a period of 60 years from 1 January following the concession’s being granted, i.e. to 1 January 2026. The concession was supplemented by an order authorising temporary occupation (‘AOT’) of approximately 6 ha of additional land, granted on 12 November 1986 (7). The state terminated the concession on 31 January 2006 (8).

(22) A schedule of conditions was annexed to the 1965 Order. This schedule set out the conditions under which the CCI was to establish, equip, maintain and operate the structures, buildings, facilities and equipment. According to the AOT, the assets making up the aerodrome’s equipment belonged to the state. However, any alterations that needed to be made to the structures and facilities were the responsibility of the CCI. The CCI had to pay an annual fee of FRF 2 000 (approximately EUR 300). The AOT also stipulated that the airport was ‘assigned primarily to the French Navy (Airbase) and secondarily to the [CCI]’.

(23) The CCI is a member of the network of chambers of commerce and industry. In France, chambers of commerce and industry are public administrative bodies. In essence, they represent the general interests of trade, industry and services within their catchment area. Their tasks and powers are laid down by law. These chambers are subject to the administrative and financial scrutiny of the state, through the Minister for Finance and Infrastructure and the Minister for Planning and Local Administration, each acting within their area of responsibility. According to Article R.712-2 of the Commercial Code, ‘regional chambers of commerce and industry and local chambers of commerce and industry shall be supervised by the regional prefect, assisted by the regional public finance officer’. The supervisory authority must therefore be informed of certain important decisions specified in the regulations (regarding, for example, budget, recourse to borrowing, granting of guarantees to third parties, transfers, acquisitions or extensions of financial holdings in civil or commercial companies, etc.). Such acts may be implemented only after having been notified to the supervisory authority, which may object to them. Chambers of commerce and industry are governed by an assembly elected from among industry representatives in their catchment area.

(24) The CCI kept separate accounts for the management of the civilian area of the airport, and the latter’s operating activity was recorded in a separate account throughout this period. In order to distinguish between the activities of the CCI’s general arm and the airport management activity, the part of the CCI operating the civilian area of Nîmes airport will be referred to as the ‘CCI-Airport’ in this Decision.

(25) From 1 February 2006 responsibility for the equipment, maintenance, operation and development of the civilian area of the aerodrome was entrusted to the SMAN through an agreement dated 31 January 2006. Under this agreement, the civilian area of the airport was placed at the disposal of the SMAN, with the state retaining ownership of the assets.

(26) The SMAN is a public body (9) created by Order of the Prefect of the Gard Department of 9 December 2005. It brings together (10) the Departmental Council of Gard (‘the CGG’), the Communauté d’Agglomération de Nîmes Métropole (the ‘CANM’), and the Communauté d’Agglomération d’Alès Cévennes (the ‘CAAC’). It is responsible for equipping, maintaining and managing, particularly including operating and developing, civilian airport infrastructure (11).

(27) Between 1 February 2006 and 31 December 2006, the SMAN temporarily entrusted the operation of the airport to the CCI through a public service delegation (12). It therefore specified how the aerodrome was to be equipped, developed, maintained and managed. In coordination with the CCI-Airport, it also made the decisions and provided the financing needed to develop the aerodrome in line with the Order creating the SMAN and the public service delegation agreement signed with the CCI-Airport. For its part, the CCI-Airport was to make the alterations resulting from the work that it had undertaken, even if those alterations affected structures or facilities situated outside the civilian area. Under the delegation agreement, the CCI was not due to pay any fees in exchange for using the infrastructure.

(28) Following an invitation to tender procedure, in which there were two competing tenders, the SMAN chose to subcontract the operation of the aerodrome to the company Veolia Transport under a public service delegation agreement (the ‘CDSP’) that took effect on 1 January 2007. This company created a wholly owned subsidiary, Veolia Transport Aéroport de Nîmes, which performed the CDSP in the place of its parent company. The CDSP exclusively entrusted to the delegatee, at its own risk, the operation, maintenance and servicing of the civilian area of the airport, its land, structures, buildings, infrastructure, equipment and systems, the development of traffic and the development of services for the handling of civilian aircraft for passenger and freight traffic, for civilian aircraft flight training and for those undertakings established at the site. The initial term of the Veolia Transport delegation agreement was five years, which was then extended to 31 December 2012 (13).

(29) The SMAN organised a new public service delegation procedure, and a new operating agreement was signed on 14 December 2012 between the SMAN and the Canadian group SNC-Lavalin. The new delegatee has been operating the airport since 1 January 2013.

(30) Following the decision to close the airbase, the airport’s management was transferred, without charge, to the SMAN from 1 July 2011 (14) for a term of 50 years. The SMAN is therefore the airport manager and concession authority for its operation, with the state remaining the owner.

3. DESCRIPTION OF THE MEASURES

3.1. MEASURES SUBJECT TO THE FORMAL INVESTIGATION PROCEDURE

(31) The measures subject to the formal investigation procedure involve various agreements signed over this same period by the successive airport managers with Ryanair, both directly and through its subsidiary AMS, and also financial contributions made by various public entities and authorities to the airport operators from the year 2000 to the opening of the formal investigation procedure.

3.2. FINANCIAL SUPPORT FOR THE AIRPORT OPERATORS

3.2.1. FINANCING OF COSTS ASSOCIATED WITH TASKS REGARDED AS SOVEREIGN TASKS WITHIN NÎMES AIRPORT — NATIONAL SYSTEM FOR FINANCING SOVEREIGN TASKS IN FRENCH AIRPORTS

(32) Various tasks performed by the successive managers of Nîmes airport relating to air traffic safety, security or environmental protection were financed by the public authorities between 2000 and 2012. This funding falls within the scope of the formal investigation procedure.

(33) In this connection, France has referred to the general system for financing sovereign tasks in French airports, laid down in national law and described in recital 36 et seq.

(34) This system is based on a tax — the airport tax — and an additional financing instrument. The background to and rules governing these instruments, and the tasks financed by them, are described in recital 37 et seq.

(35) In 1998 the Council of State ruled in the SCARA judgment (15) that safety and security tasks within airports were sovereign tasks for which the state was responsible and that could not therefore be funded by airport users through fees. Following this judgment, Act No 98-1171 of 18 December 1998 on the organisation of certain air transport services and Article 136 of Act No 98-1266 of 30 December 1998 (Finance Act for 1999) (16) introduced the airport tax as from 1 July 1999. This is a specific tax in the sense that its proceeds can be used only to finance certain expenditure, in this case the costs of tasks that France regards as sovereign within airports. The above legal provisions also introduced an additional instrument to finance such tasks. The tasks financed by these instruments and the rules governing the airport tax and the additional financing instrument are set out below.

(36) The French legislation, together with more detailed regulatory provisions, sets out precisely which tasks can be financed by the airport tax. They are aircraft rescue and firefighting, wildlife hazard prevention (17), screening of hold baggage, passengers and cabin baggage, control of public access points to the restricted area (18), environmental protection measures (19) and automatic border control using biometric identification. The reference to automatic border control using biometric identification was introduced into the legislation in 2008. Otherwise, the tasks eligible for financing by the airport tax have remained the same since this scheme was introduced and correspond to the tasks identified by the SCARA judgment. Various national and European regulations clarify the obligations of airport operators in terms of carrying out these tasks. For example, with regard to aircraft rescue and firefighting, the regulations precisely define the human and physical resources to be provided depending on the characteristics of the airport.

(37) For a given airport, the airport tax is payable by any airline using the airport. It is based on the number of passengers and weight of freight and mail loaded by the airline. The rate of airport tax per passenger or tonne of freight or mail is set annually, airport by airport, according to the predicted costs of carrying out the tasks financed by the scheme.

(38) Every year airport operators draw up an annual statement of costs and traffic. These statements set out, for the previous year, the recorded levels of traffic and the costs of performing the safety and security tasks (20), as well as the amounts collected through the airport tax and the additional instrument for financing these tasks. They also contain predictions of traffic, costs and revenue in relation to the safety and security tasks for the current year and the next two years. These statements are checked by the administrative authorities, which can also carry out on-site inspections. The rate of the tax is then set on this basis by an interministerial order.

(39) As the tax rate calculations are based on predicted cost and traffic data, an ex post adjustment mechanism has been introduced to ensure that the proceeds from the airport tax, plus the financing provided under the additional instrument described in recital 40, where applicable, do not exceed the costs actually incurred in carrying out the tasks concerned. The costs in question include the operating and staff costs incurred in carrying out these safety and security tasks, depreciation on investments made in connection with these tasks, and the share of the overheads related to these tasks (21). Operators must keep multiannual accounts showing the revenue from the airport tax and the additional financing instrument, and the costs incurred in carrying out the tasks concerned. When a positive balance is reported, this is added to the cumulative accounts from previous years, which may result in a positive or negative balance. This balance is taken into account when setting the tax rate for the following year. In addition, any positive balance carries financial charges payable by the operator.

(40) From the outset, the airport tax financing instrument has had to be supplemented by an additional financing instrument. This is because safety and security costs are not proportional to the volume of air traffic, unlike the airport tax revenue. It was therefore clear that, at airports with low traffic volumes, the airport tax rate would have needed to be set at a high level, deemed to be barely affordable for users, in order to meet the safety and security costs. For these airports, provision was therefore made for the airport tax to be set at a level below that required to cover the costs and for an additional financing instrument to be used, as necessary, to finance those tasks eligible for financing by the airport tax.

(41) Various additional financing instruments have been used. To start with, the French authorities used a specific fund, the ‘fonds d’intervention pour les aéroports et le transport aérien’ (‘FIATA’) or Intervention Fund for Airports and Air Transport, set up alongside the airport tax by the aforementioned Act No 98-1266 of 30 December 1998. This fund, financed by a share of the civil aviation tax, succeeded the ‘fonds de péréquation des transports aériens’ (‘FPTA’) or Air Transport Adjustment Fund, which had initially been reserved for financing routes supporting regional development. The FIATA financing covered the same tasks as the FPTA financing and was extended to those tasks covered by the airport tax in order to supplement the latter for small airports. In essence, the FIATA tasks were split into two distinct ‘parts’: an ‘airport’ part providing supplementary cover for safety and security tasks at small airports, and an ‘air transport’ part providing subsidies for routes supporting regional development. Decisions to pay the FIATA subsidies providing additional financing for the safety and security tasks were taken following an opinion from the FIATA committee managing the ‘airport’ part.

(42) In 2005 the FIATA was abolished and, for two years, the corresponding financing was provided directly through the state budget according to the same operating principles, particularly an opinion from a management committee. In 2008 the state replaced this arrangement with an increase in airport tax, which means that this tax is set at a rate higher than what is necessary to cover the safety and security costs at certain airports. The surplus thus created is redistributed among the smallest airports in order to supplement their revenue from the airport tax.

(43) As indicated above, the annual statements of airport operators, which are checked by the administrative authorities, give the predicted and recorded costs and the predicted and recorded revenue from both the airport tax and the additional financing instrument. Likewise, the annual accounts kept by operators, based on which the balance of actual costs and revenue is calculated, which, if positive, results in a reduction in the airport tax and financial charges being payable by operators, include both the airport tax proceeds and the financing received through the additional financing instrument. The statement, checking and ex post adjustment mechanism intended to prevent the payment of public resources in excess of the costs actually incurred therefore applies to both the airport tax and the additional financing instrument.

(44) This national system applies to Nîmes airport. However, when the airbase was operating, the tasks covered by the system described in the above recitals were partly carried out by the operator of that airbase. The costs therefore incurred were only partly rebilled to the civilian operator according to the terms of the agreement defining the distribution between the civilian operator and the military operator of the investment and operating costs for those facilities and services that were jointly used. This partial rebilling took account of the fact that most of the activity at the airport was military. The share of the costs paid by the civilian operator was then compensated under the sovereign tasks financing system described in this section.

(45) Following the closure of the airbase on 1 July 2011, VTAN took over all the airport safety and security tasks for which civilian airport operators are responsible under French law, with the associated costs being compensated under the system set out above.

(46) Furthermore, the Commission noted in the opening decision that, as Nîmes airport had mainly been a military aerodrome until July 2011, certain investments in joint infrastructure, notably the runway, had been made under the control of the Ministry of Defence.

3.2.2. FINANCIAL SUPPORT FOR THE CCI-AIRPORT

(47) The CCI-Airport operated Nîmes airport until 31 December 2006.

3.2.2.1. Contractual framework

(48) Under the 1986 temporary occupation authorisation (22), the CCI had to pay a fee of FRF 2 000 per year to the state, which owned the infrastructure. Aside from this stipulation, no other financial transfer benefiting the CCI-Airport was included in this contractual framework, which remained in force until 1 February 2006.

(49) On 1 February 2006 the state placed the airport infrastructure in the civilian area at the disposal of the SMAN and authorised the latter to organise the airport’s civilian activity, subject to the powers of the Ministry of Defence. The agreement signed on 31 January 2006 between the state and the SMAN requires the SMAN, or the third-party operator appointed by the latter, to develop and finance the movement areas, stands and equipment storage areas within the civilian area (23).

(50) In this context, a public service delegation agreement was signed between the SMAN and the CCI in order to entrust the latter with the operational management (24) of the airport between 1 February and 31 December 2006, which was the time needed to organise an invitation to tender procedure in order to select a new operator. Article 6 of this agreement required the airport operating costs to be covered by the CCI, whilst the investment expenditure was funded by the SMAN. To cover the airport operating costs, it was stipulated that the operator could have recourse to contributions from other relevant public bodies (25). An annual fee of one euro was to be paid to the SMAN by the CCI (26).

3.2.2.2. Investments in the civilian area of the airport

(51) The French authorities have set out all the investments made in the civilian area of the airport by the CCI-Airport over the 1970-2006 period, which totalled EUR 19 447 268. These investments increased the size of the passenger terminal. Alterations were particularly made to the concourse, check-in area, departure lounge, passenger arrivals area and administrative area (27). The aim was to adapt the airport so that it could handle 600 000 to 800 000 passengers per year. This work was paid for in full by the CCI-Airport through self-financing and borrowing.

(52) France has also stressed that, during the period of operation by the CCI until 1 February 2006, the entire airport, except for the passenger terminal, was used for military activities. The runway and control tower, for example, were built and used for military aviation. These existing infrastructures were subsequently used for commercial aviation, but on a secondary basis to the military activity. The Ministry of Defence did make investments in these infrastructures. However, these investments were not intended to develop or maintain the airport’s commercial activities, but rather its military activities, and in this respect they were not made or assumed by the civilian operator. On the other hand, the CCI-Airport paid the military operator a contribution corresponding to its share of the costs associated with the joint infrastructure (mainly the runway and control tower) and the joint services provided (mainly air navigation and firefighting services) (28).

3.2.2.3. Operating subsidies

(53) The CCI-Airport’s main accounting and commercial data for the 1999-2005 period are summarised in Table 2 in this recital. Table 2 Key figures for the CCI-Airport (thousand EUR) (29) 1999 2000 2001 2002 2003 2004 2005 Ryanair revenue […] (*) […] […] […] […] […] […] Total revenue 2 664 2 943 3 328 3 522 2 747 2 665 4 314 Payments to Ryanair […] […] […] […] […] […] […] Total expenditure 2 933 3 217 3 746 4 318 5 171 4 553 4 957 Result - 269 - 274 - 419 - 796 -2 424 -1 887 - 643 Assets 8 956 8 333 7 714 7 145 7 383 6 641 8 026 Equity 3 844 3 357 2 729 1 805 -1 093 -3 491 -4 341 Final balance 10 831 10 258 9 419 8 522 8 869 7 924 10 729

(54) The Commission indicated in the opening decision having identified, in the CCI-Airport financial statements for the years 2000 to 2006, accounting entries relating to operating subsidies, for which the amounts are given in Table 3 in this recital: Table 3 Amounts of the operating subsidies received by the CCI between 2000 and 2006 (in EUR), as identified in the opening decision State Region CGG Municipalities Other Total 2000 8 944 13 993 22 937 2001 28 314 15 299 43 613 2002 46 000 16 518 62 518 2003 12 603 400 331 412 934 2004 3 694 39 587 43 281 2005 500 000 850 000 13 758 1 363 758 2006 200 000 200 000 Total 46 000 8 944 528 314 898 114 667 669 2 149 041

(55) France has given the following explanations for these various amounts. In 2005 the CCI-Airport received subsidies of EUR 250 000 from the CAAC, EUR 600 000 from the CANM and EUR 500 000 from the CGG to cover its operating deficit (30). In 2006 the CCI-Airport received a payment of EUR 200 000 from the general arm of the CCI to cover its operating deficit (31). On the other hand, according to France, none of the other amounts indicated in Table 3 in the above recital correspond to financial support from public authorities for the CCI-Airport’s economic activities. According to France: — the sums of EUR 22 937 and EUR 43 613 indicated respectively for the years 2000 and 2001 were allocated to the operation of the shuttle between the centre of Nîmes and the airport, — the sum of EUR 62 518 indicated for the year 2002 corresponds to financing for the shuttle (EUR 16 518) and a FIATA subsidy (EUR 46 000) under the national system for financing sovereign tasks, as explained previously, — the sum of EUR 412 934 indicated for the year 2003 corresponds to financing for the shuttle (EUR 12 603), a FIATA subsidy (EUR 14 218) and financing provided by the state (EUR 386 103) to cover sovereign safety tasks falling within the scope of the airport tax and the FIATA, — the sum of EUR 43 281 indicated for the year 2004 corresponds to financing for the shuttle (EUR 3 694) and a FIATA subsidy (EUR 39 587), — the sum of EUR 13 758 indicated in the ‘other’ column for the year 2005 corresponds to a FIATA subsidy.

(56) The shuttle is operated by an external service provider with financial assistance from various public authorities. It is not under the control of the CCI-Airport and does not fall within the scope of its activities.

(57) France has also made clear that, except for the payment of EUR 200 000 from 2006, referred to in recital 55, the CCI did not make any transfer between the general arm’s accounts and the airport arm’s accounts during the term of the concession. However, it notes that repayable advances were made. The flows and reserves (32) of these advances are summarised in Table 4 in this recital. Table 4 Advances from the CCI’s general arm to its airport arm (EUR) (33) Advance received Advance reserve at year-end 1999 -13 157 2 740 804 2000 -43 669 2 697 135 2001 0 2 697 135 2002 420 074 3 117 210 2003 1 752 663 4 869 873 2004 1 429 624 6 299 497 2005 500 000 6 799 497 2006 2 938 660 9 738 157

(58) The reserve of advances from the CCI’s general arm was automatically converted to subsidy when the public equipment concession was terminated on 31 January 2006 (34). As allowed by the terms of the 1965 concession agreement (35), the state terminated this concession early in 2006. It then applied Article 48 of the 1965 concession agreement, under which, at the end of the concession, ‘the state shall reimburse to the Chamber of Commerce those advances made by the latter from its own resources etc.’

(59) Finally, the Commission noted in the opening decision that, for the 2000-2006 period, the CCI-Airport had not entered any costs under the ‘Contribution to the manager’s overheads’ heading in its accounts. In the opening decision, the Commission assumed that the CCI’s general arm had not billed any overheads associated with the use of its resources for the management, for example administrative or accounting management, of the airport arm. However, in its reply to the opening decision, France indicated that all the services common to the CCI’s various arms, including the CCI-Airport, were rebilled, with the contribution of each arm being determined based on an allocation key that was itself based on the volume of services used by each arm of the CCI. For example, with regard to the IT overheads, each arm bore the relevant costs according to the number of computers connected and used by the arm concerned. France provided details of the airport arm’s contributions to the overheads between 2000 and 2006, item by item (management control, staff management, accounting, IT, supplies, insurance, mail).

3.2.3. FINANCIAL SUPPORT FOR VTAN

3.2.3.1. Contractual framework and operating subsidies

(60) The company Veolia Transport was entrusted with operating Nîmes airport from 1 January 2007. The extent of its responsibilities and the operating conditions were defined by the SMAN, as the delegating authority, in the CDSP. This agreement covered the operation, maintenance and servicing of the civilian area of the airport, the development of traffic and the development of services for the handling of civilian aircraft and for those undertakings established at the site.

(61) Subsequently, and in accordance with Article 1a of the CDSP, Veolia Transport set up the company VTAN to perform the CDSP. The parent company of VTAN, Veolia Transport, was also authorised to engage in other commercial activities ‘related’ (36) to the task of operating the airport.

(62) In accordance with Article 27 of the CDSP, a flat-rate contribution was paid by the SMAN to VTAN every year to ensure that the airport’s operation was financially stable. This contribution was calculated as the difference between the delegatee’s commitment in terms of the predicted level of expenditure (total costs plus net margin before tax) and its commitment in terms of the predicted level of revenue. This contribution was fixed, except for annual indexation based on a formula set out in Article 27.6 of the CDSP. Under this agreement, the flat-rate contribution was set at EUR [1,2-1,5] million per year net of VAT (2005 euro value) in a reference scenario corresponding to the operating conditions prevailing in the second quarter of 2006.

(63) However, the CDSP stipulated that the flat-rate contribution would change if VTAN found itself in a ‘downturn scenario’, defined by specific criteria set out in the CDSP. This downturn scenario corresponded to a drop in activity resulting in a change to the rotation schedule for aircraft on scheduled routes, itself leading to the airport’s second staff team being axed and the predicted expenditure therefore falling. According to the CDSP, in this downturn scenario, the flat-rate contribution would be reduced to EUR [1,0-1,3] million net per year.

(64) Moreover, the CDSP stipulated that, if, for a given year, the pre-tax margin of the airport’s operation was higher than the margin initially set, i.e. if the activity’s finances were in better shape than predicted and undertaken, [30 %-45 %] of the difference in the margin would be deducted from the flat-rate contribution. Taking into account the additional corporation tax of 10 % of the difference in the pre-tax margin, this reduction formula allowed the savings not initially predicted to be equally shared between the SMAN and VTAN.

(65) On 27 January 2010 an initial amendment was made to the CDSP (‘Amendment No 1’) due to VTAN being unable to collect the fee associated with the temporary occupation authorisation for a factory situated in the airport zone (the SGAÏ factory), which was an unknown factor at the time when Veolia drew up its tender. Amendment No 1 to the CDSP increased the flat-rate contribution by EUR [20 000-50 000].

(66) A second amendment (‘Amendment No 2’) was signed on 20 July 2010 with a view to committing VTAN to renewing the airport’s air-conditioning system. This amendment stipulated that the SMAN would compensate VTAN for the undepreciated value of the equipment at the end of the delegation.

(67) A third amendment (‘Amendment No 3’) to the CDSP was signed on 23 March 2011. This introduced the possibility of the flat-rate contribution being increased in the amount of the subsidies received by the SMAN from other public authorities. It also stipulated that the SMAN would transfer to VTAN the subsidy received from the Languedoc-Roussillon Region under the agreement signed with that authority to support the development of tourist traffic through low-cost air travel. This subsidy amounted to EUR [100 000-300 000] for 2009. The SMAN took the view that VTAN had incurred expenditure in supporting the development of tourist traffic and therefore wanted to increase the flat-rate contribution by the amount of the subsidy received.

(68) France has indicated that this subsidy was intended to cover the costs incurred by VTAN in dealing with the reduction in traffic triggered by Ryanair’s decision in March 2009 to no longer operate flights from Nîmes airport to East Midlands and to reduce the number of flights to Liverpool and London Luton.

(69) According to VTAN, the expenditure supported by this public relations subsidy did not in any way finance the additional advertising with Ryanair’s subsidiary (AMS), but was targeted at the public service mission of developing tourist traffic and promoting the local economy. In particular VTAN recruited a sales manager who was in charge of public relations development and marketing as well as efforts to develop air traffic through numerous B2B meetings at airline offices, several email campaigns and participation in air transport trade shows and forums (such as the BMT trade show in Naples, Italy, which enabled contact with five Italian tour operators) directly aimed at foreign customers.

(70) On 8 April 2011 an agreement was signed between the SMAN and VTAN to define a coordinated approach to the commitment of the expenditure needed to maintain aviation activity after 1 July 2011, the date when the airbase closed, which required the governance of the entire airport to be reviewed.

(71) On 2 July 2011 the state transferred to the SMAN part of the former military area as well as the tasks and responsibilities previously assumed by the Ministry of Defence. This transfer had the effect of altering the area and responsibilities entrusted to VTAN under the CDSP. In this context, on 30 June 2011 the SMAN and VTAN signed a new amendment to the CDSP (‘Amendment No 4’), which, on the one hand, extended the initial term of the CDSP by one year and, on the other hand, altered the obligations of the delegatee and the terms of its compensation. From that date, VTAN became responsible for the activities previously carried out by the Ministry of Defence, except for control over aviation safety. It also had to purchase the equipment in the military area and make the investments in this infrastructure that were deemed necessary.

(72) In view of these new operating costs and additional investments, a specific public contribution estimated at EUR [300 000-600 000] for 2011 and equipment subsidies were granted to the delegatee. The equipment subsidies were estimated at EUR [900 000-1 400 000] (EUR [300 000-500 000] for 2011 and EUR [600 000-900 000] for 2012). At the end of the delegation, a readjustment was to be made in order to bring the payments into line with the expenditure actually incurred by VTAN and the taxes actually received by the SMAN. France asserts that the aforementioned subsidy was intended to cover investments in sovereign activities and certification work on the airport that was not anticipated at the time when the public service delegation was granted (37).

3.2.3.2. Investments in the airport zone

(73) The CDSP stipulated that the operator was responsible for only some of the investments (38). VTAN therefore had to finance the investments involved in taking over the restaurant equipment, amounting to EUR [150 000-350 000], developing the airport’s shops, and purchasing the equipment needed for entertainment in the terminal. These investments, totalling EUR [200 000-400 000], were planned for the 2007 financial year and were to be depreciated over the term of the CDSP. In accordance with Amendment No 2 (39), VTAN financed the renewal of the airport’s air-conditioning system, which the delegating authority undertook to take over at the end of the delegation, in return for the delegatee being paid the undepreciated value of the asset. Generally speaking, the operator financed the maintenance and renewal of the operating equipment. All other investments were the responsibility of the SMAN and its member authorities.

(74) From 2 July 2011 the area covered by the CDSP included the military area. According to France, the transfer of management of the military area necessitated work and purchases that were vital in order to continue operating the airport, particularly in terms of its certification (i.e. to ensure the transfer of management of the former military area of Nîmes airport and the tasks carried out up to then by the airbase, which had the effect of altering the obligations of VTAN and the terms of its compensation). This work was identified by working groups made up of the Directorate-General for Civil Aviation, the Ministry of Defence, the SMAN and VTAN. As indicated in recital 72, in return for these new obligations, VTAN was to receive an equipment subsidy estimated at EUR [300 000-500 000] for 2011 and EUR [600 000-900 000] for 2012, i.e. a total of EUR [900 000-1 400 000].

(75) According to France, the investments made by VTAN over the entire term of the CDSP amounted to EUR [600 000-900 000].

3.3. AGREEMENTS SIGNED WITH RYANAIR/AMS

(76) The history of Ryanair’s activity at Nîmes airport is set out in recital 18.

3.3.1. AGREEMENTS SIGNED WITH THE CCI-AIRPORT

(77) The French authorities point out that there was a general balance among the activities pursued at the airport, which was based on the coexistence of the army, industrial enterprises in the aviation field (fuel recycling) and passenger transport activity, with over 2 000 jobs being at stake. In this economic context, the CCI, firstly on its own and subsequently with its partner local and regional authorities, sought to maintain the routes operated from Nîmes airport. In particular the CCI strived to overcome the drop in traffic recorded following the announcement of the new TGV line, which finally came into operation in June 2001.

(78) The French authorities have also confirmed that the agreements and amendments signed between Ryanair and the CCI were not the subject of any formal resolutions by the CCI authorising the negotiations. In this respect, France makes clear that the signature of agreements with airlines is an everyday administrative act, for which the approval of the General Meeting is not needed given that the president of the CCI has broad power, including the right to sign agreements on behalf of the CCI (40).

3.3.1.1. Agreement of 11 April 2000 between the CCI and Ryanair

(79) An initial agreement, signed on 11 April 2000 between the CCI and Ryanair for a term of 10 years, set the amount of the airport charges applicable to Ryanair. The airline also undertook in that agreement to serve Nîmes airport daily. According to France, an oral commitment to a load factor of 70 % was made, which was seemingly exceeded by 10 percentage points.

(80) Under the agreement of 11 April 2000, Ryanair benefited from discounts on the tariffs applicable at Nîmes airport. In view of the flight schedules and characteristics, parking and lighting charges were not applied to the airline. Ryanair also benefited from […]. The passenger and landing charges applied to the airline were in line with the general rate card. France notes that any airline operating the same volume of flights as Ryanair could have benefited from identical tariffs (41).

(81) In return for the discounts granted to Ryanair on the ground handling charge, this agreement provided for a financial penalty payable by Ryanair if the annual passenger target was not met. In this case, Ryanair was to pay a penalty of EUR […] per missing passenger. A lower tariff of EUR […] was granted to Ryanair by VTAN, given the large number of flights operated.

(82) The agreement also provided for part of the proceeds from the landing charge set in the agreement signed with Ryanair to be used to contribute towards the marketing costs. This contribution, which formed part of the proceeds from the landing charge, was calculated as the difference between the amount of the landing charge paid by Ryanair and the sum of EUR […], to which part of the passenger charge, set at EUR […] per Community passenger, was added.

3.3.1.2. Amendments to the agreement of 11 April 2000

(83) The agreement of 11 April 2000 was amended following an exchange of correspondence, firstly at the end of 2001 (42) and secondly in March 2004 (43). These amendments provided for an increase in the payments made by the CCI to Ryanair with a view to the development of additional routes.

(84) The 2001 amendments provided for an increase in the marketing contribution paid by the CCI to Ryanair, which rose to EUR […] per passenger outbound from Nîmes airport on routes operated to London until 31 October 2002, provided that Ryanair launched the second route to London for the summer service.

(85) However, the 2004 amendments provided for an increase in the marketing contribution of EUR […] per passenger, provided that a second route to London was launched during the summer season (from 29 April 2004).

3.3.1.3. Agreement of 10 October 2005 between the CCI and Ryanair

(86) On 10 October 2005 a new agreement was signed between Ryanair and the CCI, for an initial term of five years that was renewable for a further term of five years. With retroactive effect from 1 January 2005, it set the amount of the airport charges payable by Ryanair, which corresponded to the general rate card applied at Nîmes airport, except for the parking, lighting and […] charges, which were waived. In addition, the airline was set traffic targets.

(87) The new agreement also contained an incentive scheme for the development of traffic. This was based on the CCI paying a contribution of EUR […] per passenger outbound from Nîmes airport and EUR […] per landing throughout the term of the agreement. A penalty clause was included in the event that Ryanair failed to meet the traffic targets set in the agreement. Under the terms of this clause, if the volume of passengers carried was between […] and […] % of the target traffic, the amount of the passenger payment would be reduced to EUR […] throughout the year in question and until the traffic target was once again met. If the volume of passengers carried was less than […] % of the target traffic, […].

(88) Under the terms of this agreement, Ryanair undertook to operate: — a daily service to London Stansted for a volume of 40 000 passengers/year, — an additional daily service to London Stansted during the summer, for six consecutive months, for an additional volume of 22 000 passengers, — a service to Liverpool on four days out of seven, for a volume of 22 000 passengers, — an additional service from April 2006 to a destination to be determined, for a volume of 22 000 passengers.

(89) The agreement also provided for financial penalties in respect of the discounts granted to Ryanair on the ground handling charges and a penalty of EUR […] per passenger if the annual passenger target was not met.

3.3.1.4. Agreement of 10 October 2005 between the CCI and AMS

(90) On 10 October 2005 an agreement was also signed, for a period of five years renewable for the same period, between the CCI and Airport Marketing Services Limited (‘AMS’), a wholly owned subsidiary of Ryanair. This agreement also applied retroactively from 1 January 2005. The object of this agreement was the purchase by the CCI of related marketing services, namely: — five paragraphs of 150 words in the ‘Five things to do’ section on the Nîmes destination page of Ryanair’s website, — five links to the websites designated by the CCI in the status bar on the Nîmes destination page of Ryanair’s website, — one link to the website designated by the CCI in the ‘Five things to do’ section on the Nîmes destination page of Ryanair’s website, — for seven days per year, one link to the website designated by the CCI on the homepage of Ryanair’s British website, with all the above services, or package No 1, being provided for the sum of EUR […] excluding tax per year, — from the announcement of new routes from Nîmes airport in 2006, for 26 days per year, one link to the website designated by the CCI on the homepage of Ryanair’s British website (package No 2) for the sum of EUR […] per year, — from the announcement of new routes from Nîmes airport in 2007, for an additional three days per year, one link to the website designated by the CCI on the homepage of the website (package No 3) for the sum of EUR […] per year, — in 2005: an email offer promoting the destination of Nîmes for the sum of EUR […], — in 2006: an email offer promoting the destination of Nîmes for the sum of EUR […], — in 2007: an email offer promoting the destination of Nîmes for the sum of EUR […].

(91) This agreement was amended twice: 1. Amendment of 30 January 2006 (Amendment No 1), which extended the term of the agreement between the CCI and AMS to the end of the CCI’s effective operation of the airport, i.e. 31 December 2006, despite the termination of the equipment concession. This amendment introduced a clause requiring the CCI and AMS to make their ‘best efforts’ to ensure that an equivalent agreement was signed with the future operator. According to the French authorities, this amendment was the logical consequence of the airport’s operation by the CCI being temporarily extended beyond the end of the concession agreement (44). 2. Amendment of 17 October 2006 (Amendment No 2), which reduced the cost of the marketing services provided to the CCI given that the CCI was allegedly unable to supply the marketing materials requested. The amendment stipulated that the marketing services provided from 2007 would comply with the base agreement. The provision of marketing services was suspended from April and July 2006 to 31 December 2006 due to the CCI being unable to supply the marketing materials to be included on the Ryanair website. In the end, the sums due by the CCI for 2006 were as follows: — EUR […] instead of EUR […], for package No 1, — EUR […] instead of EUR […], for package No 2, — EUR […] instead of EUR […], for package No 3, — another service costing EUR […] per invoiced file, which was not amended, was included in the amendment.

3.3.2. AGREEMENTS SIGNED WITH VTAN (2007-2011)

(92) France has explained that the decisions to sign the various agreements with Ryanair were made by the sole director of VTAN and its chairperson and were not therefore the subject of resolutions or meetings (45).

3.3.2.1. Agreement of 2 January 2007 between VTAN and Ryanair

(93) On 2 January 2007 an airport services agreement was signed between Ryanair and the company VTAN, which set the landing and passenger charges payable by the airline and which granted the airline a contribution per passenger under an incentive scheme for the development of traffic. This agreement applied from 1 January to 31 October 2007.

3.3.2.2. Agreement of 2 January 2007 between VTAN and AMS

(94) On the same day, the company VTAN signed a marketing services agreement with the company AMS for the purchase of marketing services costing EUR […]. As with the previous agreement, this applied from 1 January to 31 October 2007.

(95) On 1 August 2007 VTAN and AMS signed an amendment to this agreement in which they agreed on the payment of an additional contribution of EUR […] for the period between 1 September 2007 and 28 February 2008. This amendment was a condition for the Ryanair service to Charleroi to be maintained for the 2007-2008 winter season. France takes the view that this additional contribution was imposed by Ryanair on VTAN, which, given its status as an entrant to the market, was not in a strong position to negotiate this contribution downwards. France has also confirmed that this amendment was not such as to alter the routes and frequencies stipulated in the agreement of 2 January 2007 or the expected traffic (46).

3.3.2.3. Agreements of 1 November 2007 between VTAN and Ryanair/AMS

(96) On 7 November 2007 two new agreements were signed, for an initial term of one year that was renewable three times, in order to continue the airport services agreement and marketing services agreement that had expired. Although the provisions were similar, the payments to Ryanair and its subsidiary were increased to EUR […].

3.3.2.4. Agreements of 27 August 2008 between VTAN and Ryanair/AMS

(97) On 27 August 2008 two new agreements, one for airport services and the other for marketing services, replaced the contractual framework described above as from 1 November 2008, for a term of one year renewable twice.

(98) Under the airport services agreement, Ryanair undertook to operate (47): — a daily service during the summer and a service on four days out of seven during the winter to London Luton, for a volume of […] passengers/year, — a service to Charleroi on four days out of seven, for a volume of […] passengers.

(99) The new agreement also contained an incentive scheme for the development of traffic. This was based on the CCI paying a contribution of EUR […] Likewise, the agreement included a penalty to be paid by Ryanair of EUR […] per passenger if the traffic target was less than […] passengers.

3.3.2.5. Amendments to the agreements of 27 August 2008

(100) Two ‘amendments’ of 25 August 2009 respectively extended the marketing services agreement and the airport services agreement to 31 December 2011.

(101) Amendment No 1 to the marketing services agreement of 18 August 2010 exceptionally increased VTAN’s contribution by EUR [20 000-50 000] in order to target new tourists, according to the contracting parties. France takes the view that this amendment was agreed in order to maintain good commercial relations between the airport operator and Ryanair (48).

(102) Amendment No 2 to the marketing services agreement of 30 November 2010, which was connected with Ryanair maintaining the route to Liverpool, exceptionally increased VTAN’s contribution by EUR [35 000-65 000]. France has indicated that this amendment was agreed due to pressure being exerted by Ryanair on VTAN with regard to the Liverpool route. Traffic on the route had fallen considerably and Ryanair had threatened to withdraw […] flights from this route. It made the continuation of these flights for […] conditional upon the purchase of additional marketing services to contribute to the promotion of this route (49).

4. GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

(103) The Commission considered it necessary to initiate the formal investigation procedure in order to examine all the financial contributions made by the various public authorities and bodies to the airport operators between 2000 and the date of the opening decision, including the financial contributions described in Section 3.2, and to assess the possible aid to Ryanair provided for in all the agreements between the airport operators and the airline and/or its subsidiaries between 2000 and the date of the opening decision (25 April 2012).

(104) Firstly, in its assessment of the financial contributions made to the airport operators, the Commission expressed its doubts about the existence of an economic advantage under Article 107(1) TFEU.

(105) The airport operators and France asserted that the overall management of Nîmes airport constituted a service of general economic interest. The Commission therefore assessed the financial support measures in favour of the airport operators in the light of the Altmark judgment. The Commission separately assessed the CCI-Airport operating period (2000 to 1 February 2006), the period covered by the delegation agreement between the CCI and the SMAN (1 February 2006 to 31 December 2006) and the VTAN period (2007 to 2012). With regard to the CCI operating period, it considered that the first Altmark criterion was not met during the 2000-2006 period and therefore that the measures granted to the CCI and the CCI-Airport could not be regarded as compensation for a service of general economic interest during the 2000-2006 period.

(106) As regards the VTAN operating period, the Commission considered that the French authorities had not proven that Nîmes airport was an exceptional case allowing the overall management of the airport to be defined as a service of general economic interest. In addition, the Commission expressed doubts that the clauses of the CDSP met the requirements associated with the second, third and fourth Altmark criteria.

(107) With regard to the compatibility of the financial contributions with the market economy operator principle, the Commission could not rule out that the contributions in question had given the successive operators of Nîmes airport a selective advantage over the entire period covered by the decision. It could not therefore rule out that these financial contributions constituted State aid.

(108) In addition, the Commission also assessed the compatibility with the internal market of the measures in favour of the airport operators in the light of the 2005 Guidelines (50) and its decision-making practice. As regards the investment aid, the Commission concluded that it did not have clear information on the investments financed by the public authorities for the benefit of the successive airport operators. As regards the compatibility of the operating aid with the internal market, the Commission considered that these measures constituted operating aid for which the French authorities had not provided any justification as regards their possible compatibility with the internal market.

(109) Secondly, as regards the assessment of possible aid granted to Ryanair, the Commission considered that the airport services agreements and marketing services agreements signed at the same time had to be assessed together, as Ryanair and AMS formed a single beneficiary of the measures concerned. The Commission considered that, in order to determine whether these various agreements constituted State aid, this principle needed to be taken into account and the private investor in a market economy test needed to be applied on the various dates when the agreements were signed, namely: — on the date of signature of the airport services agreement with Ryanair, i.e. 11 April 2000, — on the dates of the letters from November 2001 to February 2002 and from March 2004, which amended the airport services agreement signed on 11 April 2000 with Ryanair, — on the date of signature of the new contractual framework consisting of the airport services agreement with Ryanair and the marketing services agreement with AMS, i.e. 10 October 2005, — on the dates of the two amendments to the marketing services agreement signed with AMS on 10 October 2005, namely Amendment No 1 of 30 January 2006 and Amendment No 2 of 17 October 2006, — on the date of signature of the airport services agreement with Ryanair and the marketing services agreement with AMS, i.e. 2 January 2007, — on the date of signature of the airport services agreement with Ryanair and the marketing services agreement with AMS, i.e. 1 November 2007, — on the date of signature of the airport services agreement with Ryanair and the marketing services agreement with AMS, i.e. 1 November 2007, — on the date of signature of the amendments of 25 August 2009, which extended the agreements of 27 August 2008 to 31 December 2011, — on the dates of 1 August 2007, 18 August 2010 and 30 November 2010, which were the dates of the amendments making substantial changes to the marketing service agreements signed with AMS.

(110) In this context, first of all the Commission particularly considered that, based on the information at its disposal, it could not rule out that Ryanair/AMS had benefited from State aid under the contractual and commercial framework with the successive airport operators. The Commission considered that the measure in question was likely to constitute State aid, paid to AMS by the operators, which was prohibited in principle under Article 107(1) TFEU. This view was based on an analysis of the information submitted by France and the circumstances under which this agreement was signed.

(111) In addition, the Commission expressed doubts as to whether the airport operators, by signing the airport services agreements and marketing services agreements, had behaved as prudent market economy operators pursuing a global or sectoral structural policy, guided by prospects of profitability in the more or less long term. The Commission observed that there were no market studies and/or business plans for the various agreements signed with Ryanair/AMS that economically supported the airport’s decision to make such undertakings to Ryanair/AMS.

(112) In order to carry out this analysis, the Commission proposed to apply the single till principle to the airport’s operation, by taking into account both the aeronautical revenue (airport and ground handling charges) and the revenue from the airport’s non-aeronautical activity (shops, car parks, etc.).

(113) With regard to the CCI operating period, the Commission observed that it was difficult to establish how the discounts and rebates granted on the airport charges and the waiver of the ground handling charges had been determined in relation to the operating costs of the airport infrastructures, and therefore the costs of providing the airport services. In this context, the Commission expressed doubts as to whether the CCI-Airport had acted as a prudent market economy investor in its relations with Ryanair.

(114) As regards the VTAN operating period, the Commission noted that the implementation of the new contractual framework defined from 2007 seemed to substantially degrade the operator’s financial situation, as a result of which the Commission could not rule out that Ryanair/AMS had benefited from State aid due to the contractual and commercial framework in question.

(115) Lastly, the Commission expressed doubts about the compatibility of these measures with the internal market under the 2005 Guidelines.

5. COMMENTS MADE BY INTERESTED PARTIES

(116) The Commission received comments from the following interested third parties: the CCI, VTAN, the SMAN, Ryanair, AMS and Transport & Environment.

5.1. COMMENTS SUBMITTED BY INTERESTED THIRD PARTIES FOLLOWING THE OPENING OF THE FORMAL INVESTIGATION PROCEDURE

5.1.1. JOINT COMMENTS OF THE CCI, VTAN AND THE SMAN

(117) The two airport operators during the period covered by the opening decision, namely the CCI and VTAN, submitted their comments jointly with the SMAN. The CCI, VTAN and the SMAN will hereinafter be referred to as ‘the Operators’.

(118) The Operators stress that Veolia Transport and VTAN are two separate entities. The first is the company selected to operate Nîmes airport, whilst VTAN replaced Veolia Transport in the performance of the public service delegation agreement.

5.1.1.1. Reminder of the public service mission of operating Nîmes-Alès-Camargue-Cévennes airport

(119) The Operators note that the SMAN is a legal person governed by public law. The SMAN was assigned public service missions by the French state under the transfer of powers to the local and regional authorities. The Operators assert that, in accordance with the case-law of the French Council of State (51), when a syndicat mixte or joint association operates an aerodrome, there is a public service inherent in the nature of its activity. The SMAN subsequently decided to delegate the airport’s operation to the CCI and then to VTAN in accordance with French law and subject to monitoring of its legality by the Prefect of the Gard Department, without the latter identifying any illegality.

5.1.1.2. Measure 1: Assessment of the financial contributions made to the airport Operators

5.1.1.2.1. Existence of aid

5.1.1.2.1.1. Tasks falling within the powers of a public authority and infrastructure used to perform those tasks

(120) The Operators take the view that aircraft firefighting and wildlife hazard prevention services are not security services, but sovereign tasks associated with safety that are covered by the airport tax, such that these are non-economic activities falling outside the scope of the European rules on State aid.

5.1.1.2.1.2. Financing of the operation

(121) The Operators stress that, during the CCI operating period, neither the repayable advances paid by the CCI’s general arm for the benefit of the airport’s accounts nor the rebilling system for joint costs can be regarded as acts that may be assessed under the State aid rules. Accordingly, in their view, in the first case the CCI acted as a private investor ensuring that its business had the necessary resources and, in the case of the rebilling system for joint costs, these costs were decided based on objective criteria associated with the volume of services provided to each recipient.

5.1.1.2.1.3. Compatibility of the flat-rate contribution with the Altmark case-law

(122) Clearly defined public service obligations. The Operators refute the Commission’s view that developing the airport, particularly for commercial flights, cannot be defined as a service of general interest. In fact, they consider that (i) the Member States enjoy broad discretion in defining what they regard as a service of general economic interest (SGEI); and that (ii) the ‘development of air traffic’ has a wider objective, namely regional development, which is an objective that, according to the Operators, has already been recognised by the Commission as being a general interest objective.

(123) In addition, the Operators have submitted a study proving that the airport’s impact on the local economy is clearly greater than the flat-rate contribution, due to the airport’s importance as a focus of activity.

(124) The Operators also refer to the contents of the CDSP to prove that (i) the CDSP contains numerous obligations associated with the maintenance and accessibility of the airport; and that (ii) VTAN was required to ensure the continuity of the public service under threat of penalties, by assuming obligations that a private investor, based on its own commercial interest, would not have assumed or would not have assumed to the same extent or under the same conditions.

(125) The Operators assert that the Commission has misinterpreted the meaning of the expression ‘development of air traffic’. Unlike the Commission, which has taken the view that this task involves developing the airport, the Operators have indicated that, in its broader sense, this task corresponds to regional development, which they claim to be a clearly defined general interest objective. In addition, in their view, this task also includes development of the industrial hub.

(126) The Operators also stress that, contrary to the Commission’s opinion, the compensation granted to VTAN did not depend on how the aviation activity developed. In fact, the flat-rate contribution took the form of compensation fixed at EUR [1 200 000–1 500 000] per year in the reference scenario, which could only go down subject to certain conditions defined in the CDSP.

(127) Lastly, the Operators consider that the overall management of Nîmes airport, given its size and local role, should be regarded as an SGEI, given that the Commission has not proven that a private market economy operator would have been prepared to assume such obligations in the absence of public service compensation.

(128) Parameters established in advance for determining the amount of compensation. The Operators maintain that the flat-rate contribution paid by the delegator to the delegatee was fixed, and was only indexed each year according to a clearly defined formula. Furthermore, they clarify that the exceptional increases stipulated in the amendments were agreed as a result of the occurrence of events that were unforeseeable at the time when VTAN drew up its tender.

(129) Fair compensation for costs arising from public service obligations. The Operators rely on a quantitative analysis to prove that the airport operator was not overcompensated. As a result, given the size of Nîmes airport, all the operator’s economic costs (excluding sovereign tasks) must be taken into account to determine the existence of overcompensation. In this context, over the 2007-2011 period, there was allegedly a loss of nearly EUR [1-3] million. Only if the entire flat-rate contribution were allocated solely to the public service costs in the strict sense would the operator make a profit of EUR [2-4] million. Lastly, the Operators stress that, if the AMS expenditure is included in the public service missions, the compensation covers only […] % of the AMS expenditure of EUR [5-7] million over the 2007-2011 period, less the public service costs in the strict sense, which does not show any overcompensation.

(130) Selection of the service provider. The Operators rely on an independent economic study to prove that the negotiated procedure allowed the most efficient operator to be selected (i) by improving the efficiency of the agreement; and (ii) by allowing the Operators to submit more aggressive tenders. The procedure followed with Veolia met the final Altmark criterion, given that the predicted costs used to calculate the financial contribution reflected the costs of a well-run airport of the same size as Nîmes.

5.1.1.2.1.4. Clarifications on the AMS expenditure

(131) VTAN stresses that Ryanair and AMS are two separate entities and that their contractual relations must therefore be treated separately. In addition, the Operators maintain that all the services contracted to AMS fell within the public service missions assigned to VTAN. As a reminder, the main objective of these public service missions was the economic and tourism development of the Nîmes region.

5.1.1.2.1.5. Financing of the infrastructure

(132) The Operators confirm that the only work directly carried out by the CCI during its operation of Nîmes airport involved the expansion and adaptation of the passenger terminal, with this work being financed from the CCI’s own resources or through loans taken out in its name. Given that the vast majority of this work took place during the 1990s, the applicable legislation is the 1994 Aviation Guidelines, meaning that the financing of this work escapes the monitoring of State aid carried out by the Commission.

(133) The Operators also note that, except for the passenger terminal, the investments were made in the airbase, as the commercial activity was secondary.

(134) During the VTAN operating period, the main investments, which were mainly military in nature, involved bringing the runway into compliance. These investments were made to meet the basic needs of the airbase. In addition, other investments were made between 2010 and 2011 to bring the terminal into compliance following an unfavourable opinion from the Safety Commission, which could not have been anticipated when the delegation was granted.

(135) As regards the financing of certain investments by the SMAN, the Operators assert that this was the only possible solution given the short term of the CDSP, which was much shorter than the ‘investment depreciation period’. In addition, they assert that, if these investments had been taken into account at the time of the invitation to tender, the interested parties would have requested higher compensation. To conclude, they assert that the infrastructure being placed at the operator’s disposal without charge did not confer any advantage on VTAN because, in the absence of the SMAN’s support for certain investments, the associated costs would have been directly included in the amount of the flat-rate contribution.

(136) As regards the equipment subsidy granted to VTAN following closure of the airbase, the Operators maintain that the investments in the aircraft rescue and firefighting service (service de sauvetage et de lutte contre l’incendie des aéronefs sur les aérodromes — ‘SSLIA’) and in the creation of an automatic parameter transmission system (système de transmission automatique des paramètres — ‘STAP’) cannot be regarded as falling within the airport’s commercial activity rather than its sovereign activities.

5.1.1.2.1.6. Effect on intra-EU trade and competition

(137) The Operators maintain that a regional airport’s catchment area is limited to those airports that can be reached by car within a maximum of 60 minutes. They also note that customers of low-cost airlines are much more sensitive to the costs of transport to the airport.

(138) With regard to Montpellier airport, the Operators take the view that its potential passengers would not be interested in travelling to Nîmes, given the additional journey time and the additional cost incurred. Furthermore, Montpellier airport serves a tourist demand that is situated more to the west of the airport, whereas Nîmes airport covers a different catchment area. Lastly, the existence of identical destinations served by the two airports (London and Brussels) and the study of their traffic show that there is no competition between Montpellier airport and Nîmes airport.

(139) Likewise, with regard to Avignon airport, the Operators take the view that its potential passengers would not be interested in travelling to Nîmes, given the additional journey time and the additional cost incurred. Furthermore, the destinations served by the two airports are different (except for London, although the arrival airport is different and the Avignon service is targeted at a different type of passenger, mainly business passengers). In addition, a 2011 passenger survey highlighted the low ranking of Avignon airport among the other airports situated in the region.

(140) With regard to Marseille airport, the Operators stress that, in accordance with the Commission’s decision-making practice, the activities of a Category D airport such as Nîmes cannot really hinder those of an airport such as Marseille, which sees annual traffic of over 7 million passengers, given that the two airports are not substitutes as far as users are concerned. In addition, an independent economic study shows that the drop in passenger numbers at Nîmes following the opening of the low-cost terminal at Marseille in 2007 was less than the losses recorded during the period prior to that opening.

(141) As regards the financing granted to the CCI and VTAN, the Operators consider that this could not have affected the airport operating market given that the overlap between the catchment areas of Montpellier, Avignon and Marseille airports is very limited.

5.1.1.2.1.7. Compatibility of the measures with the internal market

(142) The Operators consider that all the measures examined are compatible with the internal market. Given that their aim is the performance of general economic interest tasks, these measures de facto meet the SGEI criteria and are therefore compatible with the 2005 Guidelines.

5.1.1.2.1.8. Compatibility of the operating aid with the SGEI Decision (52)

(143) CCI operating period to February 2006. The aid is compatible with the internal market given that (i) there was an act entrusting the public service missions (in particular the 1986 AOT); (ii) the compensation was limited to the costs necessary to perform the public service (there were legal mechanisms, such as Circular No 111 of 30 March 1993, to ensure fair compensation); and (iii) there were regular checks to ensure the absence of overcompensation (monthly reports verifying that the voted budget was being properly implemented).

(144) CCI operating period from 1 February 2006 to 31 December 2006. In this case, the SGEI criteria were also met given that (i) the delegation agreement of 1 February 2006 imposed clearly defined public service obligations; (ii) the agreement also stipulated that the compensation must be limited to the costs necessary to perform the public service; and (iii) regular checks were also carried out.

(145) VTAN operating period. The CDSP also met the criteria, in particular (i) the existence of an act entrusting the public service missions; (ii) the limitation of the compensation to the necessary costs; and (iii) the absence of overcompensation given that there was an annual report to the delegating authority that set out the economic and financial results for the year.

5.1.1.2.1.9. Compatibility of the infrastructure aid with the 2005 Guidelines

(146) Clearly defined objective of general interest. The investment measures met a clearly defined objective of general interest, namely the economic and tourism development of the Gard department because, according to the Operators, the specific net impact of Nîmes airport on the local economy was approximately EUR 71 million, based on both the jobs created by the airport and net tourism flows.

(147) Necessity and proportionality of the investments. The majority of the investments were made in the 1990s. The investments made during the CCI operating period that are covered by the opening decision were minor and intended to bring the airport into compliance with the applicable safety standards. In addition, the investments made during the VTAN operating period involved renovating the runway in 2007 and bringing the terminal into compliance between 2010 and 2011.

(148) Satisfactory medium-term prospects for use. The Operators maintain that there were satisfactory prospects during both operating periods. Accordingly, the CCI underlines that, during its operating period, the prospects were positive given that traffic had increased by 3,5 times over the 20 years prior to the airport’s resizing. Likewise, VTAN asserts that, when the CDSP was signed, there were satisfactory medium-term prospects.

(149) Equal and non-discriminatory access to the infrastructure. The general rate card determined the charges to be paid by any airline operating from Nîmes airport.

(150) Absence of effect on the development of trade to an extent contrary to the Community interest. Given that the aid granted was unlikely to affect the airports situated within the catchment area of Nîmes airport.

(151) Proportionality and necessity of the aid — incentive effect. In the absence of these measures, the airport would have been closed. In addition, the fact that an invitation to tender covering the operation of the airport was launched in 2007 shows that no economic operator would have agreed to assume these investments.

5.1.1.3. Measure 2: assessment of the aid potentially granted to Ryanair and AMS

5.1.1.3.1. State resources and imputability to the state of the payments made by VTAN to Ryanair and AMS

(152) CCI operating period. The Operators maintain that the aid does not meet the Stardust (53) criteria with regard to imputability to state resources. The Operators claim that the only argument put forward by the Commission to establish imputability is the supervision exercised over the CCI in accordance with the French Commercial Code. In their opinion, the region’s supervision is limited to certain categories of financial commitments, which do not in any way include services and marketing agreements signed with airlines. As a result, this criterion is insufficient to establish the imputability of state resources. As regards the other criteria in the aforementioned case-law, the Operators take the view that (i) there are no links with a public body; (ii) the decisions under analysis were made by the CCI in the context of activities carried out in competition with private operators; and (iii) the state’s involvement in the decisions under analysis has not been proven.

(153) VTAN operating period. The Operators point out that there was no automatic link between the amount of the public contribution granted to VTAN and the agreements negotiated by VTAN with Ryanair and AMS. With regard to the imputability of the measures to the state, the measure was adopted by a private undertaking such that the criteria set out in the Stardust case-law are not met.

5.1.1.3.1.1. Selective advantage

5.1.1.3.1.1.1. Joint analysis of the airport services agreements and marketing services agreements

(154) The Operators do not agree with the joint analysis of the agreements, as announced by the Commission, because, in their opinion, the two types of agreement have different conditions and objects.

5.1.1.3.1.1.2. Analysis of the marketing services agreements signed with AMS

(155) CCI operating period. The Operators consider that advertising on specialist websites is an essential service for the development of any regional airport. They believe that this activity is in line with Commission practice and Court of Justice case-law, given that this is a service paid for at market price.

(156) VTAN operating period. The Operators point out that all the payments made to Ryanair were made in the context of the public service mission delegated to VTAN, in particular to promote the region and its economic and tourism development.

5.1.1.3.1.1.3. Analysis of the airport services agreements signed with Ryanair

(157) The Operators consider that the Commission cannot expect a small airport such as Nîmes to pass on all its costs to the airlines. As a result, they suggest that, in order to measure the profitability of the commercial relationship, only the variable costs exclusively attributable to the airline should be taken into account, with the fixed costs that would have to be borne in any event being excluded.

(158) During the CCI operating period. The Operators stress that the conditions granted to Ryanair could have been offered transparently and non-discriminatorily to any airline making a commitment in an identical manner to Ryanair.

(159) During the VTAN operating period. The Operators consider that the Commission cannot include 100 % of the AMS expenditure in the costs chargeable to the commercial operation of the airport in so far as this expenditure was fully or partly made in the context of VTAN’s public service mission of promoting the region. In addition, the Operators point out that Nîmes airport was the first airport operated by VTAN and, as a result, it was vital for VTAN to ensure Ryanair’s presence, if necessary through an initial loss, in order to allow the group to acquire the experience needed to develop its airport operation activity. Lastly, the Operators stress that, in this context, the public authorities (and particularly the SMAN) did not play any role in the commercial relationship established between Ryanair and VTAN.

5.1.2. RYANAIR

5.1.2.1. Ryanair’s comments on the opening decision

(160) Ryanair has submitted a report prepared by Oxera, an independent economic consultancy firm, in order to prove that Ryanair’s agreements with Nîmes airport comply with the market economy operator principle. This report concludes that the average charges paid by Ryanair at Nîmes airport are higher than the average charges applied at comparable airports acting as market economy investors (Oxera examined […], […], […], […] and […] airports).

5.1.2.1.1. No aid from ‘state resources’, no imputability to the state

5.1.2.1.1.1. Agreements with the CCI (before 1 January 2007)

(161) The Commission claims that Ryanair and AMS were paid amounts owed under their respective agreements not by the CCI but by state entities such as the Languedoc-Roussillon Region.

(162) Ryanair takes the view that the Commission cannot credibly support its claims regarding imputation to the state and use of state resources through its arguments regarding the CCI. Ryanair asserts that, under both European Union case-law (54) and French law (55), the French state does not enjoy any influence in the decision-making processes of the chambers of commerce, with its role being limited to supervising certain decisions and its approval not being required for the signature of agreements such as the ‘airport services agreement’ and the ‘marketing services agreement’.

(163) Ryanair indicates that not all the resources of the CCIs come from taxes, given that they have their own resources generated, for example, by their commercial activities. In the specific case of airports, the CCIs must finance their airport operations independently, under the French Civil Aviation Code.

5.1.2.1.1.2. Agreements with VTAN (after 1 January 2007)

(164) Ryanair asserts that the fact that flat-rate contributions were involved clearly shows that these contributions did not correlate to specific payments by VTAN to Ryanair. It also maintains that the imputation of the measures to the state has not been established by the Commission and that the analysis therefore fails to meet the criteria required for the imputation of a measure to the state.

(165) In addition, Ryanair concludes that the change of contractual partners (from the CCI to VTAN) entailed a change in the negotiating conditions, which allegedly proves that VTAN was not simply a front for the French state.

5.1.2.1.2. The Commission’s incorrect application of the market economy operator principle

(166) Ryanair takes the view that the Commission has failed to compare the Ryanair agreements with other agreements signed with comparable private and public-private airports and indicates that, according to the Chronopost (56) case-law, it is only in the absence of a reference private investor that a market-based analysis can be replaced by a cost-based analysis. According to Ryanair, there are a number of airports that have similar characteristics to those of Nîmes airport, which are encouraged to operate as market economy investors (57) and which the Commission could have used as benchmarks in its analysis. In addition, Ryanair takes the view that the Commission’s cost-based analysis is limited to a simple mention of these costs.

(167) Moreover, Ryanair explains that, in the present aviation context, certain factors can support the commercial logic of pricing at incremental (or even lower) cost. In particular it mentions the following factors: (i) degree of competition on the market concerned; (ii) interest in attracting airlines to a regional airport that has limited market power; (iii) existence of network externalities at airports; (iv) economic advantage resulting from commitments by airlines to guaranteed passenger numbers; (v) correct definition of incremental revenues; (vi) history and typical profile of European regional airports; and (vii) correct definition of incremental costs.

(168) As regards the presence of network externalities at airports, Ryanair maintains that these are both one-sided (as the number of established routes from a given airport increases, this airport is likely to become more attractive) and two-sided (airlines will be more willing to commence operations at airports with good surface access facilities and a minimum of shopping facilities since they will attract more passengers).

(169) With regard to the economic advantage resulting from commitments by airlines to guaranteed passenger numbers, Ryanair asserts that these guaranteed passenger numbers and the existence of penalties if targets are missed — as stipulated in the airport services agreements signed with Ryanair — enable the airport not only to better plan its activities and adopt policies that minimise costs to a greater extent than if no commitments existed, but also to attract commercial operators (58).

(170) As regards the need to adopt a consistent approach to the definition of incremental revenues in relation to the definition of incremental costs, Ryanair proposes a single-till approach, which involves taking account of revenues generated from both aeronautical and non-aeronautical activities, and welcomes the approach adopted by the Commission in this respect. In this context, Ryanair has submitted some financial data for a number of small and medium-sized regional airports in the United Kingdom, which show that there is a clear correlation between growth in passenger numbers and growth in non-aeronautical revenues. That being so, Ryanair takes the view that it makes sound business sense to lower the airport charges for airlines that generate non-aeronautical revenues in order to maximise such revenues (the single-till approach therefore justifies lower airport charges).

(171) As regards the profile of European regional airports, Ryanair notes that none of them was originally conceived as a commercial ‘market economy investor’-type venture (most of them were created several decades ago as public infrastructure serving a variety of purposes, such as military uses, civil or leisure aviation, etc.). Ryanair is therefore convinced that a market economy investor would have to consider both the airport infrastructure and the fixed operating costs, and that the decision as to whether or not an airline could operate at the airport would not in any way change the existence or amount of the initial sunk costs, which must therefore be ignored in the analysis of the decision. Ryanair takes the view that the costs of closing the airport could be significant, given the need to compensate for breaching long-term commercial agreements with third parties and the existence of other costs such as redundancy costs, environmental costs associated with decontaminating the airport site, etc.

(172) Finally, Ryanair stresses that it operates a different business model from most other airlines. As a result, the cost to an airport of serving Ryanair is likely to be lower than the cost to an airport of serving other carriers that use a wider range of airport facilities. Therefore, from the viewpoint of a market economy investor, any commercial offer will normally be an improvement on the existing situation, as long as the airport’s expected incremental revenues exceed its incremental costs. In addition, as already stated, Ryanair considers that airport infrastructure already constructed is a sunk cost that should not affect the incremental choices made by the airport. Moreover, fixed operating costs (such as the costs of maintaining terminal buildings) also should not be included in the assessment of compliance with the market economy operator principle, since this principle is not supposed to be based on an exceptionally successful investment result, but rather on the minimum investment standard sufficient to satisfy a private investor. Ryanair highlights the need to charge investment costs appropriately so that they reflect the airline’s use of the facilities offered by the airport. Ryanair also indicates that, for the purposes of applying the market economy investor test, the net present value of the investment over the long term should be compared. Ryanair has submitted an analysis produced by Oxera that confirms that Nîmes airport has acted as a market economy investor under the conditions set out above.

(173) Furthermore, Ryanair asserts that business plans are not systematically used by private investors, and that it itself does not use them. The Commission is therefore seemingly wrong in suggesting that the lack of a business plan prevents a public body from acting as a private investor.

(174) Ryanair strongly objects to the opening decision’s use of ‘Ryanair/AMS’ to designate the single presumed beneficiary of the measures in question, and the conclusion that the marketing services agreements with AMS and the airport services agreements with Ryanair should be assessed together. Ryanair stresses that, generally speaking, its operation of routes is not dependent on the conclusion of a marketing agreement with AMS and that, based on their own perception of their marketing needs, many airports served by Ryanair do not conclude agreements with AMS.

(175) Ryanair refers to the agreements signed with the airport (59) to prove that these were not agreed on a non-exclusive basis and that the measures concerning Ryanair were not therefore selective. In addition, Ryanair points out that, since the market economy investor test is met, then any aid, if proven, must have been distributed in some other way (or retained by the airport), either to other users of the airport or to unproductive projects (60).

(176) To conclude, Ryanair makes a few general comments, namely (i) it takes the view that the safety and firefighting services are non-economic activities and should not therefore be included in any State aid assessment; (ii) Ryanair did not request any investment in runway infrastructure or other equipment, meaning the investment costs are not chargeable to the agreements with Ryanair; and (iii) none of the measures benefiting VTAN, as described in Section 3.1 of this Decision, can be attributed to Ryanair since it never requested any of the investment projects in question.

5.1.2.2. Ryanair’s comments of 10 April 2013

(177) Ryanair submitted two notes prepared by Oxera and an analysis prepared by Professor Damien P. McLoughlin.

5.1.2.2.1. First Oxera note — Identifying the market benchmark in comparator analysis for MEIP tests. Ryanair State aid cases, note prepared for Ryanair by Oxera, 9 April 2013

(178) Oxera takes the view that the Commission’s approach of accepting only comparator airports in the same catchment area as the airport under investigation is flawed.

(179) Oxera argues that market benchmark prices obtained from comparator airports are not polluted by State aid given to surrounding airports. It is therefore possible to robustly estimate a market benchmark for the MEIP (market economy investor principle) tests.

(180) In fact: — comparator analyses are widely used for MEIP tests outside the field of State aid, — companies influence each other’s decisions only to the extent that their products are substitutable or complementary, — airports in the same catchment area do not necessarily compete with each other, and the comparator airports used in the reports submitted face limited competition from public airports in their catchment area (less than one-third of the commercial airports in the catchment area of the comparator airports are fully state-owned, and none of the airports in the same catchment area as the comparator airports was the subject of a State aid procedure (in April 2013)), — even where the comparator airports face competition from public airports in the same catchment area, there are reasons to believe that their behaviour is in line with the MEIP (for example, where the private sector holds a large stake or where the airport is privately operated), — airports that respect the MEIP will not set prices below incremental cost.

5.1.2.2.2. Second Oxera Note — Principles underlying profitability analysis for MEIP tests. Ryanair State aid cases, note prepared for Ryanair by Oxera, 9 April 2013

(181) Oxera argues that the profitability analysis undertaken by Oxera in its reports 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.

(182) The principles underlying the profitability analysis are as follows: — The assessment is undertaken on an incremental basis. — An ex ante business plan is not necessarily required. — In the case of an uncongested airport, the single-till approach is the appropriate pricing methodology. — Only those revenues associated with the economic activity of the operating airport should be considered (‘Charleroi’ decision) (61). — The entire term of the agreement, including any extensions, should be taken into account. — Future financial flows should be discounted in order to assess the profitability of the agreements.

(183) The incremental profitability resulting from Ryanair agreements with airports should be assessed on the basis of internal rate of return estimates or net present value measures.

5.1.2.2.3. Analysis by Professor Damien P. McLoughlin — Brand building: why and how small brands should invest in marketing, note prepared for Ryanair, 10 April 2013

(184) This document aims to set out the commercial logic underlying regional airports’ decisions to purchase advertising space on the Ryanair website from Airport Marketing Services (AMS).

(185) There is a large number of very robust, well-known and regularly used airports. Weaker competitors have to overcome the static purchasing behaviour of consumers to grow their business. Smaller regional airports need to find a way to continuously communicate their brand message to as wide an audience as possible. Traditional forms of marketing communication require expenditure beyond their means.

(186) Advertising via AMS: — offers an opportunity to reach a significant number of people already considering a travel purchase, — entails relatively low costs (prices in line with commercial rates for online communication), — allows communication at the point of purchase, — offers the possibility of creative advertising.

5.1.2.3. Ryanair’s comments of 20 December 2013

(187) Ryanair submitted comments on the payments made to AMS. Ryanair disagrees with the Commission’s preliminary assessment that the payments made to AMS constitute costs for the airport, as this approach disregards the value of AMS’s services to the airport. Ryanair further believes that, for the purposes of the market economy operator analysis, the purchase of valuable marketing services at market rates should be considered separately from a related airport-airline agreement.

(188) In support of its arguments, Ryanair submits an analysis comparing the prices charged by AMS with prices for comparable services offered by other travel websites (62). The analysis concludes that the prices charged by AMS were either lower than the average or within the mid-range of the prices charged by comparator websites.

(189) According to Ryanair, this shows that AMS’s prices are in line with market prices and that the decision by a public airport to purchase AMS’s services satisfies the market economy operator test. Ryanair also produces evidence of the services provided to airports under the AMS agreements in order to prove the value of these services to the airports.

(190) According to Ryanair, if the Commission insists on subje