EN Official Journal of the European Union L 179/1

COMMISSION DECISION (EU) 2015/1071

of 1 October 2014

on State aid SA 26190 (2012/C) (ex 2011/NN) implemented by Germany for Saarbrücken Airport and airlines using the airport

(notified under document C(2014) 5062)

(Only the English text is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

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

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

Having called on interested parties to submit their comments pursuant to the provision(s) cited above (2) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) In a parliamentary question of 2008, MEP Hiltrud Breyer raised the issue of the public financing of Verkehrsholding Saarland (‘vh Saar’), of Saarbrücken Airport and of the discounts granted to the airlines using the airport (3). The parliamentary question was answered by Commissioner Tajani on 5 September 2008. In addition, the question was registered as a complaint under CP 171/2008.

(2) The parliamentary question alleged that vh Saar had received EUR 11 million from Saarland’s State budget in the form of a capital increase. It was alleged that these funds were used to cover losses of the airport’s operating company, which belonged to a subsidiary of vh Saar. The airport operator, its parent company and vh Saar were claimed to be connected via profit and loss transfer agreements (‘P&L agreements’). This construction allegedly served the purpose of covertly and permanently subsidising the unprofitable airport.

(3) The Commission requested further information from Germany on 31 July 2008, 24 September 2010, 24 March 2011, and 8 August 2011. Germany responded to these requests and provided further information on 4 November 2008, 17 January 2011, 14 June 2011, and 7 October 2011.

(4) By letter dated 22 February 2012, the Commission informed Germany that it had decided to initiate the formal investigation procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union in respect of the aid.

(5) The Commission decision to initiate the procedure (‘opening decision’) was published in the Official Journal of the European Union (4). The Commission invited interested parties to submit their comments on the alleged aid.

(6) The Commission received comments from one interested party — Air Berlin — on 20 August 2012. It forwarded them to Germany on 1 October 2012, which was given the opportunity to react within one month; Germany’s comments were received by letter dated 29 October 2012. Private individuals sent their comments within the framework of the procedure, stating that the public financing granted to the airport constituted State aid.

(7) Following the opening of the formal investigation procedure the Commission requested further information on 24 February 2012, 23 April 2012, 16 October 2012, 26 November 2013 and 14 March 2014. Germany responded to these requests and submitted further information on 17 April 2012, 4 May 2012, 14 December 2012, 14 January 2014 and 3 April 2014.

(8) On 24 February 2014 the Commission informed Germany that the 2014 Aviation Guidelines (5) were adopted on 20 February 2014 and invited Germany to submit comments within 20 working days as of the publication of the new Aviation Guidelines in the Official Journal. Germany replied on 6 May 2014.

(9) The 2014 Aviation Guidelines were published in the Official Journal of the European Union on 4 April 2014 (6). They replaced the 2005 Aviation Guidelines (7).

(10) On 15 April 2014 a notice was published in the Official Journal of the European Union inviting Member States and interested parties to submit comments on the application of the 2014 Aviation Guidelines in this case within 20 working days of the publication date of this notice (8). Air Berlin submitted comments on 5 May 2014.

(11) On 17 June 2014, Germany informed the Commission that it exceptionally accepts that this decision is adopted in the English language.

2. DESCRIPTION OF THE MEASURES AND GROUNDS FOR INITIATING THE PROCEDURE

2.1. BACKGROUND OF THE INVESTIGATION

2.1.1. HISTORY AND DEVELOPMENT OF SAARBRÜCKEN AIRPORT

(12) Saarbrücken Airport is the airport of the capital of the Land Saarland, Saarbrücken. According to publicly accessible information, the airport was inaugurated in 1928 and operated until 1939, when it was closed after the outbreak of the war. The airport resumed operations in 1966, when a modern runway suitable for medium range aeroplanes was constructed. In 1999 the construction of a new terminal commenced, requiring an investment of approximately EUR 11,8 million. The new terminal, which according to publicly available information was designed for up to 8 00 000 passengers per year (‘pax’) was opened in May 2005. However, due to limitations arising from the security infrastructure, Germany submits that the airport’s actual capacity is only 7 00 000 pax.

(13) Tables 1 and 2 indicate the development of the airport in terms of passenger numbers and aircraft movements. Air freight is of no great significance at Saarbrücken Airport. Table 1 Passenger numbers 1998–2012 (9) Year Commercial Scheduled Commercial Charter Comm. Total Non–Comm. Total 1998 1 26 231 2 93 449 4 19 680 10 070 4 29 750 1999 1 34 228 3 08 634 4 42 862 3 810 4 46 672 2000 1 49 693 3 32 902 4 82 595 1 971 4 84 566 2001 1 41 676 3 38 354 4 80 030 831 4 80 861 2002 1 44 542 3 16 757 4 61 299 946 4 62 245 2003 1 35 100 3 23 083 4 58 183 1 502 4 59 685 2004 1 28 498 3 31 355 4 59 853 1 560 4 61 413 2005 1 36 178 3 50 052 4 86 230 1 256 4 87 486 2006 1 25 188 2 95 033 4 20 221 1 422 4 21 643 2007 1 76 690 1 73 263 3 49 953 639 3 50 592 2008 3 60 694 1 57 226 5 17 920 368 5 18 288 2009 3 35 684 1 34 249 4 69 933 214 4 70 147 2010 3 31 780 1 59 469 4 91 249 166 4 91 415 2011 3 68 314 84 000 4 52 314 1 338 4 53 652 2012 3 64 076 61 353 4 25 429 414 4 25 843 Table 2 Aircraft movements (10) Year Commercial Scheduled Commercial Charter Comm. Total Non–Comm. Total 1998 7 240 6 021 13 261 7 558 20 819 1999 7 491 7 192 14 683 7 280 21 963 2000 7 970 8 171 16 141 4 972 21 113 2001 6 740 4 624 11 364 3 582 14 946 2002 7 979 3 957 11 936 3 228 15 164 2003 7 256 4 377 11 633 3 378 15 011 2004 6 531 4 032 10 563 3 201 13 764 2005 6 291 4 453 10 744 3 458 14 202 2006 6 469 4 539 10 980 4 047 15 055 2007 7 046 4 011 11 057 3 464 14 521 2008 11 173 3 475 14 648 2 596 17 244 2009 9 686 2 912 12 598 3 093 15 691 2010 8 775 4 983 13 758 2 487 16 245 2011 7 307 4 641 11 948 2 535 14 483 2012 6 567 3 398 9 965 2 359 12 324

(14) The most significant developments for the airport were the departure of Hapag Lloyd in 2006 on the one hand and the establishment of Air Berlin in 2007 on the other. The charter airline Hapag Lloyd (now ‘TUIFly’) had, until it decided to relocate its operations to the nearby located Zweibrücken Airport, contributed more than 1 90 000 passengers to Saarbrücken’s total traffic. The establishment of Air Berlin, on the other hand, signalled a significant increase in the scheduled flights traffic at Saarbrücken. In consequence, while until 2006 charter traffic dominated operations at Saarbrücken Airport, scheduled flights traffic is since 2007 responsible for the majority of passengers at Saarbrücken.

(15) As regards the future, Germany submitted that according to the most recent air traffic projection (August 2010), passenger numbers can be expected to rise to […] (11) passengers in the year 2020.

2.1.2. GEOGRAPHICAL LOCATION AND CATCHMENT AREA

(16) Saarbrücken Airport is located approximately 10 km to the south–east of the City of Saarbrücken. The nearest other airports are (12): — Zweibrücken Airport (approximately 39 km, or approximately 29 minutes by car), — Metz–Nancy–Lorraine Airport (approximately 96 km, or approximately 61 minutes by car), — Luxembourg Airport (approximately 121 km, or approximately 77 minutes by car), — Frankfurt–Hahn Airport (approximately 128 km, or approximately 85 minutes by car), — Strasbourg Airport (approximately 140 km, or approximately 91 minutes by car), — Frankfurt (Main) Airport (approximately 163 km, or approximately 92 minutes by car), — Karlsruhe/Baden–Baden Airport (approximately 161 km, or approximately 104 minutes by car).

(17) Germany submitted that the large majority of passengers are from the region. It is asserted that 71 % of passengers are from Saarland, 15 % from the western part of Rhineland–Palatinate (including the Zweibrücken region) and around 14 % stem from France, Luxembourg and the Trier region. The projected increase of the passenger numbers is also expected to result from an increase of demand from the Saarland region.

2.1.3. LEGAL AND ECONOMIC SET–UP OF SAARBRÜCKEN AIRPORT

(18) In 1997, the Flughafen Saarbrücken GmbH, previously owner and operator of the Airport, was split up into two separate companies: the Flughafen Saarbrücken Betriebsgesellschaft mbH (‘FSBG’) was charged with operating the airport, while the Flughafen Saarbrücken Besitzgesellschaft mbH (‘FSBesitzG’) owned the airport and was in charge of maintaining the infrastructure. In return for operating and commercially exploiting the airport, the FSBG had to pay a leasing payment to FSBesitzG.

(19) Until 30 June 2007, the FSBG was 48 % owned by the FSBesitzG, 51 % by the Fraport AG (operator of Frankfurt (Main) Airport) and 1 % by the City of Saarbrücken. The FSBesitzG was, in turn, 99,9 % owned by vh Saar and 0,1 % by the Land Saarland. The vh Saar was at all times owned directly by the Land Saarland.

(20) On 30 June 2007, the Fraport AG sold its share in the FSBG to the FSBesitzG, who subsequently owned 99 % of the FSBG. At the beginning of 2008, the two companies were merged to re–establish the Flughafen Saarbrücken GmbH (hereafter: ‘FSG’), thereby essentially recreating the situation as it existed before the partial privatisation to Fraport AG in 1997. Since 2008 and until now, FSG is 100 % owned by vh Saar.

(21) vh Saar was established by the Saarland Ministry for Economy and Finance in 1996. The company’s purpose is ‘the coordination of the activities incurred with the construction, extension and operation of public airports and ports in the Saarland’. The conclusion of a contract of domination with FSG was foreseen in the statutes of vh Saar. The board of directors and the supervisory board are nominated by the Saarland State Government as the sole shareholder. Apart from the FSG, vh Saar is also the owner of Hafenbetriebe Saarland GmbH (hereafter: ‘HSG’), owner and operator of various ports in Saarland.

(22) FSBesitzG was established on 4 July 1997 as the legal successor of the original FSG. Its purpose was the ‘construction, maintenance and lease of the Airport and the shareholding in the [FSBG]’. The supervisory board was appointed by the Saarland Government, and its chairman chosen by the Saarland Ministry responsible for the aviation sector. The company’s management was bound to instructions received by the Ministry of Economy and Finance as regards the exercise of its voting rights in the shareholder assembly of FSBG.

(23) FSBG was established on 4 July 1997. Its purpose was the operation of Saarbrücken Airport. The management was appointed by a 75 % majority of the shareholder assembly. The supervisory board consisted of 10 members, five of which were appointed by Fraport AG and FSBesitzG, respectively. Since 2006, the board has consisted of six members, two of which were appointed by Fraport AG and four by FSBesitzG.

(24) FSG was established on 30 August 2008. Its purpose is the operation of Saarbrücken Airport for civil aviation and connected ancillary businesses. The members of the board of directors and the supervisory board are nominated by the Saarland State Government. The chairman of the supervisory board is appointed by the Ministry responsible for aviation.

2.2. MEASURES UNDER INVESTIGATION AND REASONS FOR OPENING THE FORMAL INVESTIGATION PROCEDURE

(25) The Commission investigated several measures involving Saarbrücken Airport. The Commission assessed whether those measures constituted State aid, and whether any such State aid could be considered compatible with the internal market.

(26) The following measures were investigated as potentially constituting State aid to vh Saar, FSG, and FSBesitzG: (a) the financing of vh Saar, FSG, and FSBesitzG by the Saarland; (b) the transfer of various plots of land to FSBesitzG by the Saarland; (c) guarantees on loans granted by the Saarland to the benefit of vh Saar and FSBesitzG.

(27) The leasing contract between FSBesitzG and FSBG was investigated as potentially constituting State aid to FSBG.

(28) The following measures were investigated as potentially constituting State aid to various airlines operating at Saarbrücken Airport: (a) the discounts introduced in 2007 for airlines taking up operations at Saarbrücken for the first time, serving new routes, or increasing their passenger numbers; (b) the contract on start–up aid between FSBesitzG and Cirrus Airlines; (c) the marketing agreement between FSG and Air Berlin.

2.2.1. FINANCING OF VH SAAR, FSG, AND FSBESITZG

Detailed description of the measure

(29) The vh Saar is financially connected to its subsidiary — until 30 August 2008 the FSBesitzG and since then the FSG — via a P&L agreement, the consequence being that the vh Saar covered all losses incurred by these companies. At the same time, vh Saar received profits generated by its second subsidiary — HSG — and direct capital injections from its sole shareholder, the Land Saarland. These funds ensured that the vh Saar always had the means to cover the FSBesitzG/FSG losses. The P&L agreement was originally concluded between vh Saar and FSBesitzG’s legal predecessor, the FSG, on 1 January 1997. After the re–establishment of the FSG, it succeeded the FSBesitzG in the contract.

(30) The FSBG, legally separate from the FSBesitzG until 2008, regularly earned a profit until 2006. The profits were either distributed to the shareholders (until 30 June 2007, FSBesitzG and Fraport AG), in which case they were administered as revenue in the shareholders’ balance sheets in the following year, or reinvested. In 2007, after FSBesitzG had become the sole shareholder of FSBG, the significant annual loss was covered by a corresponding capital injection by FSBesitzG. FSBesitzG and FSBG merged at the beginning of 2008, with the result that the combined loss would now be covered by vh Saar.

(31) Since the year 2000, the losses of the FSBesitzG/FSG and corresponding capital injections by vh Saar, financed from capital injections received from the Saarland and other revenues, developed as follows: Table 3 Annual losses FSBesitzG/FSG in EUR Year FSBesitzG FSG 2000 – 2 1 68 916 2001 – 2 7 85 473 2002 – 4 1 64 538 2003 – 3 0 99 253 2004 – 2 7 70 680 2005 – 3 9 17 320 2006 – 8 4 00 703 2007 – 8 1 71 099 2008 – 4 5 48 264 2009 – 9 3 06 512 2010 – 8 8 05 707 2011 – 1 0 0 65 522 2012 – 1 8 4 49 926 Total (2000-2009) – 4 9 3 32 758 Total (2000-2012) – 8 6 6 53 913

(32) FSG’s estimated loss for the year 2013 amounts to EUR 9 4 27 000.

(33) During 2000–2012, the EBITDA of FSBesitzG/FSG developed as follows: Table 4 EBITDA development in EUR (13) Year EBITDA 2000 (14) 9 37 000 2001 (14) – 1 56 000 2002 (14) – 8 32 000 2003 (14) 56 000 2004 (14) 7 04 000 2005 (14) – 7 32 000 2006 (14) – 5 3 07 000 2007 (14) – 4 3 92 000 2008 – 1 8 40 000 2009 – 5 2 37 000 2010 – 5 2 37 000 2011 – 3 5 28 000 2012 – 4 9 37 700 Total – 3 0 5 01 700

(34) For the year 2013, FSG’s EBITDA is estimated to be negative again, amounting to EUR – 5 1 44 000.

(35) Germany submitted that over the period 2000–2009, the majority of the costs can be traced back to investment in and maintenance of infrastructure, interest payments on loans taken up in order to finance infrastructure investments, and expenditure for safety/security purposes. The total costs for these activities are asserted to amount to approximately […]. These costs are said to be unrelated to the provision of airport services, but stem exclusively from the creation and operation of infrastructure. Table 5 Infrastructure and Safety/Security Costs 2000–2009 1 Other Infrastructure Investment […] 2 Other Infrastructure Maintenance […] Other Infrastructure Total (1 and 2) […] 3 Total Costs of Capital (15) […] 4 Safety/Security Infrastructure Investment […] 5 Safety/Security Other […] Safety/Security Total (4 and 5) […] Total (1 to 5) […]

(36) Germany (16) specified that in the period 2000–2009 the following investment and maintenance activities were conducted:

(i) Construction of a new terminal with auxiliary facilities in 2000 (net costs of around […]).

(37) The annual capacity of the old terminal was 3 90 000 passengers per year (17). It was for the first time exceeded in 1996. In that year the annual passenger number at Saarbrücken Airport reached 3 95 000 passengers and continued growing until 2000 when it reached 4 84 566 passengers. According to Germany, the old terminal was frequently congested in particular during the main travel time months (summer period), which caused long waiting times, overcrowded passengers areas or passengers waiting outside the terminal. In addition the old terminal did not comply anymore with the security requirements. The new terminal is equipped with a new security system. The old terminal serves now as a waiting and gate area.

(ii) Implementing of the runway and safety area in 2009–2010 (net costs incl. electro works around […])

(38) In 2009–2010 the runway and safety area was implemented, which comprised a number of construction and security measures which were taken to increase the security of the airport infrastructure and make them compliant with the applicable security requirements. In particular the location of the runway lights was adjusted to give better signals to the pilots, the runway guard lights were installed and the superstructure of the runway curve was adjusted to the needs of modern aircrafts.

(iii) Maintenance of the runway in 2009 (net costs of around […])

(39) Also in 2009–2010 the runway was maintained to avoid damage to the aircraft operating at the airport.

Reasons for opening the formal investigation procedure

Existence of aid

(40) The opening decision first observed that the financing of vh Saar by the Saarland and of FSBesitzG/FSG by vh Saar involved a transfer of State resources, either directly or because vh Saar was fully controlled by the Saarland and its actions imputable thereto. The activities of FSBesitzG, FSGB, and FSG as well as possibly those of vh Saar itself also amounted to economic activities.

(41) The opening decision explained that on the basis of the available information, it appeared that vh Saar did not itself incur an advantage, as it apparently passed all funds received from the Saarland on to FSBesitzG/FSG. Germany was asked to provide further information on whether vh Saar retained any of the State funds received for another purpose or activity. As regards FSBesitzG/FSG, the opening decision observed that the funds received from vh Saar lowered the costs that the airport would have normally had to bear, thereby constituting an economic advantage.

(42) The opening decision next assessed whether the financing could be characterised as compensation for a service of general economic interest (SGEI) following the Altmark jurisprudence. It was observed that on the basis of the available information, the fourth Altmark criterion did not seem to be fulfilled. More particularly, it was observed that the operation of the airport was never tendered out, nor was the financing based on an analysis of the costs that a typical undertaking, well–run and adequately provided with the necessary means, would have incurred. As the Altmark criteria are cumulative, this finding was sufficient for the preliminary conclusion that the financing could not be considered as an SGEI compensation pursuant to that jurisprudence.

(43) On the basis of the available information, it also did not appear that the financing could be justified as being in line with the behaviour of a rational market economy operator (MEO). In particular, it was observed that Germany had not presented a business plan or any other documentation showing that a profit could be expected. On the contrary, the increasing annual losses rather indicated that the airport would not be viable without financial support from the Saarland via vh Saar, which might indicate the airport was an undertaking in financial difficulties. The Commission therefore took the preliminary position that the financing of the airport by vh Saar did not comply with the MEO test and asked Germany to comment on the financial situation of the airport.

(44) It was finally noted that the financing was selective, that the measure distorted or threatened to distort competition, and that based on its close proximity to a number of airports in other Member States, there seemed to be an effect on intra–Union trade. The Commission therefore reached the preliminary conclusion that the financing indeed amounted to State aid pursuant to Article 107(1) of the Treaty.

Compatibility

(45) The opening decision first discussed whether the financing of the airport could be qualified as compatible aid under the 2005 SGEI Decision (18). It observed that no information was made available demonstrating that without the airport the region in which it is located would be so isolated that its social and economic development would be harmed. At it appears that the catchment area of Saarbrücken Airport could also be served by other airports in the region, the Commission reached the preliminary conclusion that defining the operation of Saarbrücken Airport as a SGEI under the 2005 SGEI Decision constituted a manifest error.

(46) The opening decision observed further that, in any event, the airport was not properly entrusted with the SGEI of providing airport services, that it was not clear that the financing was limited to the airport’s core activities, and that the compensation parameters were not defined in advance. Accordingly, the Commission reached the preliminary conclusion that the financing did not fulfil the conditions of the 2005 SGEI Decision.

(47) It was also analysed whether the conditions laid down in Section 4.2 of the 2005 Aviation Guidelines were met. These conditions are similar to those contained in the 2005 SGEI Decision. The lack of a proper entrustment act and the lack of provisions limiting the financing to the airport’s core activities, inter alia, led to the preliminary conclusion that the financing could not be found compatible pursuant to Section 4.2 of the 2005 Aviation Guidelines.

(48) The opening decision further analysed whether the financing could be compatible pursuant to Section 4.1 of the 2005 Aviation Guidelines. It observed that the P&L agreement did not specifically serve the purpose of financing infrastructure investments, but simply covered all losses stemming from the activities of the airport. It further noted that such an instrument could hardly have an incentive effect in terms of investments and observed that Germany predicted only a positive EBITDA for 2020, but not a positive overall result. Finally, it was considered that the operation of the airport appeared to negatively affect the operation of the nearby airport in Zweibrücken. The Commission therefore expressed its doubts as regards the compatibility of the financing pursuant to Section 4.1 of the 2005 Aviation Guidelines.

(49) The opening decision finally addressed on the possible compatibility of the financing pursuant to the Rescue & Restructuring Guidelines (19). Germany was asked to clarify whether the airport could be considered an undertaking in difficulties and, if so, whether measures in accordance with the Rescue & Restructuring Guidelines had been taken.

(50) In conclusion, the Commission adopted the preliminary position that the financing of vh Saar, FSBesitzG, and FSG by means of direct grants to vh Saar by the Saarland and capital injections by vh Saar into FSBesitzG/FSG constituted State aid. It also expressed its doubts, based on the information available, regarding the compatibility of this aid with the internal market.

2.2.2. THE TRANSFER OF VARIOUS PLOTS OF LAND TO FSBESITZG

Detailed description of the measure

(51) Since 1998, Germany transferred various plots of land to the airport, which according to the submission of Germany had a total value of EUR 2 40 000. Of the various plots of land, only three were transferred after the year 2000. According to Germany, these plots of land had a combined value of […]. In the years 2002 and 2003, two plots of lands were transferred […] and in the year 2004, the airport bought one plot for a price of […].

Reasons for opening the formal investigation procedure

Existence of aid

(52) The opening decision first observed that the transfer of State–owned land amounted to a transfer of State resources. Because the operation and construction of airport infrastructure must be considered as a task falling within the ambit of State aid control only from the date of the judgment in Aéroports de Paris (12 December 2000), only transfers that took place after that date were relevant for a State aid analysis, Germany was asked to clarify which plots of land were transferred after 2000 and how much they were worth. The Commission observed further that the transfer did not comply with the MEO test, was selective, and, for the same reasons mentioned as regards the general financing, distorted competition and affected intra–Union trade.

(53) Germany argued that the transferred land was at least partially needed for safety or security reasons (such as construction of security fences), with the consequence that these measures could not constitute State aid for the purposes of Article 107(1) of the Treaty. The Commission asked Germany to clarify exactly which measures were directly related to air traffic safety and the exercise of sovereign prerogatives, and expressed its doubts that the construction of security fences merely served the purpose of ensuring secure airport operations, thereby falling also within the remit of costs necessarily linked to the economic activity of operating an airport. Germany was further asked to explain whether the public financing of activities falling within the public policy remit is regulated in the same way with regard to all German airports, or whether some airports had to bear costs themselves that were covered by the State for other airports.

(54) Accordingly, the opening decision reached the preliminary conclusion that the transfer of land constituted State aid for the purposes of Article 107(1) of the Treaty.

Compatibility

(55) The opening decision recalled that it is the Member States’ responsibility to invoke possible grounds of compatibility and to demonstrate that the relevant conditions are fulfilled. It was noted that since Germany did not believe that the transfer of land in question amounted to State aid, they had not presented any arguments regarding compatibility. The Commission asked Germany to explain whether the transfer of land could be compatible pursuant to the Rescue & Restructuring Guidelines. The Commission further stated that, based on the information available at the time of adopting the opening decision, it had doubts about the compatibility of the measure with the internal market.

2.2.3. GUARANTEES ON LOANS TO THE BENEFIT OF VH SAAR AND FSBESITZG

Detailed description of the measure

(56) The Land Saarland granted guarantees to FSBesitzG on three occasions (two guarantees in the year 1998, one in the year 1999), each time without receiving any remuneration. Additionally, the Saarland issued two letters of comfort as security for two loans taken up by vh Saar. vh Saar transferred these loans to FSBesitzG. Table 6 Guarantees and Letters of Comfort Year Loan Amount (EUR) Duration of Loan Beneficiary 1998 […] 30 Dec. 2017 FSBesitzG […] 1 Oct. 2017 FSBesitzG 1999 1 1 4 53 000 — FSBesitzG 2005 3 7 00 000 31 Jan. 2021 vh Saar 2006 1 0 0 00 000 31 Aug. 2039 vh Saar

Reasons for opening the formal investigation procedure

Existence of aid

(57) The opening decision noted that, for the same reasons as mentioned in recital 52, only guarantees granted after the year 2000 were relevant for the State aid assessment. Due to the information available at the time, the Commission assumed that the guarantee covering a loan amounting to EUR 1 1 4 53 000 had been granted after 2000. It explained that since the guarantee for this loan, as well as the comfort letter issued for the 2005 and 2006 loans taken out by vh Saar, covered 100 % of the loans and that since the Saarland had not received any remuneration for the guarantee/comfort letters, they appeared to constitute State aid pursuant to the Guarantee Notice (20). Regarding selectivity, distortion of competition and effect on trade, the same considerations applied as those which were outlined with respect to the FSBesitzG/FSG’s general financing by vh Saar.

Compatibility

(58) The opening decision assumed that the guarantee for the loan amounting to EUR 1 1 4 53 000 was granted after 2000. Noting that the underlying loan served to finance the new terminal building, the opening decision assessed the compatibility of the guarantee pursuant to Section 4.1 of the 2005 Aviation Guidelines. It reached the preliminary conclusion that it was doubtful whether the new terminal served a clearly defined objective of public interest (since it was not clear that other nearby airports could not serve Saarbrücken Airport’s catchment area as well), whether the terminal was necessary for the functioning of the airport, whether it had satisfactory medium–term prospects (since Germany had not submitted any data on when the airport would become profitable), whether all users had equal and non–discriminatory access to the infrastructure (since it was not clear that all received the same advantages as Cirrus and Air Berlin), and finally whether it affected the development of trade to an extent contrary to the Union interest.

(59) As regards the 2005 and 2006 letters of comfort, the opening decision observed that Germany had not explained what purpose the underlying loans served. For this reason, and as Germany had not submitted arguments on the compatibility of these measures, the Commission reached the preliminary conclusion that the State aid involved in these measures was incompatible with the internal market.

2.2.4. THE LEASE CONTRACT BETWEEN FSBESITZG AND FSBG

Detailed description of the measure

(60) After the original FSG was split into FSBesitzG and FSBG in 1997, the FSBG leased the airport infrastructure from FSBesitzG. Under the lease contract of 7 July 1997, FSBG had to pay a fixed annual amount of […] per year plus turnover tax. On 3 August 2006, FSBG and FSBesitzG signed a new lease contract, retroactively applicable as from 1 July 2006.

(61) Under the 2006 contract, the fixed annual lease payment was set at […] per year. In addition, the FSBG had to transfer a certain percentage of its annual profit […].

(62) Based on these contracts, FSBG paid the following amounts as rent for the airport infrastructure to FSBesitzG: Table 7 Lease Payments made by FSBG Year Lease Payment 2000 […] 2001 […] 2002 […] 2003 […] 2004 […] 2005 […] 2006 […] 2007 […]

(63) As FSBG and FSBesitzG merged at the beginning of 2008, no further leasing payments were due after that date.

Reasons for opening the formal investigation procedure

Existence of aid

(64) The opening decision first observed that the modified lease contract was concluded between FSBesitzG and FSBG, thus without direct involvement of any public authorities. However, it noted that FSBesitzG was owned entirely by public authorities (0,1 % belonged to the Saarland directly, 99,9 % belonged to vh Saar, which itself belonged 100 % to the Saarland), making it a public undertaking. It further noted that due to the various control mechanisms, the Saarland had comprehensive control over the FSBesitzG and reached the preliminary conclusion that, if the lease contract would be found to have granted FSBG an advantage in the form of below–market–price leasing rates, this advantage involved a transfer of State resources and was imputable to the State.

(65) The opening decision then outlined that from 2000 onwards, FSBG had to be considered as engaging in economic activities and therefore constituting an undertaking. At the time of the opening decision, the Commission had not received any information on the lease contracts before 2000 and whether the lease contract that existed until 2006 had been amended after 2000. The contract that was in force until 2006 could therefore have constituted existing aid. Germany was asked to provide further information on this question.

(66) As regards the question of whether the lease contract granted FSBG an advantage, the opening decision outlined the Commission’s doubts as to whether the lease payments made by FSBG were in line with market conditions. It accordingly asked Germany for comprehensive information on the financial relations between FSBesitzG and FSBG as well as on the determination of the terms of the lease contract and the economic rationale underpinning them.

(67) On the basis of these considerations, the opening decision reached the preliminary conclusion that the lease payments made by FSBG contained an element of State aid.

Compatibility

(68) The opening decision points out that it reached the preliminary conclusion that the lease payments contain State aid in the sense of operating aid, as the below–market–price payments reduced the operating costs the FSBG had to bear. The opening decision pointed out that such operating aid is, in principle, not compatible with the internal market and requested Germany to clarify whether this aid could fall under the Rescue & Restructuring Guidelines or to present other arguments on compatibility.

2.2.5. DISCOUNTS FOR AIRLINES

Detailed description of the measure

(69) Until 2007, the applicable schedule of airport charges in Saarbrücken did not envisage any discounts for airlines. On 1 April 2007, FSBG introduced a new schedule, which provided for a series of discounts available to airlines that fulfilled certain conditions. This schedule was also adopted by FSBesitzG/FSG after the merger of the two companies.

(70) The 2007 schedule introduced three types of discounts. The first two could not be cumulated, while the third could be additional to any other discounts received. (a) Discounts for new airlines: for airlines operating from Saarbrücken for the first time, a reduction of aircraft movement, start/landing, and passenger charges by 50 % in the first year, 30 % in the second year, and 20 % in the third year, were offered. (b) Discounts for new destinations: discounts of the same magnitude and on the same charges were offered for airlines serving new destinations, that is to say destinations that had not been served in at least the previous 12 months. (c) Reimbursement for increase of passenger numbers: airlines that transported between 60 000-1 00 000 pax, or more than 1 00 000 pax during one calendar year, received a reimbursement of 5 % or 10 % respectively of the passenger charges they paid during that year.

Reasons for opening the formal investigation procedure

Existence of aid

(71) The opening decision assumed that the new schedule of 1 April 2007 was adopted by FSBesitzG. On this basis, the opening decision proceeded to recall that due to the comprehensive control that the public authorities enjoyed over FSBesitzG, the introduction of this new schedule was imputable to the State. To the extent that the schedule provided for below–market–price charges, the schedule therefore constituted a transfer of State resources that was imputable to the State.

(72) Germany submitted that the discounts were motivated by economic considerations and complied with the MEO test. The opening decision stressed, however, that Germany had so far not provided sufficient information to allow the Commission to fully assess this claim. Germany was therefore asked to provide comprehensive information on the costs and revenues of the airport, in particular those related to commercial passenger aviation. In addition, the Commission sought clarification on whether the schedule of charges was applied without discrimination between airlines.

(73) The opening decision concluded by expressing that it was doubtful whether discounts in the schedule of 1 April 2007 could be justified on the basis of the MEO test and that it could therefore not be excluded that the airlines in question received an advantage. As the discounts were also liable to distort competition and effect trade between Member States, the Commission reached the preliminary conclusion that the discounts constituted State aid.

Compatibility

(74) The opening decision assessed whether the discounts could qualify as compatible start–up aid pursuant to Section 5 of the 2005 Aviation Guidelines. In its assessment, the Commission expressed doubts as to whether the various conditions for the compatibility of start–up aid were fulfilled.

(75) In particular, the opening decision observed that: (a) It was doubtful whether the discount for an increase in passenger numbers fulfilled the condition of point (c) of point 79 of the 2005 Aviation Guidelines since it did not require a new route or frequency. (b) It was doubtful whether the discount for an increase in passenger numbers fulfilled the condition of point (d) of point 79 of the 2005 Aviation Guidelines since it was not degressive and of limited duration. (c) It was doubtful whether all the discounts fulfilled the condition of point (f) of point 79 of the 2005 Aviation Guidelines since there was no obligation on airlines to repay any of the discounts received if they operated from Saarbrücken for at least three years. (d) It was doubtful whether the discounts for new routes and new airlines fulfilled the condition of point (g) of point 79 of the 2005 Aviation Guidelines since they were not dependent on passenger numbers. (e) It was doubtful whether at least the discounts for an increase in passengers fulfilled the condition of point (i) of point 79 of the 2005 Aviation Guidelines since it did not include the requirement of a prior business plan. (f) It was doubtful whether all the discounts fulfilled the condition of point (j) of point 79 of the 2005 Aviation Guidelines since none of the required information appeared to have been published. (g) It was doubtful whether all the discounts fulfilled the condition of point 80 of the 2005 Aviation Guidelines since it was not clear whether they could be cumulated and since it appeared that at least the discount for increased passenger numbers could be combined with the two others.

(76) As the cumulative conditions for compatible start–up aid did not appear to be fulfilled and since no other compatibility grounds were apparent, the Commission reached the preliminary conclusion that the discounts constituted incompatible State aid.

2.2.6. START–UP AID TO CIRRUS AIRLINES

Detailed description of the measure

(77) On 27 January 2005, FSBesitzG signed a start–up contract with Cirrus Airlines Luftfahrtgesellschaft mbH (‘Cirrus’) with a duration of one year. The purpose of the contract was the increase of passenger numbers for the route to […]. The contract stated that an increase of passengers would only possible if ticket prices were reduced considerably so that Cirrus became attractive for passengers. It explained further that this project would incur high losses in the start–up phase. Therefore the airport was ready to support the project with a start–up financing.

(78) The start of flight operations was set for 29 March 2005. The contract was based on a business plan which contained the passenger numbers and average net yields. The contract determined also the type of aircraft to be used.

(79) The contract obliged Cirrus to provide scheduled flights between Saarbrücken and […] with a frequency of […] flights on […] days per week, […] flights […]. The contract stated explicitly that Cirrus […]. The contract was subsequently extended and modified various times and finally expired on 31 December 2006.

(80) The remuneration due pursuant to the contract was calculated in accordance with the following formula: […] Over the course of the duration of the contract, the annual amount of remuneration paid out to Cirrus by FSBesitzG was as follows: Table 8 Payments to Cirrus Airlines in EUR Year Net Remuneration Gross Remuneration 2005 […] […] 2006 […] […]

Reasons for opening the formal investigation procedure

Existence of aid

(81) The opening decision first noted that the decision of FSBesitzG involved a transfer of State resources and was imputable to the State. Cirrus was also clearly an undertaking carrying out economic activities. The question was then whether the contract granted Cirrus an advantage that Cirrus could not have otherwise obtained on the market. As Germany had not provided any explanation as to why the contract was concluded, it was asked to clarify whether it believed that in concluding the contract FSBesitzG acted like a rational MEO and, if so, to provide documentation supporting this view.

(82) The opening decision pointed out that, at the time the decision was adopted, the Commission had not received any indication that Germany had compared expected costs and revenues arising from this contract. On this basis, it preliminarily concluded that the contract with Cirrus constituted State aid.

Compatibility

(83) The opening decisions assessed whether the contract with Cirrus could qualify as compatible start–up aid under Section 5 of the 2005 Aviation Guidelines. In its assessment, the Commission expressed doubts as to whether the various conditions for compatible start–up aid were fulfilled.

(84) In particular, the opening decision observed that the contract with Cirrus apparently failed to fulfil the following conditions: (a) point (c) of point 79 of the 2005 Aviation Guidelines, since the Cirrus route between Saarbrücken and […] apparently already existed and no information was provided on new frequencies that could lead to a passenger increase; (b) point (d) of point 79 of the 2005 Aviation Guidelines, since the contract did not appear to be either degressive or truly time–limited, given that it had been extended various times, and because it was not clear whether Cirrus had demonstrated the long–term profitability of the route; (c) point (e) of point 79 of the 2005 Aviation Guidelines, since the contract did not limit the support to additional start–up costs; (d) point (f), first subparagraph of point 79 of the 2005 Aviation Guidelines, since the contract had no fixed end date and did not limit the aid amount by reference to the costs; (e) point (f), third subparagraph of point 79 of the 2005 Aviation Guidelines, since it was doubtful whether the time for which the aid was granted to Cirrus was substantially less than the period during which Cirrus committed to operate from Saarbrücken; (f) point (g) of point 79 of the 2005 Aviation Guidelines, since the aid appeared to be linked to the development of the number of passengers transported; (g) point (h) of point 79 of the 2005 Aviation Guidelines, since it was doubtful whether the contract had been published before its conclusion and made available to other airlines as well; (h) point (i) of point 79 of the 2005 Aviation Guidelines, since it was doubtful whether FSBetriebG had access to a business plan of Cirrus and whether the airport had investigated the effects of the aid on competing routes; (i) point (j) of point 79 of the 2005 Aviation Guidelines, since the required list of subsidised routes had apparently not been published; (j) point (k) of point 79 of the 2005 Aviation Guidelines, since it was doubtful whether Germany had put in place the required appeal procedure; (k) point 80 of the 2005 Aviation Guidelines, since it appeared that Cirrus had combined the aid pursuant to the contracts with that pursuant to the 2007 schedule of charges.

(85) As the cumulative conditions for compatible start–up aid did not appear to be fulfilled and since no other compatibility grounds were apparent, the Commission reached the preliminary conclusion that the contract with Cirrus constituted incompatible State aid.

2.2.7. MARKETING AGREEMENT WITH AIR BERLIN

Detailed description of the measure

(86) On 6 April 2011, FSG signed a Marketing Agreement with Air Berlin PLC & Co. Luftverkehrs KG (‘Air Berlin’), with a duration until 2 May 2014. The Agreement obliged Air Berlin to deliver marketing and publicity services to FSG. The agreement stated: […] FSG expected that the increased frequencies would trigger higher revenues from aviation and non–aviation activities. Additionally, Air Berlin was obliged to promote the two connections from and to Saarbrücken (information of the frequencies increase in the press, by emails, briefings of travel agencies, magazines, print media, at the check–in, on board, on the radio, etc.). FSG remunerated Air Berlin for the marketing service with a total of [EUR 8 00 000–EUR 1 7 00 000].

Reasons for opening the formal investigation procedure

Existence of aid

(87) Similar to the Cirrus contract, the marketing agreement concluded with Air Berlin also raised the question whether that agreement was in line with market conditions. All other conditions, such as the imputable transfer of State resources and selectivity were assumed to be fulfilled.

(88) Germany had submitted that it had conducted a cost–benefit analysis which demonstrated that the contract was profitable for the airport in the long term. It had not, however, provided that analysis, which prevented the Commission from assessing how the airport calculated the expected costs and revenues arising from the contract. Noting further that the only advantage accruing to the airport from the contract appeared to be the expected increase in passengers, the contract itself seemed to be nothing more than an additional discount on the airport charges, which were even cumulated with the discounts already available under the 2007 schedule of charges.

(89) On the basis of these considerations, the opening decision reached the preliminary conclusion that the marketing agreement with Air Berlin granted the latter a selective advantage. As all the other elements of State aid were also preliminarily found to be present, the Commission reached the preliminary conclusion that this contract contained an element of State aid.

Compatibility

(90) The opening decision assessed whether the marketing agreement could qualify as compatible start–up aid pursuant to Section 5 of the 2005 Aviation Guidelines. In its assessment, the Commission expressed doubts as to whether the various conditions for compatible start–up aid were fulfilled.

(91) In particular, the opening decision observed that the agreement with Air Berlin apparently failed to fulfil the following conditions: (a) point (d) of point 79 of the 2005 Aviation Guidelines, since it was unclear whether Air Berlin had demonstrated the long–term profitability of the route; (b) point (e) of point 79 of the 2005 Aviation Guidelines, since the contract did not limit the support to additional start–up costs; (c) point (f), first subparagraph of point 79 of the 2005 Aviation Guidelines, since the contract did not limit the aid amount by reference to the costs; (d) point (f), third subparagraph of point 79 of the 2005 Aviation Guidelines, since it was doubtful whether the time for which the aid was granted to Air Berlin was substantially less than the period during which Air Berlin committed to operate from Saarbrücken; (e) point (g) of point 79 of the 2005 Aviation Guidelines, since the aid was unconnected to the actual development of passenger numbers; (f) point (h) of point 79 of the 2005 Aviation Guidelines, since it was doubtful whether the contract had been published before conclusion and made available to other airlines as well; (g) point (i) of point 79 of the 2005 Aviation Guidelines, since it was unclear whether the cost–benefit analysis undertaken by the Airport, which had not been provided to the Commission, complied with the conditions; (h) point (j) of point 79 of the 2005 Aviation Guidelines, since the required list of subsidised routes had apparently not been published; (i) point (k) of point 79 of the 2005 Aviation Guidelines, since it was doubtful whether Germany had put in place the required appeal procedure; (j) point 80 of the 2005 Aviation Guidelines, since it appeared that Air Berlin had combined the aid pursuant to the contracts with that pursuant to the 2007 schedule of charges.

(92) As the cumulative conditions for compatible start–up aid appeared not to be fulfilled and other compatibility grounds were not apparent, the Commission reached the preliminary conclusion that the contract with Air Berlin constituted State aid incompatible with the internal market.

3. COMMENTS RECEIVED FROM GERMANY

3.1. FINANCING OF VH SAAR, FSG, AND FSBESITZG

3.1.1. EXISTENCE OF AID

Undertaking and economic activity

(93) Germany does not dispute that FSBesitzG and FSG carry out economic activities and must be qualified as undertakings for the purpose of Article 107(1) of the Treaty. In so far as FSBesitzG and FSG carry out activities forming part of the sovereign prerogatives of the State, they would not, however, constitute undertakings.

(94) In this context, Germany submitted a table with expenses (both operating and investment expenses) relating to the public policy remit which occurred in the time between 2000 and 2011: Table 9 Costs relating to the public policy remit in EUR (21) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total § 8 LuftSiG Feuerwehr Außenumzäunung/Bestreifungsweg Neues Zugangs–kontrollsystem Container Tor 1 Rollwegbeschilderung Unterbrechungsfreie Stromvers. (Notstrom) Abstellfläche Ost, Bombenbedrohte Flz. Erweiterung S/L–Bahnköpfe, RESA Flughafennavigation Summe p.A.

(95) Germany argues that any financing of airport security measures pursuant to § 8 Luftsicherheitsgesetz, of air traffic control and of air safety measures pursuant to § 27(c)(2) Luftverkehrsgesetz and of the fire brigade falls within the public policy remit. According to Germany, fences around the airport and control footpaths, a container gate, runway signs, emergency electricity, parking spaces for airplanes subject to bomb threats and extension of runway–end safety areas (RESAs) fall under § 8 Luftsicherheitsgesetz and fall therefore also in the public policy remit.

(96) With regard to air traffic control and air safety measures pursuant to § 27(c)(2) Luftverkehrsgesetz, Germany submits that the State does not cover the costs for these measures for all airports, but that the different treatment of different airports is justified and therefore does not involve an advantage. More concretely, § 27(c)(2) distinguishes between certain airports where the financing of these security measures at federal level is regarded as being necessary for reasons of safety and transport policy interests, and other airports where such measures are not regarded as strictly necessary from a federal perspective. The Federal Ministry of Transport has so far recognised the financing of several airports, among those Saarbrücken, as being necessary for reasons of safety and transport policies. This is why financing of regional airports, which would normally have to bear those costs themselves, is not discriminatory. The funding of air traffic control and air safety measures, whether financed directly by the State on the federal level or by the Länder, is part of the public policy remit in all cases.

(97) Furthermore, costs for the fire brigade, for example, are not regulated on the federal level, but fall within the competence of the Länder, which is why the fire brigade is not financed by the State at all airports. The difference in treatment is rooted in historical as well as objective reasons. Mainly, it lies in the nature of the airport business, that smaller regional airports cannot bear the high fixed costs which a fire brigade creates and that, therefore, these will be borne by the respective Land.

(98) As regards vh Saar, Germany submits that the company cannot be considered an undertaking. First, it is asserted that vh Saar does not itself act on the market, but merely holds shares in other companies (namely the airport and HSG). By referring to a judgment of the Court of Justice (22), Germany recalls that merely holding shares in other companies, even if it is a controlling share, is not in itself an economic activity. It is further submitted that an exception from this principle, according to which a holding company does engage in an economic activity where it exercises influence over the companies it owns shares in, does not apply in the case of vh Saar.

Advantage

(99) Germany argues, with respect to vh Saar, that the company did not receive any advantage from State resources, as it passed all funds received from the Saarland on to FSBesitzG/FSG. In consequence, it denies that vh Saar could be considered a beneficiary.

(100) As regards the funds received by FSBesitzG/FSG from vh Saar via the P&L agreement, Germany asserts that no advantage was granted as all financing merely compensated the FSBesitzG/FSG for providing a service of general economic interest (SGEI) in accordance with the Altmark jurisprudence.

First Altmark criterion: entrustment with a SGEI

(101) Germany argues that the operation of the airport, including the construction and maintenance of the necessary infrastructure, constitutes a SGEI. The notion of SGEI is defined by Germany as services rendered on a market, in the reliable and stable provision of which the public has a general interest, which the market itself cannot provide, and which are provided by an entity which has been entrusted with a corresponding obligation.

(102) As regards the operation of Saarbrücken Airport, Germany maintains that it involves offering services on a market. It further argues that, having less than 5 00 000 passengers per year and being thereby below the threshold in the 2005 Aviation Guidelines from which an airport can be expected to be profitable, the airport offers services that the market would otherwise not provide.

(103) According to Germany, Saarbrücken Airport has been entrusted with the obligation to provide these services. That obligation, so Germany states, results from the operating licence and the provision of German aviation law. Germany refers specifically to § 45(1) of the Aviation Licencing Regulation (Luftverkehrszulassungsordnung), which provides that an airport undertaking has to ‘maintain the airport in a safe–to–operate state and to properly operate it’. The obligation to operate involves the duty to make airport services available to aircraft without any discrimination during the regular operating hours, which are themselves laid down in the operating licence and cannot be changed unilaterally by the airport operator. Any violation of the obligation to operate the airport would result in fines of up to EUR 50 000 pursuant to § 108 Luftverkehrszulassungsordnung in connection with § 58(1)(10)(2) Luftverkehrsgesetz. Germany finally submits that, in addition, the Land ensures the proper operation by means of its comprehensive control over the operator.

(104) Commenting on the opening decision’s observation that no formal entrustment act appeared to be in place, Germany asserts that the combination of the factors mentioned in recital 103, and in particular the comprehensive and strict control over the airport exercised by the Saarland, ensure that the purposes of entrustment are realised in at least the same way as it would be the case if a formal entrustment act were in place.

(105) In supporting its claim that the operation of the airport constitutes an SGEI, Germany asserts that the airport forms an essential part of the traffic infrastructure in the Saarland, which is necessary in particular to connect the region with the rest of the country and major aviation hubs. The particular importance of this connection is said to stem from the Saarland’s geographical position on the margin of Germany, far away from the country’s major metropolitan centres.

(106) The airport is, first, claimed to serve the region’s population by catering to their touristic and private traffic needs. The Saarland is said to increasingly develop as a destination for tourism. Germany secondly asserts that it is vital for the connection of the Saarland’s scientific, cultural, and social institutions, which are predominantly located in the City of Saarbrücken. Thirdly, the significance of the airport for the local economy and regional development is emphasised, especially in light of the ongoing structural transition away from an economy based on coal–mining and towards an international and innovative economy. Germany points out that companies base their decision to move to the Saarland often on the fact that there is an airport. It further refers to a study of 2009 according to which the demand for the provision of air passenger transport is supposed to increase in the future.

(107) Germany underpins its foregoing submission by asserting that the steady increase of passengers at Saarbrücken over the last decades, the results of a study showing further growth potential, and the fact that other airports in the region cannot satisfy the local demand, all demonstrate the importance of the airport for the local population and economy. Germany invokes the 2005 Aviation Guidelines, which state that ‘it is not impossible to consider the overall management of an airport, in exceptional cases, to be considered a service of general economic interest’, for example where an airport is located in an ‘isolated region’, and assert that Saarbrücken is such an exceptional case because of its geographical position and the on–going structural changes of the local economy (23). It finally submits that the financing does not fund activities going beyond the ‘basic activities’ in point 53(iv) of the 2005 Aviation Guidelines.

(108) Germany next asserts that the existence of an SGEI cannot be undermined by the allegedly missing necessity of the airport. It argues that other airports in the region cannot satisfy the needs that Saarbrücken Airport caters to. In particular, it is submitted that the other airports in the region are either too distant from Saarbrücken Airport’s core catchment area (such as the airports in Luxembourg, Netz–Nancy–Lorraine, and Frankfurt–Hahn) or not comparable to Saarbrücken because of their smaller size and limited services offered (Zweibrücken, above all).

Second Altmark criterion: compensation parameters

(109) Germany argues that the purpose of the second Altmark criterion is to avoid overcompensation and to ensure efficient utilisation of public funding. It asserts that based on the strict control exercised by the local authorities over the airport, ensuring responsible economic behaviour, and the fact that the latter’s activities are limited to providing a SGEI, the purpose of the second criterion is fulfilled. It is finally asserted that, in any event, the financing modalities are designed in such a way as to exclude any possibility of abusive reliance on SGEI compensation.

Third Altmark criterion: avoidance of overcompensation

(110) Germany maintains that the public financing never went beyond the amount necessary to facilitate the provision of the SGEI, taking into account all the relevant revenues. The activities of the airport, it is stressed, are limited to providing the SGEI in question, with the consequence that no other costs that could have been cross–subsidised arose. It is further submitted that the infrastructure and the airport operations are necessary and appropriate to satisfy the air traffic needs in Saarbrücken Airport’s catchment area. FSBesitzG and FSG did not and do not generate profits, and FSBG only achieved marginal profits. Germany asserts that the local authorities closely monitored the utilisation of public funds and would have intervened if inefficiencies had existed.

Fourth Altmark criterion: public tender or benchmarking

(111) As the airport has been in existence for a long time well before the provision of airport services came to be considered as an economic activity, Germany submits that it chose not to tender the SGEI, but rather to continue relying on the existing airport. It is nevertheless submitted that the fourth criterion is fulfilled, as Germany considers that the local authorities have closely monitored the activities of the airport, thereby ensuring that only efficient costs were reimbursed. While the Saarland does not have precise data on other regional airports, it assumes that Saarbrücken Airport’s efficiency is average, and that the local authorities would have recognised and eliminated any inefficiency. Germany finally submits that due to the various differences existing between regional airports in Germany, a simple comparison is not meaningful. In this situation, the Commission should be content with the fact that there is no indication that Saarbrücken is inefficient.

Intermediary conclusion on Altmark/SGEI

(112) As Germany is of the opinion that all four Altmark criteria are fulfilled, it submits that the financing of the airport from State resources does not constitute an advantage, but merely a compensation for the provision of a SGEI.

Market economy operator principle

(113) Germany explains that because of Saarbrücken Airport’s great structural and economic significance for the region, the Saarland considers the operation as an SGEI, not as a for–profit business activity. Accordingly, a closure of the airport is no option and no analyses of the costs and benefits of a closure exist.

Distortion of competition and effect on trade

(114) Arguing that the financing of the airport does not distort competition or affect trade between Member States, Germany submits that it does not constitute State aid. In this context, Germany recalls that the 2005 Aviation Guidelines state that funding a small regional airport with less than 1 million pax ‘is unlikely to distort competition or affect trade to an extent contrary to the common interest’ (24). Saarbrücken Airport falls within this category of cases, and according to Germany there are no reasons to depart from the general presumption: Saarbrücken Airport is a typical regional airport catering to the needs of the population in the region and the majority of passengers are in fact from the region.

(115) With a view to other airports in the region, especially those located in other Member States, it is argued that the catchment area of Saarbrücken Airport covers Saarbrücken and the surrounding areas, but hardly extends to other Member States. Indeed, it is said that only [less than 14 %] of passengers stem from either France […] or Luxembourg […]. Germany considers that the only foreign airports in potential competition with Saarbrücken are Metz–Nancy–Lorraine Airport and Luxembourg Airport. These two airports are, however, over an hour’s drive away from Saarbrücken, so that — assuming an airport’s catchment area covers all locations from which that airport can be reached within 60 minutes — their catchment areas only marginally overlap. What is more, the locations in which they do overlap are sparsely populated and said to generate few passengers, while Saarbrücken Airport’s core catchment area does not fall within the catchment area of the mentioned foreign airports.

(116) In addition, it is argued that the profiles of the two mentioned foreign airports and of Saarbrücken Airport are very different: Luxembourg is significantly larger (approximately 1,5 million passengers per annum) and offers more diverse routes, while Metz–Nancy–Lorraine is significantly smaller and offers exclusively scheduled flights within France and charter flights to North Africa Germany maintains that, as regards Luxembourg Airport in particular, no competition exists as the two airports complement rather than substitute each other.

(117) As regards the neighbouring airports in Germany, Germany submits that Saarbrücken Airport is not in competition with either Frankfurt–Hahn or Zweibrücken. As far as the former is concerned, it is asserted that the catchment areas overlap only insignificantly due to the distance between the two airports, that Frankfurt–Hahn is much larger (approximately 3,5 million passengers per annum), and offers almost exclusively international routes by low–cost carriers, while these carriers do not serve Saarbrücken. Additionally, air freight is important in Frankfurt–Hahn, but plays no role in Saarbrücken.

(118) With respect to Zweibrücken, Germany emphasises that while Zweibrücken Airport is, due to its close proximity with Saarbrücken, most likely to be in competition with that airport, the relationship between the two airports is in fact complementary and not competitive. While Zweibrücken does not offer any scheduled flights, but is exclusively used for charter flights, Saarbrücken specialises in scheduled flights for business travellers. These different profiles are reflected in the respective infrastructure, with Saarbrücken’s higher–quality facilities being typical for airports focusing on scheduled flights. In addition, air freight plays a role in Zweibrücken, while the same is not true in Saarbrücken due to the latter’s short runway and ban on night flights.

(119) Building on the perceived complementarity between Zweibrücken and Saarbrücken airports, Germany declares that a closer cooperation between the two airports is envisaged. The respective regional governments have already decided to cooperate more closely in the future, envisaging the creation of a joint airport (‘Saar–Palatinate–Airport’) with two locations (Saarbrücken and Zweibrücken). The cooperation should lead to synergies and safe funds. Finally, Germany emphasises the demand for aviation services in the region (both airports taken together already have 7 50 000 pax), maintaining that only Saarbrücken and Zweibrücken together can properly satisfy this demand, in particular because the other neighbouring airports cannot serve as substitutes.

(120) Germany stresses that even if the airports in Saarbrücken, Zweibrücken, and Frankfurt–Hahn were found to be in competition with each other, any public support measures would not affect trade between Member States. All three airports are located in Germany, the operating companies are German and the shareholders are German territorial entities.

(121) Finally, it is asserted that any distortion of competition or effect on trade would be so marginal that a ‘de minimis rationale’ should be applied in the case at hand, leading to the conclusion that any such effect is not appreciable.

3.1.2. EXISTING AID AND COMPATIBILITY

(122) In the alternative and if the Commission should not follow the argument of Germany that the financing measures do not constitute State aid, Germany submits that the measures constitute existing aid, are in any event compatible as well as exempted from notification under the 2005 SGEI Decision, comply with the compatibility criteria set out in Sections 4.1 and 4.2 of the 2005 Aviation Guidelines, and can be justified as compatible pursuant to Article 107(3)(c) of the Treaty.

Existing aid

(123) Germany points out that if the P&L agreement between vh Saar and FSBesitzG/FSG were to be found to constitute State aid, it would qualify as existing aid. The relevant agreement, legal basis of the annual deficit cover, was concluded on 7 May 1996 and has, according to Germany, not been changed since. If the Commission were to find that the P&L agreement constitutes incompatible State aid, this finding would only have an effect for the future.

2005 SGEI Decision

(124) Germany argues that the financing falls under the 2005 SGEI Decision, as the applicability criteria for aid to airports (less than 1 million pax or less than EUR 100 million turnover in the two years prior to entrustment; less than EUR 30 million in compensation per year) are fulfilled. It further asserts that the conditions enshrined in Articles 4 and 5 of the 2005 SGEI Decision (entrustment with an SGEI, no overcompensation) are complied with, for the same reasons as those mentioned with respect to compliance with the Altmark criteria.

(125) Germany also repeats that there is a significant demand for aviation services in the region that cannot be satisfied by neighbouring airports, thereby rejecting the suggestion in the opening decision that the Airport was not necessary to satisfy the local demand for air traffic services. It stresses that relevant studies demonstrate that there are further growth potentials due to a predicted increase in passenger demand which neighbouring airports will not be able to satisfy (Germany refers to their explanations as to the lack of substitutability between the airports of the region and the corresponding lack of competition between them).

(126) As regards, finally, the suggestions in the opening decision that a formal entrustment act, a limitation to the basic activities of an airport, and a transparent fixing of the compensation parameters were missing, Germany refers back to its submissions regarding the compliance with the Altmark criteria, claiming that the reasoning presented there is equally applicable in the present context.

2012 SGEI Decision

(127) Germany mentions that the 2012 SGEI Decision, which will be applicable to the measures under discussion in this Decision only after the expiration of the transitional period in 2014, will be relevant only for the future, and then especially for the envisaged cooperation between Saarbrücken and Zweibrücken Airports.

2005 Aviation Guidelines

(128) Germany first asserts that the general financing measures are compatible with the internal market pursuant to Article 106(2) of the Treaty in connection with Section 4.2 of the 2005 Aviation Guidelines (aid for operation of airport infrastructure). In support of this submission it merely refers back to the arguments presented with respect to the compliance with the Altmark criteria and the 2005 SGEI Decision.

(129) With respect to compatibility pursuant to Section 4.1 of the 2005 Aviation Guidelines (financing of airport infrastructure), Germany submits that all conditions set out therein are fulfilled.

Construction and operation of the infrastructure meets a clearly defined objective of general interest (regional development, accessibility, etc.)

(130) Germany refers to their submissions regarding the existence of an SGEI for the purpose of demonstrating that Saarbrücken Airport meets an objective of general interest. It repeats that the airport satisfies the aviation needs of the local population, that the accessibility of the region cannot be ensured by the neighbouring airports, and that the airport is crucial for the economic development of the region.

The infrastructure is necessary and proportionate to the objective

(131) According to Germany, the infrastructure, especially the terminal building that has been in use since 2000 and the modernised runway are strictly necessary to achieve the objective and are not disproportionately large or elaborate. The investments into the infrastructure were necessary to maintain or replace the worn–out infrastructure and to adapt to increasing passenger numbers, heightened demands in terms of comfort, as well as stricter safety and security requirements. Without the investments, the Airport would not be operational. Germany also recalls that the existing infrastructure was regularly congested before the construction of a new terminal (starting in 1999) […]. It finally submits that the necessary investments could not have been financed from the operating company’s own capital.

The infrastructure has satisfactory medium–term prospects for use

(132) Based on the already existing utilisation and the expected further increase in passenger numbers, Germany maintains that the infrastructure has more than satisfactory prospects for use. It refers to a prognosis of the development of aviation in the region, demonstrating that demand will grow.

(133) Germany submits that, when the construction of the new terminal building started in 1999, it was not foreseeable that the events of 11 September 2001 in the United States, the ash–cloud following a volcano eruption on Iceland in 2010, and the global economic crisis between 2008 and 2011 would negatively affect passenger numbers in Saarbrücken. These events are said to have affected the entire European aviation sector, delaying the otherwise positive development. Nevertheless, the positive trend that was already visible in 1999 is, according to Germany, still detectable, leading to the expectation that Saarbrücken Airport’s capacity will be fully utilised in the medium term (taking account also of the envisaged cooperation with Zweibrücken Airport).

(134) With respect to the financial prospects, Germany stresses that a positive EBITDA is expected for 2020, and that this is sufficient to satisfy the requirement of satisfactory medium–term prospects for use. It recalls that the Commission itself has acknowledged that regional airports do not generally generate profits which could be reinvested into the infrastructure, a fact which cannot preclude compatibility of support measures pursuant to the 2005 Aviation Guidelines.

All potential users of the infrastructure have access to it in an equal and non–discriminatory manner

(135) As all airlines have access to the airport on a non–discriminatory basis and fall under the generally applicable schedule of charges, including discounts contained therein, Germany is of the opinion that this criterion is fulfilled. It stresses that especially the discounts are not designed in such a way that they would create a de facto selective advantage for some airlines. Finally, it asserts that the individual contracts concluded with Cirrus and Air Berlin are not relevant in this context, and that in any event all airlines had the possibility of concluding such contracts.

The development of trade is not affected to an extent contrary to Union interest

(136) It is not clear to Germany how the ‘moderate’ extension of the infrastructure at Saarbrücken Airport could have or have had effects on trade. It recalls that the Commission has accepted that support to small regional airports usually does not have such an effect. As regards a possible effect on Zweibrücken Airport, Germany repeats that the two airports are not in competition with each other, but must be seen as complementary. It also argues that the infrastructure measures did not have an effect on Metz–Nancy–Lorraine and Luxembourg airports that would be contrary to the Community interest.

Article 107(3)(c) of the Treaty

(137) Germany asserts that at least for the period between 2000 and 2005, the financial support for the airport can be found to be compatible with the internal market pursuant to Article 107(3)(c) of the Treaty. For the purpose of demonstrating the importance of Saarbrücken Airport for the regional economic development and accessibility of the region, Germany refers to its submissions regarding the existence of an SGEI. The financial support has almost exclusively benefited infrastructure projects, which were in line with regional development goals. By way of example, Germany submits extensive explanations as to the necessity of the three biggest single infrastructure investments.

(138) As regards the incentive effect, Germany explains that the airport is an important incentive for extra–regional companies to invest in the Saarland. Similarly, companies already present are incentivised to expand and invest further. It is submitted that if an incentive effect were missing, the Saarland would, taking into account its difficult budgetary situation, reconsider its support for the airport. Finally, Germany stresses again that the operation of Zweibrücken Airport is not affected.

3.2. THE TRANSFER OF VARIOUS PLOTS OF LAND TO FSBESITZG

3.2.1. EXISTENCE OF AID

(139) Germany is of the opinion that the land transfer served security purposes and came within the public policy remit, thereby falling outside of the scope of application of Article 107(1) of the Treaty. More precisely, it is argued that after the runway had been changed, the transferred land was necessary to surround the runway ends with extended security and safety areas and to adapt the existing security fence. Securing the airport territory is, according to Germany, in the public interest and constitutes a sovereign task, not an economic activity. The background to these security measures were legislative changes taking place after the events of 11 September 2001 in the United States.

(140) In addition, Germany submits that the post–2000 transfer of land with a total value of […] did not, in any event, distort competition or affect trade for the same reasons as were mentioned with respect to the general financing measures. Based on the low value, the land transfer would fall under the de minimis regulation.

3.3. GUARANTEES ON LOANS TO THE BENEFIT OF VH SAAR AND FSBESITZG

3.3.1. EXISTENCE OF AID

(141) The opening decision had assumed that of three known guarantees for FSBesitzG, only one had been granted after 2000. However, Germany explains that the guarantee in question was, in fact, granted in the course of 1999, that is to say before the crucial Aéroports de Paris judgment. It is therefore submitted that none of the three guarantees could constitute State aid measures. In the event that the Commission should nevertheless find that these guarantees constituted State aid, Germany submits that they would need to be assessed as existing aid, with the consequence that any Commission decision would only have effects ex nunc.

(142) With respect to the letters of comfort, Germany refers to its reasoning regarding the general financing measure for the benefit of the airport (recitals 93–121), claiming it to be equally applicable here.

3.3.2. COMPATIBILITY

(143) Germany argues that if the measures should be qualified as State aid, they would be compatible with the internal market pursuant to the conditions laid down in the 2005 Aviation Guidelines. In this respect, it refers to the arguments presented as regards the general financing measure, claiming that they are equally applicable here.

3.4. THE LEASE CONTRACT BETWEEN FSBESITZG AND FSBG

3.4.1. EXISTENCE OF AID

(144) Germany distinguishes between the lease contract concluded in 1997, which was in force until 1 July 2006, and the lease contract which was valid from 1 July 2006 until the merger of FSBesitzG and FSBG.

(145) As regards the 1997 lease contract, it is asserted that if found to constitute State aid, it would qualify as existing aid. If the Commission found this contract to constitute incompatible State aid, such a decision would only have effect for the future, not the past.

(146) With respect to the 2006 lease contract, Germany submits that this contract merely amounted to a modification of the existing aid, and did not qualify was new aid. It emphasises that notably the law on the basis of which such a lease contract could be concluded, had not changed. It alleges that a change of the legislative basis would be necessary for the qualification as new aid.

(147) In addition, Germany asserts that the 2006 lease contract was in line with market conditions at the time. It argues that a variable leasing payment was not uncommon, and that there is no indication that the actual amount charged was uncommonly low. In addition, it is submitted that the variable leasing payment also entailed the possibility of obtaining significantly higher leasing payments than under the previous contract. It is submitted that the 2006 lease contract improved FSBG’s ability to act. Finally, Germany argues that it was in FSBesitzG’s interest to keep Fraport as a shareholder, since that company’s involvement allowed for access to know–how and created synergies.

(148) In any event, Germany maintains that, despite the fact that no documents demonstrating how the leasing payments were calculated are available, the actual amount of the leasing payment was not important, as the close connection between FSBesitzG and FSBG meant that the overall economic impact was neutral. A higher leasing payment would have led FSBesitzG to receive less money from vh Saar, whereas a lower payment would have been compensated through higher transfers from vh Saar.

(149) As regards the distortion of competition and effect on trade, Germany refers to the arguments made in this respect in the context of the general financing measures, holding that these arguments are equally applicable here.

3.5. DISCOUNTS FOR AIRLINES

3.5.1. EXISTENCE OF AID

(150) Germany argues the discounts on airport charges introduced in 2007 were economically sensible, did not grant a selective advantage, and did not distort competition/had no effect on trade.

Market economy operator test

(151) Following the departure of Hapag Lloyd/TUIFly in 2006, the passenger numbers at Saarbrücken Airport dropped by 30 %. In this situation, according to Germany, actions were necessary to ensure that the existing capacity was appropriately used in the medium to long term and to maintain the airport’s competitiveness and attractiveness. The previous schedule of charges had proved to be a disadvantage in competition, as the airport had the highest charges of all airports in Germany. Germany submits that the discounts did indeed lead to a continuous increase in passenger numbers after 2006. Germany illustrates the positive effect of the discounts by referring to the decision of Air Berlin to start serving Saarbrücken Airport, a decision that was made only after the discounts were in place.

(152) Germany underpins its argument that the discounts made economic sense, with the argument that discounts were only granted to new airlines or new routes. In consequence, so it is asserted, it could be expected that the discounts would have no immediate effect on the status quo, but would lead to an increase of passengers in the future. The economic sense is said to be further underlined by the limitation that the discount could not go beyond 50 % of the investment costs of the new airline or the new route.

(153) While maintaining that the discounts made economic sense, Germany argues that because the discounts were offered to all airlines, it was impossible to make precise ex ante calculations of the costs and benefits of the discounts. The costs of a closure of the airport, on the other hand, were not assessed, as closure was never an option.

Selectivity

(154) Relying on the fact that the discounts introduced in 2007 were available to all airlines, Germany maintains that the measure was non–selective. The published schedule of charges, of which the discounts were a part, was general and abstract in character, the discounts were automatically applied to all airlines operating from Saarbrücken that supplied the relevant data, and the airport had no discretion in applying the discounts.

(155) Germany asserts that the purpose of the discounts was to increase the attractiveness of Saarbrücken Airport, not to favour a particular airline. A de facto selectivity would also be excluded by the fact that the same charges were applied to all airplanes exceeding 5 700 kg of Maximum Take–Off Weight (MTOW), thereby treating all commercial traffic airplanes in an equal manner, and by not discriminating between domestic and international flights. Finally, the discounts did also not discriminate on the basis of the number of landings.

Distortion of competition and effect on trade

(156) As regards the distortion of competition and effect on trade, Germany refers to the arguments brought forward in this respect for the general financing measures, holding that those arguments are equally applicable here.

3.6. START–UP AID TO CIRRUS AIRLINES

3.6.1. EXISTENCE OF AID

(157) Germany argues that in concluding the contract with Cirrus, FSBesitzG acted like a private investor could have done, with the consequence that the payments made to Cirrus did not constitute State aid. Additionally, it is submitted that the measure did not distort competition and had no effect on trade.

Market economy operator test

(158) According to Germany, the purpose of the contract with Cirrus was to achieve an increase in passenger numbers. The increase was supposed to result from a higher frequency on the flights to […], as well as from the use of modern aircraft. Both the higher frequency and the obligation to use modern aircraft were particularly intended to increase comfort and flexibility for business travellers.

(159) Germany submits that the frequent amendments to the contract demonstrate that FSBesitzG closely monitored the economic development and was able to react quickly to economic necessity. The short notice period for cancelling the contract (30 days) appears to be a further indication of FSBesitzG’s focus on the economic sustainability of the contract, allowing it to cancel the agreement in case that the goals could not be achieved. The long–term profitability was finally supposed to be strengthened by establishing Cirrus as the home carrier in Saarbrücken. According to Germany, precise data on expected costs and benefits is, however, not available.

Distortion of competition and effect on trade

(160) As regards the distortion of competition and the effect on trade, Germany refers to the arguments made for the discounts on airport charges introduced in 2007, holding that these arguments are equally applicable here.

3.6.2. COMPATIBILITY

(161) Germany argues that even if they were considered to constitute State aid, the payments to Cirrus can be justified as compatible start–up aid pursuant to the conditions laid out in the 2005 Aviation Guidelines as well as in Article 107(3)(c) of the Treaty.

(162) Recalling that the contract with Cirrus increased the frequency of that airline’s service on the […] route, that FSBesitzG concluded that contract with a view to it being profitable, and that the effect of the increased frequency on other routes could not be investigated because no other airline served […] from Saarbrücken, Germany maintains that the relevant conditions are fulfilled. It further explains that there were no other high–speed connections linking Saarbrücken and […] and that the payments under the contract were not cumulated with discounts on the airport charges (the schedule of charges including the discounts only entered into force after the Cirrus contract had expired). Finally, Germany explains that because it did not see the contract as containing elements of State aid, the existence of the contract was not made public (on a list or otherwise), and no specific appeal mechanism was provided for.

3.7. MARKETING AGREEMENT WITH AIR BERLIN

3.7.1. EXISTENCE OF AID

(163) Germany submits that the marketing agreement with Air Berlin was concluded in compliance with the MEO test and does not grant Air Berlin an advantage for the purposes of Article 107(1) of the Treaty. Additionally, it is submitted that the measure did not distort competition and had no effect on trade.

Market economy operator test

(164) Before concluding the contract with Air Berlin, FSG evaluated the costs and expected revenues, concluding that the contract was profitable for the airport. Germany explains that, while the original expectations were not entirely met, an extrapolation of the available real data shows that the contract is still clearly profitable.

(165) In this context, Germany contests the suggestion made in the opening decision that the marketing agreement had no genuine value for the airport apart from increasing the number of passengers on Air Berlin flights. It submits that the marketing activities agreed upon in the contract raise the Airport’s profile and draw attention to the region as a travel destination, which in turn entails the possibility to generate further (non–aviation) revenue. Germany argues that when an airline markets a destination, consumers do not only take notice of the fact that this airline serves this destination, but also become aware of the region as a travel destination in general.

(166) Germany also challenges the preliminary finding contained in the opening decision that the marketing agreement effectively introduced additional special discounts for Air Berlin. Germany states that rather, the marketing agreement has genuine economic value for the airport, in such a way that a private investor would also have concluded such a contract, expected to be profitable already after three years.

Distortion of competition and effect on trade

(167) As regards the distortion of competition and effect on trade, Germany refers to the arguments it made concerning the discounts on airport charges introduced in 2007, holding that those arguments are equally applicable here.

4. COMMENTS RECEIVED FROM AIR BERLIN

(168) Before arguing that the two measures that directly affect Air Berlin — the general discount scheme on airport charges and the market contract concluded between FSG and Air Berlin — are in compliance with State aid rules, the airline first makes the general remark that it considers a genuine demand for aviation service to exist in the region of Saarbrücken. It stresses that Air Berlin’s flights to […] and […] reach a ‘Seat Load Factor’ comparable to that reached on Air Berlin’s flights to the same destinations from […]. Additionally, Air Berlin is of the opinion that none of the other existing airports in the region would be a viable alternative to Saarbrücken, which in turn precludes an effect on trade. In particular, Air Berlin stresses that it has never considered the neighbouring airports […] as an alternative base, given that on those airports the demand for flights to […], a holiday destination mainly fancied by German tourists, is not comparable to the demand for such destinations at Saarbrücken Airport.

4.1. DISCOUNTS FOR AIRLINES

(169) With respect to the discounts enshrined in the 2007 schedule of airport charges, Air Berlin, like Germany, argues that due to its abstract and general character, the discounts could not be considered to be selective. Wherever an airline fulfilled the listed conditions, the discounts would be granted without any discretion on the part of the airport.

(170) Additionally, Air Berlin contests the fact that there is competition between airlines from different Member States. Putting forward that only one airline from another Member States operates from Saarbrücken, it submits that the assumption that the measures has an effect on trade is not sustainable.

(171) Air Berlin also claims that the discount system fulfils all the conditions set out in the Charleroi judgment of the Court, namely that the discounts are time–limited, degressive, and not available for more than 50 % of the actual start–up and marketing costs.

(172) Finally, Air Berlin asserts that the airport charges at Saarbrücken Airport are, in comparison with other German airports, not particularly low. It is argued that the passenger charges are between […] and […] lower in […].

4.2. MARKETING AGREEMENT WITH AIR BERLIN

(173) Air Berlin explains that the development of passenger numbers since the conclusion of the contract confirms the expectations held at the time. On this basis, it could be assumed that the increase in aviation and non–aviation revenue that FSG expected to gain from this contract would materialise.

(174) Further, Air Berlin lists the various connections available via […], as well as the various marketing activities it has undertaken to promote Saarbrücken Airport. It submits that the combination of the increased frequency, the attractive connections, and the promotion of Saarbrücken Airport as a vacation and business destination have significant value for the airport and the region as a whole. As a consequence, according to Air Berlin, the contract makes economic sense for the airport, and therefore a private investor could also have concluded it.

5. ASSESSMENT

5.1. FINANCING OF VH SAAR, FSG, AND FSBESITZG (CAPITAL INJECTIONS INTO VH SAAR, CAPITAL INJECTIONS INTO FSBESITZG/FSG TO COVER LOSSES)

(175) The financing of vh Saar, FSG and FSBesitzG under assessment consisted of the following measures: vh Saar injected capital into FSBesitzG/FSG in order to cover their losses. vh Saar financed this with capital injections it received from the Saarland and other revenues.

5.1.1. EXISTENCE OF AID

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

(177) The criteria in Article 107(1) of the Treaty are cumulative. Therefore, in order to determine whether the measure in question constitutes aid within the meaning of Article 107(1) of the Treaty all of the following conditions need to be fulfilled. Namely, the financial support should: (a) be granted by the State or through State resources; (b) favour certain undertakings or the production of certain goods; (c) distort or threaten to distort competition; and (d) affect trade between Member States.

Economic activity and notion of undertaking

(178) According to settled case–law, the Commission must first establish whether the vh Saar, FSG, and FSBesitzG are undertakings within the meaning of Article 107(1) of the Treaty. The concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed (25). Any activity consisting in offering goods or services on a given market is an economic activity (26).

(179) In its ‘Leipzig–Halle Airport’ judgment the Court of Justice confirmed that the operation of an airport for commercial purposes and the construction of the airport infrastructure constitute an economic activity (27). Once an airport operator engages in economic activities by offering airport services against remuneration, regardless of its legal status or the way in which it is financed, it constitutes an undertaking within the meaning of Article 107(1) of the Treaty, and the Treaty rules on State aid are therefore capable of applying to advantages granted by the State or through State resources to that airport operator (28).

(180) Regarding the moment in time from which the construction and operation of an airport became an economic activity, the Commission recalls that the gradual development of market forces in the airport sector does not allow for a precise date to be determined. However, the Court of Justice of the European Union has recognised the evolution in the nature of airport activities, and in its judgment in ‘Leipzig/Halle Airport’ the General Court held that from 2000 onward the application of State aid rules to the financing of airport infrastructure could no longer be excluded. Consequently, from the date of the judgment in ‘Aéroports de Paris’ (12 December 2000), the operation and construction of airport infrastructure must be considered as a task falling within the ambit of State aid control.

(181) In this regard the Commission notes that the infrastructure which is subject to the present Decision was operated by the airport operator FSBG since 1997, while FSBesitzG owned and maintained the airport infrastructure.

(182) Since 2008, FSG is both the owner and the operator of Saarbrücken airport. The airport operator — until 2008 FSBG and since then FSG — charges users for the use of its services and infrastructure, while the infrastructure owner — FSBesitzG until 2008 — leased the infrastructure to the airport operator against a lease payment. In effect, both the infrastructure owner and the infrastructure operator thereby commercially exploit the airport infrastructure in Saarbrücken. It follows that the entities exploiting this infrastructure — FSBesitzG, FSBG, and FSG — constitute undertakings for the purposes of Article 107(1) of the Treaty from the 12 December 2000, the date of the Aéroports de Paris judgment, onwards.

(183) As regards vh Saar, Germany submitted that, as a holding company, vh Saar could not be regarded as an undertaking for the purposes of Article 107(1) of the Treaty. The Commission recalls that according to the Court of Justice, ‘the mere fact of holding shares, even controlling shareholdings, is insufficient to characterise as economic an activity of the entity holding those shares, when it gives rise only to the exercise of the rights attached to the status of shareholder or member, as well as, if appropriate, the receipt of dividends, which are merely the fruits of the ownership of an asset’ (29). At the same time, the Court of Justice observed that ‘on the other hand, an entity which, owning controlling shareholdings in a company, actually exercises that control by involving itself directly or indirectly in the management thereof must be regarded as taking part in the economic activity carried on by the controlled undertaking’.

(184) The Commission recalls that the statutory function of vh Saar is to coordinate the ‘activities related to the construction, extension, and operation of public ports and airports in Saarland’. That coordination would typically go beyond the mere exercise of rights attached to the status of shareholder. At the same time, there is no evidence of vh Saar actually exercising control or involving itself directly in the management of FSBesitzG or FSG. Against this background, it is not entirely clear whether vh Saar can be characterised as an undertaking. The Commission finds, however, that it can leave this question open in light of the considerations in recital 203 below, namely that vh Saar has not received an advantage.

Public policy remit

(185) While FSBesitzG, FSG and FSBG must therefore be considered to constitute undertakings for the purposes of Article 107(1) of the Treaty, it must be recalled that not all the activities of an airport owner and operator are necessarily of an economic nature (30).

(186) The Court of Justice (31) has held that activities that normally fall under State responsibility in the exercise of its official powers as a public authority are not of an economic nature and do not fall within the scope of the rules on State aid. Such activities include for example security, air traffic control, police and customs. The financing has to be strictly limited to the compensation of the costs to which these activities give rise and may not be used instead to fund other economic activities (32).

(187) Therefore, the financing of activities falling within the public policy remit, or of infrastructure directly related to those activities in general, does not constitute State aid (33). At an airport, activities