98/337/EC: Commission Decision of 21 January 1998 concerning aid granted by the Flemish Region to the company Air Belgium and the tour operator Sunair in connection with the use of Ostend Airport (Only the Dutch and French texts are authentic) (Text with EEA relevance)
Date: 1998-01-21
Institutions: European Commission
Subjects: Belgium, Flemish Community, State aid, airport, infringement of EU law

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Official Journal of the European Communities

19. 5. 98

COMMISSION DECISION

of 21 January 1998

concerning aid granted by the Flemish Region to the company Air Belgium and
the tour operator Sunair in connection with the use of Ostend Airport

(Only the Dutch and French texts are authentic)

(Text with EEA relevance)

(98/337/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of
Article 93(2) thereof,

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

Having served notice on the interested parties, in accord-
ance with the provisions of the abovementioned Articles,
those
to pass on their comments, and in view of
comments;

Whereas:

THE FACTS

I

In letters dated 1 and 20 June 1995 respectively the
Belgian Tour Operators’ Association lodged a complaint
with the Commission against the subsidies granted by the
Flemish Region to tour operators and airlines operating
non-scheduled flights to and from Ostend Airport. As a
result of the complaint the Commission conveyed that
information to the Belgian authorities by mail on 15
September 1995 and then asked them to answer the two
following questions in order to enable the Commission to
examine the matter in the light of Articles 92 and 93 of
the Treaty with regard to State aids.

tour operators

(cid:190) What action has the Flemish Region taken in order to
assist
and airlines using Ostend
Airport? On what date did that action take effect?
Would you please supply a copy of the regulations or
decisions introducing such action.

(cid:190) Since such action was initiated what amounts have
been paid to the tour operators and airlines using
Ostend Airport? Would you please supply a detailed
in question, broken down
table of
the amounts
according to recipient
each year
for
involved.

company,

In its letter of 17 October 1995 the Belgian Government
sent the Commission a detailed answer to those questions.
It emerged from this that the action by the Flemish
Region to assist tour operators and airlines using Ostend
Airport was intended to promote charter flights from that
airport. It was the outcome of an agreement reached on 1
March 1994 between (a) the Flemish Region and (b) the
airline Air Belgium NV and the tour operator Sunair NV.
Under that agreement Air Belgium and Sunair undertook
to implement a minimum programme of 36 charter
flights (corresponding to an estimated 5 202 passengers)
between Ostend Regional Airport and Majorca, Alicante
and Monastir during the 1994 summer season, namely
between June and September. Among other things they
also undertook to provide a comparable schedule of
flights in 1995 and 1996. In return ‘in view of the import-
ance in economic and tourism terms of the expansion of
charter flights from Flemish airports' the Flemish Region
confers the following advantages (Article 3 of the agree-
ment, paragraphs 1 to 4), more particularly in order to
provide the flights in question with:

(cid:190) for 1994, an exemption from landing and parking fees

(Article 3(1)),

(cid:190) solely for 1994 and within the limit of 7 000 passen-
gers carried, a subsidy calculated in such a way that
Air Belgium and Sunair may offer each passenger a
discount of BEF 1 000 as compared with the normal
fare charged at Brussels-National Airport (Article 3(2)),

(cid:190) a programme promoting the flights

in question,
covering a maximum figure of BEF 4,5 million (2,5
million for 1994 and 1 million each for 1995 and
1996). That programme, drawn up jointly with Air
Belgium and Sunair, will take the form of advertise-
ments, posters
intended to
promote the regional Flemish airports of Ostend and
Antwerp in general. In 1995 and 1996 it could also
take the form of a further exemption from landing
and parking fees (Article 3(3)),

and other

activities

(cid:190) for 1994 only, a subsidy intended to compensate Air
the additional cost of using Ostend

Belgium for

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Airport. That subsidy amounts to a maximum of
50 % of
the real extra cost, as demonstrated by
invoice and restricted to BEF 2 million (Article 3(4)).

29 March 1996. It covered the four measures identified by
the Commission, and stated that:

In its reply the Belgian Government also stated:

(cid:190) that the subsidy granted in 1994 in order to offer
every passenger using Ostend Airport a competitive
advantage of BEF 1 000 over Zaventem Airport,
provided for in Article 3(2) of the contract of 1 March
1994, ultimately rose to BEF 1 426 680, or 2 124
actual passengers. That amount has so far neither been
paid by the Flemish Region nor even been claimed by
the joint parties to the contract,

(cid:190) that the subsidy intended to compensate for the extra
costs in 1994, provided for by Article 3(4) of the
contract of 1 March 1994, ultimately amounted to
BEF 528 693, or 15 passenger-carrying flights. The
amount was claimed by Air Belgium but has still not
been paid by the Flemish Region.

In view of this information the Commission, on 13 March
1996, decided in this instance to initiate the procedure
provided for by Article 93(2) of the Treaty. The Commis-
sion’s doubts that prompted that initiation were based on
the two following factors: the exemption from landing
and parking fees, and the two subsidies described above
most certainly constitute State aids within the meaning of
Article 92(1) of the Treaty and of Article 61(1) of the
Agreement on the European Economic Area (hereinafter
referred to as the ‘EEA Agreement'); the absence, at first
sight, of any scope for exemption under paragraphs 2 and
3 of
the said Articles. In its decision to initiate the
procedure the Commission also expressed the wish to
obtain all of the necessary information on the content of
the flight-promotion programme for 1994, 1995 and
1996, amounting to a maximum of BEF 4,5 million.

In a letter of 29 March 1996 the Commission brought its
decision to initiate the procedure to the attention of
Belgium and served notice on that country to comment.
That letter was published in the Official Journal of the
European Communities (1), and the other Member States
and interested parties were also invited to comment in
accordance with Article 93(2) of the Treaty.

II

No Member State other than Belgium and no interested
party has commented following publication in the Offi-
cial Journal of the European Communities.

However, in a letter dated 13 May 1996, Belgium passed
on its comments following the decision to initiate the
procedure, and in response to the Commission’s letter of

(1) OJ C 121, 25. 4. 1996, p. 8.

(cid:190) ultimately the exemption from the landing and
parking rights for 1994 and the two following years, as
provided for by Article 3(1) of the contract of 1 March
1994, had not been granted to Air Belgium NV,

(cid:190) the subsidy of BEF 1 426 680 granted in 1994 in order
to offer each passenger a discount of BEF 1 000 as
compared with Zaventem Airport, as provided for by
Article 3(2) of the contract of 1 March 1994, had so far
not been claimed by the tour operator Sunair NV,
which had therefore still not received that amount,

(cid:190) the maximum of BEF 4,5 million intended to finance
a flight-promotion programme in 1994, 1995 and
1996, as provided by Article 3(3) of the contract of 1
March 1994, was used by Ostend Airport in order to
raise public awareness of the airport among passangers
on non-scheduled flights. For
commercial
purpose and in order to reach the holidaymakers
concerned in a highly targeted manner, the airport
chose to channel the advertising via the publications
and publicity campaigns conducted by the tour oper-
ator Sunair NV,

this

(cid:190) the subsidy intended to compensate for the extra cost
of using Ostend Airport, as provided for by Article
3(4) of the contract of 1 March 1994, was reduced
from BEF 528 683 to BEF 270 116 after negotiations
had taken place. That subsidy has still not been paid.

In that same correspondence,
the Belgian authorities
stressed that the action by the public authorities proved,
in the final event, to be narrower in scope than that
intended by the contract of 1 March 1994, owing to the
success of the advertising campaigns, particularly for the
non-scheduled winter flights. Moreover, no other contract
has been concluded since then. They added that the two
subsidies amounting to BEF 1 426 680 and BEF 270 117
respectively would only be paid if authorised by the
Commission.

In a letter of 10 July 1996 the Commission informed the
Belgian authorities that
the information contained in
their letter of 13 May 1996 did not enable it to deliver a
final opinion on this matter. It therefore asked them to
supply (a) a copy of
the amendments made to the
contracts with regard to the exemption from landing and
parking fees and (b) further information on the activities
and amounts involved as part of the flight-advertising
programme. The Belgian authorities sent the Commission
the information in question on 29 July 1996.

Finally, in its letter of 17 September 1997 the Belgian
authorities noted that:

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(cid:190) the landing and parking fees were paid in the normal
way by Air Belgium (Article 3(1) of the contract of 1
March 1994),

(cid:190) the subsidy provided for by Article 3(2) of the contract
of 1 March 1994 was claimed, and involved BEF
984 600 (cid:190) an amount which is still to be examined
by the Flemish region and which will only be paid if
approved by the Commission,

(cid:190) the cost of

the advertising campaign of BEF 4,5

million was paid back to Sunair SA,

(cid:190) the subsidy of BEF 270 116 provided for by Article
3(4) of the contract of 1 March 1994 was claimed by
Air Belgium SA, but will only be paid if approved by
the Commission.

LEGAL ASSESSMENT

III

On the exemption from landing and parking fees for the
years 1994, 1995 and 1996

It is clear from the information in the Commission’s
possession that the measure consisting in the exemption
of the companies Air Belgium NV and Sunair NV from
the fees charged for landing and parking aircraft at
Ostend airport, as stipulated by paragraph 1 and the final
indent of paragraph 3 of Article 3 of the contract of 1
March 1994 concluded between the two companies in the
Flemish Region was ultimately withdrawn and never took
effect.
therefore appropriate to terminate the
procedure on this matter, which has become irrelevant.

It

is

(cid:190) the granting, in 1994, of a subsidy calculated as a
function of the number of passengers carried and
intended to confer a competitive advantage on the use
of Ostend airport as compared with Zaventem airport
(Article 3(2) of the contract),

(cid:190) the financing of a flight-advertising programme in
1994, 1995 and 1996 for a maximum amount of BEF
4,5 million (Article 3(3) of the contract),

(cid:190) the granting,

in 1994, of a subsidy intended to
compensate for the additional cost of using Ostend
airport (Article 3(4) of the contract).

It would seem, turning first of all to the flight-advertising
programmes in 1994, 1995 and 1996 that, according to
the information in the Commission’s possession,
the
programme included publicity features and advertise-
ments in the catalogues produced by the tour operator
Sunair NV which also illustrated the position occupied by
Ostend airport among Belgium’s airports. They constitute
a simple advertising vehicle that benefits Ostend airport
and forms part of the normal activity of the Flemish
region, which owns and manages Ostend airport, in order
to publicise that airport. Neither its aim nor its effect was
to confer an advantage on the tour operator Sunair NV,
which had received BEF 4,5 million, which corresponded
that advertising campaign, above and
to the cost of
beyond the profits which the owner/manager of
the
airport was likely to expect in return. It follows that the
measure is not State aid within the meaning of Article
92(1) of the Treaty or Article 61(1) of the EEA Agreement.
No objection should therefore be raised to this.

On the other three measures at issue

Pursuant to Article 92(1) of the Treaty and Article 61(1) of
the EEA Agreement 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 is,
in so far as it affects trade between Member States or the
Contracting Parties,
incompatible with the common
market and with the EEA Agreement. ‘State aids' must be
taken to mean aid granted by the central, regional or local
authorities in a Member State or by public or private
bodies set up or designated by these in order to manage
aid (judgment of the Court of Justice of the European
Communities of 22 March 1977, Case 78/76, Steinike &
Weinlig v. Federal Republic of Germany (1)).

The three measures set out below, covered by the above-
mentioned contract of 1 March 1994, should be examined
in the light of those provisions:

(1)

[1977] ECR 596, at paragraph 21.

the action was taken,

Next, as far as the two subsidies provided for by para-
graphs 2 and 4 of Article 3 of the contract of 1 March
1994 and claimed by Air Belgium, to the tune of BEF
984 600 and BEF 270 116 respectively, are concerned:
those measures constitute State aids within the meaning
of Articles 92(1) and 61(1) referred to above. First, their
public nature means that
in a
contractual manner, by a regional authority. Secondly, the
existence of aid arises (a) from the reality of financial
transfers in the form of direct subsidies, and (b) from the
specific nature of those measures, which only concern two
companies. Thirdly, the aids affect trade between Member
States inasmuch as they apply to two companies whose
air-transport business, which by its very nature directly
affects trade, extends to several Member States and may
cover the entire EEA. This has been particularly true
since the entry into force, on 1 January 1993, of Council
Regulations (EEC) No 2407/92 (2), (EEC) No 2408/92 (3)
and (EEC) No 2409/92 (4) (‘third aviation package'), which
liberalise the Community civil-aviation market. Further-
more, two of the destinations specifically mentioned by

(2) OJ L 240, 24. 8. 1992, p. 1.
(3) OJ L 240, 24. 8. 1992, p. 8.
(4) OJ L 240, 24. 8. 1992, p. 15.

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the Community. Fourthly,

are located within another
the Belgian authorities
Member State of
the aids
distort competition since they are granted only to two
companies that are in direct competition with other
Community companies within the common market. It
must be pointed out here that the agreement concluded
on 1 March 1994 between (a) the Flemish region and (b)
the companies Air Belgium NV and Sunair NV stipulates
that the flight schedule may be discontinued and that the
Flemish region would then suspend its financial involve-
ment if, during 1994 to 1995, other companies were to
provide flights departing from Ostend to the same des-
tinations and if Air Belgium and Sunair consequently
suffered demonstrable financial losses. This latter clause
clearly illustrates the exclusive nature of the measure.
Indeed, the Belgian authorities have not challenged the
description of the two subsidies in question as aid.

IV

The Commission should have been notified of the two
abovementioned aid packages, which are not covered by
the approved aid systems, in accordance with Article 93(3)
of the Treaty. By omitting to give notification of that aid
in advance, that is to say, before providing it, Belgium has
failed to meet the obligations imposed upon it by Article
93(3). The aid has thus been granted illegally and is
unlawful.

V

The two aid packages should be examined in terms of
their compatibility with the common market, bearing in
mind the provisions of Article 92(2) and (3) of the Treaty
and Article 61(2) and (3) of the EEA Agreement.

The provisions of points (a), (b) and (c) of Article 92(2) of
the Treaty and of points (a), (b) and (c) of Article 61(2) of
the EEA Agreement do not apply to the aid in question,
since it represents neither aid having a social character,
granted to individual consumers without discrimination
as to product origin, nor aid intended to make good the
damage caused by natural disasters or other exceptional
occurrences; still less is it aid granted to the economy of
certain areas of Germany.

Article 92(3) of the Treaty and Article 61(3) of the EEA
Agreement list the forms of aid which may be considered
compatible with the common market. That compatibility

is to be assessed from a Community point of view and not
that of a single Member State.

In order to safeguard the proper functioning of
the
common market and in view of the principles set out in
point (g) of Article 3 of the Treaty, the exemptions from
the provisions of Article 92(1), as defined in paragraph 3
of that Article, must be interpreted strictly when any
system of aid or any individual measure is examined. In
addition,
in view of the sharper competition resulting
from the gradual liberalisation of air transport under the
third set of measures, the Commission must maintain a
stringent policy of checking State aids in order to prevent
to the
them from having effects
common interest (1).

run counter

that

Points (a) and (c) of Article 92(3) of the Treaty and points
(a) and (c) of Article 61(3) of the EEA Agreement contain
exemptions for aid intended to promote or smooth the
development of certain regions. The aid in question had
been granted by the Flemish Region, was ad hoc in
nature, and could not benefit from the abovementioned
exemptions since (a) it was operating and not investment
aid, and (b) did not meet the eligibility criteria concerning
the regional aid under point (a) of Article 92(3) of the
Treaty or point (a) of Article 61(3) of the Agreement.

The provisions of point (b) of Article 92(3) of the Treaty
and point (b) of Article 61(3) of the EEA Agreement
likewise do not apply in this instance since the aid at
issue is not intended to promote the execution of a Euro-
pean project or to remedy a serious disturbance in the
economy of a Member State.

The exemptions under point (c) of Article 92(3) of the
Treaty and point (c) of Article 61(3) of the EEA Agree-
ment as regards aid intended to ease the expansion of
certain economic activities applies even less to this
instance in that, as was said earlier, the various types of
aid in question are direct, operational aids and not aids
intended to spur investment. Moreover, the Commission
is only prepared to grant such an exemption to aid that
process (2).
accompanies
However, it would seem that Air Belgium and Sunair are
not currently undergoing any restructuring nor that the
aid in question is being granted as part of any restruc-
turing. In any case, the Belgian authorities have never
pleaded that provision.

restructuring

company

a

Finally, it needs again to be pointed out that in general
terms the Commission limits the scope for direct aid in
providing aviation services to two highly specific cases (3):

(cid:190) first of all, where a Member State invokes the provi-
sions of Article 4 of Regulation (EEC) No 2408/92 on
public-service obligations. That is in no way the case
here,

(1) Application of Articles 92 and 93 of

the EC Treaty and
Article 61 of the EEA Agreement to State aids in the aviation
sector (OJ C 350, 10. 12. 1994, p. 5).

(2) See footnote 6, Chapter V(2).
(3) See footnote 6, Ckhapter III.

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(cid:190) secondly, where point (a) of Article 92(2) of the Treaty
and point (a) of Article 61(2) of the Agreement are
applied. It has already been stated earlier that this
exemption could not apply to the present instance.

It emerges from the above that the two subsidies in ques-
tion are not covered by any of the cases provided for by
Article 92(2) and (3) of the Treaty or Article 61(2) and (3)
of the EEA Agreement. It is therefore appropriate to order
Belgium to cease providing these aids, which are incom-
patible with the common market,

HAS ADOPTED THIS DECISION:

Article 3

Within two months from notification of this Decision,
Belgium shall inform the Commission of the action that
it has taken in order to comply therewith.

Article 4

The Commission has no objection to the payment of BEF
4,5 million to the tour operator Sunair NV in order that
the Flemish Region may in general finance the advert-
ising of the regional airports at Ostend and Antwerp, as
provided for by paragraph 3, first indent, of Article 3 of
the contract of 1 March 1994, referred to in Article 1 of
this Decision.

Article 1

Article 5

The two subsidies provided for by, respectively, para-
graphs 2 and 4 of Article 3 of the contract concluded on 1
March 1994 between (a) the Flemish Region, and (b) the
air transport operator Air Belgium NV and the tour oper-
ator Sunair NV, and claimed by Air Belgium NV for
amounts of BEF 984 600 and BEF 270 116, constitute
illegal State aid, since they were granted in breach of
point (a) of Article 93(3) of the EC Treaty. The aid is
incompatible with the common market within the
meaning of Article 92 of the EC Treaty and Article 61 of
the EEA Agreement.

Article 2

Belgium is ordered to cancel payment of the two sub-
sidies referred to in Article 1.

The procedure concerning the exemption from landing
and parking fees provided for in paragraph 1 and the final
indent of paragraph 3 of Article 3 of the contract of 1
March 1994 referred to in Article 1 of this Decision is
terminated.

Article 6

This Decision is addressed to the Kingdom of Belgium.

Done at Brussels, 21 January 1998.

For the Commission

Neil KINNOCK

Member of the Commission