2003/196/EC: Commission Decision of 11 December 2002 concerning State aid scheme C 42/2002 (ex N 286/2002) which France proposes to implement to assist French airlines (notified under document number C(2002) 4833) (Text with EEA relevance)
Date: 2002-12-11
Institutions: European Commission
Subjects: France, State aid, United States, aid system, air transport, control of State aid, economic consequence, terrorism

24.3.2003

EN

Official Journal of the European Union

L 77/61

COMMISSION DECISION

of 11 December 2002

concerning State aid scheme C 42/2002 (ex N 286/2002) which France proposes to implement to
assist French airlines

(notified under document number C(2002) 4833)

(Only the French text is authentic)

(Text with EEA relevance)

(2003/196/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

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

Having invited interested parties to submit their comments in
accordance with the aforementioned Articles (1),

Whereas:

I. PROCEDURE

(1)

(2)

(3)

(4)

By fax dated 11 April 2002, recorded on 12 April 2002
(TREN (2002) A/56617),
the
Commission of a compensation scheme for losses in the
aviation sector for the period starting on 15 September
2001.

notified

France

By letter dated 5 June 2002, the Commission informed
France of its decision to initiate the procedure laid down
in Article 88(2) of the Treaty in respect of the said aid.

The Commission’s decision to initiate the procedure was
the European
published in the Official
Communities (2). The Commission invited interested
parties to submit their comments on the aid in question.

Journal

of

The Commission received no comments on this matter
from interested parties.

II. DETAILED DESCRIPTION OF THE AID

Background

(5)

As a result of the terrorist attacks perpetrated in the
United States on 11 September 2001, certain parts of

(6)

(7)

(8)

(9)

space were closed for

air
several days. This was
particularly true of United States air space, which was
entirely off limits from 11 to 14 September 2001 and
was only gradually reopened to navigation as of
15 September 2001. Other States were prompted to
take similar measures on all or part of their territory.

Accordingly, during this initial period, airlines were
forced to cancel flights using the air space concerned. In
addition, they suffered losses as a result of disruption to
routing some
other
passengers to their final destination.

traffic and the impossibility of

In view of the scale and sudden nature of these events,
and the costs they engendered for the airlines,
the
Member States were prompted to envisage special
compensation arrangements.

France’s compensation scheme for losses sustained from
11 to 14 September 2001 received Commission
approval (3). The decision was taken on the basis of
Article 87(2)(b) of the Treaty and the guidelines set out
in the communication from the Commission to the
European Parliament and the Council (cid:145)The repercussions
of the terrorist attacks in the United States on the air
transport industry(cid:146) (4) (hereinafter the communication of
10 October 2001). The budget authorised for France
was EUR 54,9 million.

New scheme notified by France

The notified scheme covered by the present decision is
an extension of the scheme approved for the period
provides
ending
compensation for losses for the period from 15 to 19

September

2001.

14

on

It

(1) OJ C 170, 16.7.2002, p. 11.
(2) See footnote 1.

(3) Decision of 30 January 2002 on aid N 806/2001 (OJ C 59,

6.3.2002, p. 25).

(4) COM (2001) 574 final, 10.10.2001.

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September 2001 sustained by scheduled airlines and
charter companies, and from 15 to 30 September 2001
by business airlines.

Losses
such as
relating to other airline activities,
maintenance or the provision of on-board services, are
not eligible under this measure.

(10)

(11)

(12)

In support of their notification, the French authorities
contend that the closure of United States air space had
direct consequences for airlines beyond 14 September
2001, as it was only as of 20 September that
the
scheduled airlines were able to resume a stabilised flight
schedule while
complying with the new security
measures imposed by the American authorities as a
condition
Similar
restrictions are claimed to have affected business airlines
until the end of September 2001.

entering

space.

their

for

air

the new scheme does not alter

In point 2.1 of the notification, the French authorities
specify that
the
budgetary allocation of EUR 54,9 million approved in
the Commission’s decision regarding the compensation
scheme for losses following the closure of air space
from 11 to 14 September 2001.

The eligible airlines are air carriers with a licence to
operate as such or an air transport authorisation issued
by the French authorities and valid on 11 September
2001. To qualify for compensation, operating losses
sustained by airlines must be directly linked to the
access restrictions to United States air space applied
over the period from 15 to 19 September 2001 (5)
following the attacks of 11 September 2001, and must
relate to one of the following:

(cid:151) the airline’s inability to carry out a flight owing to

the restrictions imposed by the United States,

(cid:151) the disruption those restrictions caused to the
operation of the other flights of that airline or other
airlines,

(cid:151) the fact that some passengers on other flights of
that airline or other airlines were unable to reach
their final destination.

(15)

The maximum compensation provided is
to be
calculated with reference to those of the airline’s routes
or networks on which incurred operating losses may be
compensated. Nonetheless, loss of turnover eligible for
compensation under the scheme may relate to airlines’
entire networks, in both North America and in Europe
or in other parts of the world.

(16)

For these routes or networks, the calculation will take
into account:

(cid:151) loss of turnover recorded during the period from
15 to 19 September 2001 (6) compared with the
situation which would have been considered normal
had the events of 11 September 2001 not occurred;
loss of turnover is to be calculated by comparing
the traffic recorded by each airline during the five
days in question with that recorded by the same
airline over the same five days of the first week of
September, adjusted to take account of the trend
seen in the corresponding period in 2000;

(cid:151) costs which would have been incurred had activity
not been affected by the events of 11 September
2001, and which were avoided;

(cid:151) additional operating costs borne by the airlines as a
result of the suspension of their activity, and which
are not covered by insurance.

(17)

The maximum amount of compensation may not
exceed 5/365ths of an airline’s turnover.

(13) However, losses resulting from flight cancellations at the
airline’s own initiative, or from journey cancellations by
passengers on personal grounds, are not considered to
qualify for compensation.

(14) Only activities linked to public passenger transport or
freight transport may be considered for compensation.

(5) From 15 to 30 September 2001 for business airlines.

(18)

The French authorities indicate that they consulted all
the eligible airlines. As a result of this process they
propose to grant compensation to eight Community
for a total of around EUR 20,96
French airlines
million (7). They also indicate
they envisage
that
compensation for
extra-Community French airlines
based in French Polynesia (8) should the individual aid
planned for the Community airlines be accepted by the
Commission.

(6) From 15 to 30 September 2001 for business airlines.
(7) [(cid:133)].
(8) [(cid:133)].

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L 77/63

(19)

(20)

this

that

told

case-by-case

the Commission

France
detailed
information on each proposed recipient has been sent
to allow a
French
authorities believe this approach to be in line with that
laid down by the Transport Council on 16 October
2001 (9)
compensation beyond 14
September 2001.

examination;

assessing

the

for

the

to initiate

The Commission decided
formal
examination procedure in the light of doubts as to the
compatibility of such an aid scheme with the Treaty,
not just because it extends beyond the period stipulated
in paragraph 35 of the communication of 10 October
2001, but also, and above all, because of the absence of
exceptional occurrences and the different nature of the
losses being compensated after 14 September 2001.

III. COMMENTS FROM INTERESTED PARTIES

(21) No interested third party submitted comments to the
Commission within the allotted one month period.

IV. COMMENTS FROM FRANCE

(22)

The French authorities submitted no further comments
to the Commission within the one-month period
stipulated by the decision to initiate the procedure or
within the additional one-month period they requested
by fax dated 3 July 2002, registered by the Commission
under
the number TREN (2002) A/61839. The
Commission also notes that at 1 November 2002 no
comments had been received.

V. ASSESSMENT OF THE AID

Existence of aid

(23)

the Treaty,

to Article 87(1) of

Pursuant
(cid:145)save as
otherwise provided (cid:133), 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 common
market.(cid:146)

airlines due to receive aid under the scheme have been
explicitly identified (see recital 18 and footnote 6).

(26)

In the context of an air market liberalised since the
(cid:145)third package(cid:146)
entered into force on 1 January
1993 (10), a Member State’s airlines find themselves
competing with other airlines
from other Member
States. Specifically, the eight airlines eligible for the aid
operate
actively on the Community market. The
subsidies proposed for them, and the advantage this
would give them, would affect trade between Member
States and are liable to affect competition.

(27)

These measures, which constitute
aid,
compatible with the common market only if
qualify for one of the derogations provided for.

State

are
they

Legal basis for assessing the aid

(28) Having examined the scheme in question in the light of
its provisions and its possible application to the eight
potential
recital 18 and
footnote 6), the Commission does not consider any of
the derogations provided for in Article 87(2) and (3) to
be applicable in this instance.

identified (see

recipients

(29)

(30)

The derogations provided for in Article 87(2)(a) and (c)
of the Treaty do not apply because the aid in question is
neither aid of a social character granted to individual
the
consumers nor aid granted to certain areas of
Federal Republic of Germany.

The derogations provided for in Article 87(3)(a) and (c)
of the Treaty cannot be considered as the aid is neither
aid to promote the economic development of areas
where the standard of living is abnormally low or where
there is serious under-employment nor aid to facilitate
the development of certain economic activities or of
certain economic areas.

(24)

Subventions to airlines constitute an allocation of State
resources to those airlines and thus represent a definite
economic advantage for them.

(31)

Lastly, the derogations provided for in Article 87(3)(b)
and (d) of the Treaty, for aid to promote the execution

(25)

The measure covered by this decision and relating to air
the eight
is by nature selective. Moreover,
transport

(9) See recital 40.

(10) Council Regulation (EEC) No 2407/92 of 23 July 1992 on
licensing of air carriers (OJ L 240, 24.8.1992, p. 1), and Council
Regulation (EEC) No 2408/92 of 23 July 1992 on access for
Community air carriers to intra-Community air routes (OJ L 240,
24.8.1992, p. 8).

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of an important project of common European interest
or to remedy a serious disturbance in the economy of a
Member State and aid to promote culture and heritage
conservation,
in this
instance.

respectively, are not

relevant

Compatibility within the meaning of Article 87(2)(b) of the
Treaty

(32)

occurrences(cid:146)

Pursuant to Article 87(2)(b) of the Treaty, (cid:145)aid to make
caused by natural disasters or
good the damage
exceptional
the
is
common market. In the communication of 10 October
2001 (11), the Commission considers that the events of
11 September 2001 may be described as exceptional
occurrences within the meaning of Article 87(2)(b) of
the Treaty.

compatible with

(33)

In point 35 of the communication of 10 October 2001,
the Commission sets out the conditions it believes must
be met
in order for compensation relating to these
events to be considered to be in line with Article
87(2)(b) of the Treaty:

the costs arising
(cid:145)The Commission considers that
directly from the closure of American airspace
between 11 and 14 September 2001 are a direct
consequence of the events of 11 September. They
may therefore give rise to compensation by Member
States in accordance with Article 87(2)(b) of
the
Treaty on the following conditions:

(cid:151) compensation is paid in a non-discriminatory
manner to all airlines in a given Member State,

(cid:151) it concerns only the costs incurred during the
days 11 to 14 September 2001 following the
grounding of air traffic decided by the American
authorities,

(cid:151) the

of

amount of

compensation is

calculated
accurately and objectively by comparing the
traffic recorded by each airline during the four
days in question with that recorded by the same
airline in the preceding week, adjusted to take
the
account
corresponding period of 2000. The maximum
amount of compensation, which must
take
account in particular both of the actual costs
incurred and those avoided, is equal to the loss
of revenue duly recorded during these four days.
It must of course be less than 4/365ths of the
airline’s turnover.(cid:146)

development

the

in

(11) See point 33 of the communication.

(34)

It

thus clearly exceeds

The notified scheme is designed to compensate for
losses during the period up to 19 September 2001 for
scheduled airlines and up to 30 September 2001 for
the frame
business airlines.
considered admissible in the communication of 10
October 2001 for applying Article 87(2)(b) of
the
Treaty, that frame being limited to the period from 11
to 14 September 2001 and confined to losses, directly
linked to the closure of air space and already approved,
sustained during that period.

(35) While the Commission has already stated, in point 35
of the communication of 10 October 2001, that the
closure of United States air space from 11 to 14
September 2001 and the compatibility of compensation
losses resulting from that closure constitute an
for
(cid:145)exceptional occurrence(cid:146),
it has not said the same of
other damage indirectly linked to the said closure. This
is the case, for instance, of losses sustained by airlines
following the reopening of air space on 15 September.

(36)

(37)

The Commission explained in the communication of 10
October 2001 that
losses eligible for compensation
must concern (cid:145)only the costs incurred (cid:133) during the
days 11 to 14 September 2001 following the grounding
of air traffic decided by the American authorities.(cid:146) In
their notification,
the French authorities describe in
detail the additional security measures imposed by the
American authorities,
including searching of hold
baggage at check-in, close surveillance of aircraft and
screening of staff, plus the checks those authorities
these
intended to make on the implementation of
for
deadlines
measures,
implementing these measures prevented the airlines
from resuming all their flights on 15 September.(cid:146)

indicate

that

and

(cid:145)the

in terms of

The French authorities thus recognise that, after 14
September 2001, the situation was no longer marked by
traffic disruption but by tighter operating arrangements
for airlines
security measures. Though
unusual, such additional costs cannot be considered to
be exceptional occurrences within the meaning of
Article 87(2)(b) of the Treaty. Similar additional costs or
operating constraints have arisen or persist where
conflicts
in an
overflying ban, e.g. the Balkans, or in respect of air
services to countries posing a specific political risk,
without this giving rise to any eligibility for aid.

in certain geographical areas

result

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L 77/65

(38)

i.e.

that

therefore accept

The Commission cannot
the
indirect repercussions of the attacks of 11 September
2001, such as difficulties in operating air routes as of
15 September, be placed on the same level as the direct
repercussions,
the complete closure of some air
space until 14 September and the impossibility of
operating routes which used that space. The indirect
repercussions of the attacks were felt, and continue to
be felt,
the world economy to
differing degrees, but as with any other economic or
political crisis, these difficulties, however burdensome,
cannot be looked upon as exceptional occurrences such
as would allow application of Article 87(2)(b) of the
Treaty.

in many sectors of

airline

(39) Moreover, the compensation ceiling of 5/365ths of an
airline’s annual turnover, while corresponding in spirit
to the 4/365ths ceiling the Commission specified for the
four days from 11 to 14 September, would lead to a
given
receive maximum
able
compensation of 9/365ths of its annual turnover. The
limits set in the communication of 10 October 2001
would thus be exceeded very significantly, and this
would also mean that the circumstances referred to in
Article 87(2)(b) of the Treaty could not be deemed to
obtain.

being

to

(40)

invites

Regarding the conclusions of the Transport Council of
16 October 2001, to which France refers in support of
its notification, the Commission points out that these
only have indicative policy value and are not legally
binding in the context of examining the compatibility of
aid. Moreover, while in point 7 of the conclusions the
Council
the period
the Commission,
following 14 September, to examine (cid:145)on a case by case
basis the compensation which could be granted on the
basis of objective criteria to make up for restrictions
country of
imposed to European airlines by the
destination,(cid:146)
or
aid
indicates
also
compensation may not lead to distortion of competition
In assessing equality of treatment
between operators.(cid:146)
between
the
Commission thus notes that no other proposal for an

operators, which

it must

ensure,

(cid:145)any

that

for

it

equivalent period has been notified by the other
Member States for their air operators. What is more, the
Commission, in its decisions in this area (12) has yet to
authorise any compensation beyond the period ending
on 14 September 2001.

VI. CONCLUSIONS

(41)

In view of the foregoing, the Commission concludes
that
the notified measure is incompatible with the
common market and is not eligible for the derogation
provided for in Article 87(2)(b), as interpreted in the
communication of 10 October 2001,

HAS ADOPTED THIS DECISION:

Article 1

The State aid which France proposes to implement in favour
of French airlines
to provide compensation beyond 14
September 2001 for the losses those airlines sustained on
account of the partial closure of air space is incompatible with
the common market.

For that reason, the aid may not be implemented.

Article 2

France shall inform the Commission within two months of the
notification of this decision of the measures taken to comply
with it.

Article 3

This decision is addressed to the French Republic.

Done at Brussels, 11 December 2002.

For the Commission

Loyola DE PALACIO

Vice-President

(12) See the Decisions of 12 March 2002 on aid N 854/2001 granted
by the United Kingdom and 2 July 2002 on aid N 269/2002
granted by Germany, available for consultation at:
http://europa.eu.int/comm/secretariat_general/sgb/state_aids/trans-
ports.htm.