2003/637/EC: Commission Decision of 30 April 2003 on State aid C 65/2002 (formerly N 262/2002) from Austria to Austrian air carriers (Text with EEA relevance) (notified under document number C(2003) 1307)
Date: 2003-04-30
Institutions: European Commission
Subjects: Austria, State aid, air transport, control of State aid, transport company

5.9.2003

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 30 April 2003

on State aid C 65/2002 (formerly N 262/2002) from Austria to Austrian air carriers

(notified under document number C(2003) 1307)

(Only the German text is authentic)

(Text with EEA relevance)

(2003/637/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

(2)

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

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

(3)

Whereas:

By letter of 16 October 2002, the Commission informed
Austria of its decision to consider part of the notified
in respect of four measures amounting to a
scheme,
maximum of EUR 1 419 000, as compatible with the
common market and to initiate the procedure provided
for in Article 88(2) of the Treaty in respect of the other
measures envisaged in the aid scheme (2).

The Commission Decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities. The Commission has invited interested parties to
submit their comments on the aid in question.

I. PROCEDURE

(1)

the EC Treaty,
In accordance with Article 88(3) of
Austria informed the European Commission, by letter
dated 5 April 2002, registered on 10 April 2002 under
No SG(2002) A/3826, of a scheme to grant compensa-
tion to airlines. On 2 May 2002 an initial request for
additional information was sent to the Austrian authori-
ties (letter DG TREN D(2002) 7022). A reply was
received from Austria by letter dated 24 May 2002,
registered by the Commission under No TREN A/59420.
The Commission sent a second request for additional
information on 5 July 2002 (letter DG TREN D(2002)
11286). Austria replied by letter of 7 August 2002,
registered on 13 August 2002 under No SG (2002) A/
8235.

(4)

The Commission has not received any comments on this
subject from interested parties.

II. DESCRIPTION OF THE AID

Background

(5)

As a result of the terrorist attacks in the United States of
America on 11 September 2002, some parts of airspace
were closed for several days, in particular US airspace,
which was completely closed between 11 and 14
September 2002, and was only gradually reopened to air
traffic from 15 September 2001. Other States saw fit to
take similar measures for all or part of
their own
airspace.

(1) OJ C 309, 12.12.2002, p. 5.

(2) See footnote 1.

(6)

(7)

(8)

(9)

(10)

(11)

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flights
During this period, air carriers had to cancel
affected by the closure of the airspace concerned. In
addition, they suffered losses due to the disruption of
other traffic and the fact that some passengers were
unable to travel to their final destinations.

Communication of 10 October 2001). Austria was
authorised to pay the sum of EUR 1 419 000 for this
purpose.

The extent and suddenness of these events as well as the
costs sustained by air carriers prompted the Member
States to consider special compensation schemes.

(14)

The notified scheme to which this Decision refers
provides for two further measures in respect of which a
formal investigation was opened by the decision of 16
October 2002:

The scheme notified

In this connection, Austria proposed to introduce a
scheme to compensate Austrian air carriers for opera-
tional losses sustained during the period between 11 and
14 September 2001.

All air carriers which hold an air carrier's licence issued
by the Austrian authorities in accordance with Council
Regulation (EEC) No 2407/92 of 23 July 1992 on licen-
sing of air carriers (3) are eligible for compensation. The
measures notified are solely in respect of losses notified
to the Austrian authorities by companies of the Austrian
Airlines group, i.e. Austrian Airlines, Tyrolean Airlines,
Lauda Air and Rheintalflug. However, Austria has
confirmed to the Commission that other air carriers
which hold a licence issued by the Austrian authorities
are eligible for compensation under the scheme.

(15)

The maximum amount of compensation may not under
any circumstances exceed four 365ths of the company's
total annual turnover.

The eligible losses determined in this manner must be
verified and certified by the accountants of the company
concerned on the basis of the specified eligibility criteria.

(12) Austria has assured the Commission that it will submit a
report on payments made during the six months
following the approval of the scheme.

(13) On 16 October 2001 the Commission decided that a
scheme providing for compensation for losses sustained
during the period between 11 and 14 September 2001
was partly compatible with the common market. This
decision is based on Article 87(2)(b) of the Treaty and
the guidelines defined in the Communication from the
Commission to the European Parliament and the Council
‘The repercussions of the terrorist attacks in the United
States on the air transport industry’ (4) (hereinafter the

— the first, referred to as Measure 2b in the abovemen-
tioned decision, provides for compensation for the
cancelled transatlantic flight on 15 September 2001
(amount notified: EUR 55 727);

— the second, referred to as Measure 3, is intended to
provide compensation for loss of revenue on all
flights except those to the USA. For this purpose, the
average number of passengers per day and route
between 11 and 14 September 2001 was compared
with the number for the period between 1 and 10
September. The deficit of 8 630 passengers was
multiplied by the average income per passenger on
these routes to obtain the sum concerned. The
amount notified was EUR 1 908 128.

The Commission decided to open a formal investigation
since it doubts whether this aid scheme is compatible
with the common market. With regard to Measure 2b,
its doubts concern
which covers 15 September 2001,
not only the fact that the period referred to in point 35
of
the Communication of 10 October 2001 was
exceeded, but also and above all the fact that there were
no special events and that the nature of the eligible
losses changes after 14 September 2001. With regard to
Measure 3, which involves the greatest amount finan-
cially, the Commission doubts whether this measure is
compatible with the common market concern in parti-
cular since Austria has failed to demonstrate the direct
link which, according to point 35 of the abovemen-
tioned Communication, must exist between the eligible
costs and the closure of airspace, as well as the fact that
the measure obviously concerns geographical areas
which were not affected by the closure.

III. COMMENTS FROM INTERESTED PARTIES

(3) OJ L 240, 24.8.1992, p. 1.
(4) COM(2001) 574 final, 10.10.2001, available on: http://euro-

pa.eu.int/eur-lex/de/com/cnc/2001/com2001_0574de01.pdf

(16)

The Commission has not received any comments from
third parties within the period of one month.

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IV. COMMENTS BY AUSTRIA

(17) Austria sent the Commission further comments by letter
of 16 December 2002, registered by the Commission
under No TREN (2002) A/72621.

decision of 16 October, were on the outward part of
their journey, and that these passengers' return flights
were also cancelled. Austria confirmed that this compo-
nent had not been taken into consideration in its first
notification and provided an exact estimate based on
figures for the previous month, putting the loss at
EUR 1 235 700.

(18) With regard to Austrian Airlines'

transatlantic flight
cancelled on 15 September (Measure 2b), Austria stated
that this flight was cancelled following its original deci-
sion to put armed security guards on the flight. Authori-
sation could not be obtained from the US authorities in
good time, and so the necessary preparations for the
flight could not be made. Austria further stated that, in
flights restarted only gradually, which the
its view,
Commission itself recognised in its decision, and that
such cancellations show that
the situation remained
chaotic even after 14 September 2001.

(23)

Further losses relating to passengers who were similarly
in transfer on the other parts of Austrian Airlines'
network and whose return flights were cancelled were
calculated as described in recital 21 and estimated at
EUR […].

(24)

the Austrian Airlines group sustained similar
Finally,
losses of EUR […] for transfer passengers arriving for
transatlantic flights by other air carriers which had to be
cancelled on the same days.

(19)

Finally, Austria confirmed that it intends to pay the sum
of EUR 55 727, which was already disputed when the
investigation started, pursuant to Measure 2b.

(25)

Finally, Austria confirmed that, instead of the amount of
EUR 1 908 128 stated in the original notification,
it
planned to pay the sum of EUR 1 983 333 under this
measure, the total of the four amounts indicated in reci-
tals 21 to 24.

interpretation of

(20) Austria has justified the general compensation scheme
for the entire network of routes (Measure 3), to which
the Commission had raised objections, by reference to
its
the Communication from the
Commission of 10 October 2001 and the letters from
Commission departments to the Member States of 14
November 2001, and not by reference to previous deci-
sions taken by the Commission in respect of other
Member States (5), to which the Commission had drawn
Austria's attention. Austria also made other statements
about the proposed compensation scheme.

V. ASSESSMENT OF THE AID

Existence of the aid

(21) Austria first of all calculated the actual losses, based on
the averages for August 2001, for transfer passengers in
the Austrian Airlines' network who did not board their
onward flight because the company's transatlantic flights
were cancelled between 11 and 14 September 2001.
These losses amount to EUR […].

(26) Article 87(1) of the Treaty states that ‘save as otherwise
provided in this Treaty, any aid granted by a Member
State or through State resources […] which distorts or
threatens to distort competition by favouring certain
undertakings or the production of certain goods shall,
insofar as it affects trade between Member States, be
incompatible with the common market’.

(22) Austria furthermore calculated that about

[…] % of
transatlantic flights
passengers on Austrian Airlines'
cancelled between 11 and 14 September 2001,
for
which compensation for losses was approved by the

(27)

The aid to the air carriers is being granted from State
resources
them an economic
advantage.

and therefore gives

(5) See similar Decisions concerning France (N 806/2001 of 30
January 2002), the United Kingdom (N 854/2001 of 12 March
2002) and Germany (N 269/2002 of 2 July 2002), available at:
http://europa.eu.int/comm/secretariat_general/sgb/state_aids/
transports.htm

(28)

The scheme for air carriers to which this Decision refers
is selective in nature. Furthermore, the four air carriers
for which the aid is primarily intended are expressly
named (see recital 9).

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(29)

to

air

carriers

Since the opening up of the air transport market on 1
January 1993 following the entry into force of Council
Regulation (EEC) No 2407/92 and Council Regulation
(EEC) No 2408/92 of 23 July 1992 on access for
Community
air
routes (6), as amended by the Act of Accession of
Austria, Finland and Sweden, air carriers in the indivi-
dual Member States are in competition with each other.
The four air carriers for which the aid is intended
operate in the Community market. The proposed aid
and the resulting advantages
the undertakings
concerned affect trade between the Member States and
could distort competition.

intra-Community

for

(30)

These measures, which constitute State aid, are only
compatible with the common market if they are covered
by one of the four proposed derogations.

Legal basis for assessment of the aid

The derogations provided for in Article 87(2)(a) and (c)
of the Treaty do not apply since the aid concerned is
neither aid having a social character, granted to indivi-
dual consumers, or aid granted to the economy of
certain areas of the Federal Republic of Germany.

The derogations provided for in Article 87(3)(a) and (c)
of the Treaty also do not apply since the aid is neither to
promote the economic development of areas where the
standard of living is abnormally low or where there is
serious underemployment, nor is it
to facilitate the
development of certain economic activities or of certain
economic areas.

that the events of 11 September 2001 can be regarded
as exceptional occurrences within the meaning of Article
87(2)(b) of the Treaty.

(35)

In paragraph 35 of its Communication of 10 October
2001, the Commission explains the conditions which it
believes must be fulfilled for compensation relating to
such events to be compatible with Article 87(2)(b) of the
Treaty:

‘The Commission considers that the costs arising 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 condi-
tions:

— compensation is paid in a non-discriminatory
manner to all airlines in the given Member States,

— 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,

— the 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 account of the development
in the 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 four 365ths of the airline's turnover.’

Similarly, the provisions of Article 87(3)(b) and (d) of
the Treaty also do not apply, since these concern aid to
important projects of common European
promote
interest or
to remedy a serious disturbance in the
economy of a Member State and aid to promote culture
and heritage conservation.

Compatibility in accordance with Article 87(2)(b) of
the Treaty

(a) Measure 2b (Transatlantic flight on 15 September 2001)

In accordance with Article 87(2)(b) of the Treaty, aid to
make good the damage caused by natural disasters or
exceptional
compatible with the
common market. In paragraph 33 of its Communication
of 10 October 2001, the Commission expresses the view

circumstances

is

(6) OJ L 240, 24.8.1992, p. 8.

(36)

The notified scheme clearly surpasses the framework
considered permissible in the Communication of 10
October 2001 as regards the application of Article
87(2)(b) of the Treaty, namely a restriction to the period
between 11 and 14 September 2001 and to losses which
arose during this period and have been approved and
which are due to the closure of airspace.

(31)

(32)

(33)

(34)

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(37)

(38)

(39)

(40)

(41)

the Commission did state that

In paragraph 35 of its Communication of 10 October
2001,
the closure of
American airspace between 11 and 14 September 2001
was an ‘exceptional occurrence’ and that compensation
for losses due to this closure is permissible, but in the
Commission's view this does not apply to losses which
are only indirectly related to the closure of the airspace.
This applies in particular to losses sustained by air
carriers following the reopening of airspace on 15
September.

In its Communication of 10 October 2001, the Commis-
sion explained that compensation may be paid ‘only for
the costs incurred following the grounding of air traffic
decided by the American authorities’. The explanations
given by the Austrian authorities, however, make it quite
clear that the flight concerned was unable to be operated
due to its own decision to take a special measure and to
use
required the
approval of the US authorities, which Austria failed to
receive in good time. The Austrian authorities therefore
recognise that the decisive factor after 14 September
2001 was not the grounding of air traffic, but more
restrictive operations on the air routes concerned.

armed personnel. That measure

The Commission is therefore unable to share the view
that the indirect effects of the attacks of 11 September,
such as operational difficulties faced by air carriers after
15 September, can be considered to be the same as the
direct effects, by which is meant the complete closure of
certain parts of airspace until 14 September which made
it impossible to operate on the routes concerned. The
indirect effects of the attacks were felt for a longer or
shorter time in many sectors of the global economy, and
even continue to be felt, but these difficulties, as serious
as they may be, can no more be regarded as exceptional
occurrences justifying the application of Article 87(2)(b)
of the Treaty than other economic or political crises.

The Commission would also draw attention to the fact
that, as part of its task of ensuring the equal treatment
of undertakings, it has not authorised compensation in
any of its relevant decisions (7) for a period after 14
September 2001.

The Commission therefore concludes that Measure 2b
for an amount of EUR 55 727 as compensation for
losses incurred after 14 September 2001 is not compa-
tible with the common market, and in particular that it
does not fall within the scope of the derogation provided

(7) In addition to the decisions referred to in footnote 5, see also the
final negative Decision 2003/196/EC (OJ L 77, 24.3.2003, p. 61)
concerning State aid C 42/2002 which France proposed to imple-
ment and which was intended to extend beyond 14 September
2001 the compensation for costs incurred initially authorised by
Decision N 806/2001.

(42)

(43)

(44)

(45)

for in Article 87(2)(b) of the Treaty, according to the
interpretation made in the Communication of 10
October 2001.

(b) Measure 3 (other planned compensation)

carrier's

The Commission notes that all air carriers which hold an
air
issued by the Member State
concerned are eligible for compensation. It is therefore
obviously a non-discriminatory measure.

licence

for

the

application of

The Communication of 10 October 2001 approves the
principle of compensation for the direct consequences of
the closure of airspace by the US authorities. The
the
detailed arrangements
Commission Communication were set out
in letters
dated 14 November 2001 from the relevant Commission
departments to the Member States. These letters referred
in particular to the direct link which must exist between
the closure of the entire US airspace and the resulting
disturbances in European airspace. In this context, this
in accordance with the information
measure provides,
given by Austria in its reply to the initiation of the
procedure,
for compensation only for networks and
routes which were affected by the closure of airspace
and by the resulting disturbances in other networks,
such as passengers not being able to be carried to their
final destination. The Commission takes the view that
this measure therefore corresponds to the position laid
down in its Communication of 10 October 2001,
in
particular as regards the direct link which must exist
between the costs eligible for compensation and the
closure of airspace.

This measure applies only for the period between 11
and 14 September 2001 and is confined to losses arising
during this period which are directly due to the closure
of airspace. It therefore complies with the restrictions
laid down by the Commission in this respect.

The method used to calculate the operational losses for
which compensation may be paid is based on the
method laid down by the Commission in its Communi-
cation, the details of which were explained in the letters
of 14 November 2001 from the Commission depart-
ments to the Member States. The loss of revenue during
the four days in question was determined on the basis of
the companies' most recent figures at the time of the
attacks. In particular, Austria considered only losses of
revenue due to the actual cancellation of transatlantic
flights or the corresponding transfers.

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With regard to the loss of revenue per passenger, Austria
made it clear in its reply that no variable costs had to be
deducted for these flights since they were all operated in
the normal manner.

Lastly, the maximum amount of four 365ths of turnover
applied by the Member State corresponds
to the
maximum laid down by the Commission.

The Commission therefore considers that this calculation
is within the framework of the maximum amount it laid
down in its Communication of 10 October 2001, corre-
sponding to the net loss of revenue on these four days.

In accordance with the detailed rules of application indi-
cated in the abovementioned letters of 14 November
2001 from the Commission departments, the Member
State has undertaken to inform the Commission,
following the initial notification, of the conditions for
the application of this aid scheme within six months of
its approval.

The Commission therefore concludes that the supple-
mentary measure taken by Austria in respect of air
carriers following the closure of airspace between 11
and 14 September 2001 for the sum of EUR 1 983 333
corresponds to the rules laid down in its Communica-
tion of 10 October 2001, and can therefore be regarded
as compatible with Article 87(2)(b) of the Treaty.

VI. CONCLUSIONS

The Commission concludes that the notified measure for
an amount of EUR 55 727 as compensation for losses
after 14 September 2001 is not compatible with the
common market and in particular does not fall under
the derogation provided for in Article 87(2)(b) of the
Treaty, as interpreted in the Commission Communica-
tion of 10 October 2001. However, the Commission
takes the view that the additional measure taken by
Austria in respect of air carriers following the closure of
airspace between 11 and 14 September 2001 amounting
to EUR 1 983 333 complies with the rules laid down in

(46)

(47)

(48)

its Communication of 20 October 2001 and can there-
fore be regarded as compatible with the common market
in accordance with Article 87(2)(b) of the Treaty,

HAS ADOPTED THIS DECISION:

Article 1

The State aid amounting to EUR 55 727 which Austria intends
to pay to an Austrian air carrier as compensation for losses
sustained after 14 September 2001 following the closure of
certain parts of airspace is not compatible with the common
market.

The aid concerned may therefore not be paid.

Article 2

However, the aid amounting to EUR 1 983 333 which Austria
intends to pay to Austrian Airlines is compatible with the
common market in accordance with Article 87(2)(b) of the
Treaty.

Payment of this aid is therefore approved.

Article 3

Austria shall inform the Commission, within two months of
notification of this Decision, of the measures taken to comply
with this Decision.

This Decision is addressed to the Republic of Austria.

Article 4

Done at Brussels, 30 April 2003.

For the Commission

Loyola DE PALACIO

Vice-President