2004/393/EC: Commission Decision of 12 February 2004 concerning advantages granted by the Walloon Region and Brussels South Charleroi Airport to the airline Ryanair in connection with its establishment at Charleroi (notified in Number C(2004) 516) (Text with EEA relevance)
Date: 2004-02-12
Institutions: European Commission
Subjects: Belgium, State aid, Walloon region (Belgium), air transport, control of State aid, infringement of EU law, tax relief

30.4.2004

EN

Official Journal of the European Union

L 137/1

II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 12 February 2004

concerning advantages granted by the Walloon Region and Brussels South Charleroi Airport to
the airline Ryanair in connection with its establishment at Charleroi

(notified in Number C(2004) 516)

(Only the French and Dutch texts are authentic)

(Text with EEA relevance)

(2004/393/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(2)

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 called on interested parties to submit their comments
pursuant to the above Articles (1), and having regard to these
comments,

Whereas:

1. PROCEDURE

(1)

Following information published in the Belgian press in
July 2001 and the receipt of a complaint in January
2002, the Commission was informed that Belgium had
granted a number of advantages to the airline Ryanair
for the operation of air services at Charleroi Airport. In
letters dated 21 November 2001, 13 June 2002 and 4
July 2002, and in a meeting held on 9 October 2002,
Belgium transmitted information on to the Commission.

(3)

(4)

(5)

letter dated 13 December 2002 (SG(2002)
In a
its
the Commission informed Belgium of
D/233141),
decision to initiate the procedure provided for in Article
88(2) of
these measures.
Belgium transmitted its comments on 14 February 2003
after having requested an extension until 15 February
2003 of the period for its response, which was accepted
by the Commission.

the Treaty in respect of

The Commission's decision to initiate the procedure was
published in the Official Journal of the European Union (2).
The Commission invited interested parties to submit
their comments on the measures in question within one
month of the publication date.

It

contributions,

The Commission received comments on the subject
from interested parties.
transmitted the comments
that did not contain confidential information to Belgium
by a letter dated 19 March 2003, and followed by the
other
confidential
information had been removed, by letter dated 22 April
2003. On each occasion, Belgium was given the
opportunity to respond to them within one month. The
Commission received Belgium's observations by letters
dated 16 and 27 May 2003.

from which the

At the request of the Commission, three meetings were
held with the Belgian authorities on 24 June 2003, 23
July 2003 and 25 July 2003. These meetings were
followed by the dispatch of additional
information, as
requested by the Commission, on 27 August 2003.

(1) OJ C 18, 25.1.2003, p. 3.

(2) See Note 1.

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Official Journal of the European Union

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(6)

On 19 December 2003, Belgium sent a final letter to
the Commission, containing additional
information. In
this letter,
the Belgian authorities requested another
meeting with the Commission; this meeting was held on
16 January 2004.

any specific obligation on the part of Ryanair towards
the Walloon Region.

2. DESCRIPTION

2.1. BRIEF DESCRIPTION OF THE FACTS

(7)

airport

infrastructure,

the Charleroi

On 6 November 2001 the Walloon Region, the owner
signed an
of
agreement with Ryanair that involved a reduction of
some 50 % in the amount of
the landing charge
compared with the amount fixed by the government
and published in the Moniteur Belge (3). This reduction
was granted to Ryanair on a discretionary basis by the
Walloon Minister
through a private
for Transport,
contract and not through the adoption of a statutory
measure. While
calculated
landing
according to the tonnage weight of the aircraft under
the general system applicable to all, it is calculated on a
for Ryanair and collected for each
different basis
embarking passenger (4).
the Walloon
Region undertook to compensate Ryanair for the losses
that the company might incur because of a possible
change in the level of all airport
taxes or airport
opening hours during the years 2001—2016 (5). These
advantages were not published and were not subject to

In addition,

charge

the

is

(3) On the basis of a 1994 Parliamentary Decree,

the Walloon
Government issued a decree in 1998 that introduced, for Charleroi
and Liège airports, a system of airport taxes (landing, passenger
and parking) and reductions which were clearly established and
available to all (Decree of the Walloon Government of 16 July 1998
laying down the fees to be levied for the use of airports within the
Walloon Region, Moniteur Belge of 15 September 1998). This
system was
amended in March 2001 by a new Walloon
Government Decree (Walloon Government Decree dated 22 March
2001 amending the Walloon Government Decree of 16 July 1998,
Moniteur Belge of 10 April 2001). Walloon regulations state that
‘the fees and subscriptions fixed in this decree shall be levied by the
airport management company'.
In addition, at the end of each
calendar year,
‘35 % of the amount of the fees and subscriptions
fixed by this decree and levied at each airport shall be paid into a
fund for the environment of the airport concerned'.

(4) The calculation, shown in detail in points 22-29 of the decision to
initiate the procedure, shows a figure of approximately 50 %
reduction at the present time, totalling, according to the types of
aircraft, approximately EUR 104 and EUR 151 for Ryanair's Boeing
737-200 and 737-800, compared with approximately EUR 250 and
EUR 390 according to the general rates for the same aircraft.

(5) ‘The Walloon Region undertakes to compensate Ryanair against any
loss of profit arising directly from a modification of the decree or
regulation, unless the exercise by the Walloon Region of its decretal
or regulatory power is dictated by a regulation or directive, by an
ICAO regulation, or by any international treaty or federal law'.

(8)

(9)

(BSCA)

Brussels South Charleroi Airport
is a public
sector company controlled by the Walloon Region,
which has managed the airport since 1991 under a
50-year concession agreement. BSCA collects financial
support from the Walloon Region in order to carry out
certain tasks of general
interest entrusted to it. Under
this agreement, BSCA is authorised to collect air-traffic
fees of up to 65 % as well as fees corresponding to any
services provided (6). In a letter dated 4 July 2002, the
Belgian authorities explained that the Walloon Region
gives BSCA a flat 65 % of the revenue from the taxes by
way of compensation: ‘The elements taken into account
embarkation,
are
disembarkation and transfer of passengers and their
luggage and the volume of increase in overheads that
cannot be allocated to a specific heading, following the
rapid increase in the number of passengers to be dealt
that are currently not
with in reception facilities
adapted'. The Belgian authorities
‘these
specify that
activities involve a public service task and can thus be
the subject of compensation, in accordance with Articles
73 and 86(2) of the EC Treaty'.

in the welcoming,

involvement

This income allows BSCA to grant Ryanair a ‘share' in
the expenditure connected with the opening of Ryanair's
base in Charleroi
(EUR 250 000 for hotel costs and
Ryanair staff subsistence; EUR 160 000 for each new
route opened up to a maximum of three routes for each
based aircraft or a maximum of EUR 1 920 000; EUR
768 000 for participation in the cost of recruiting and
training pilots
assigned to the new
destinations served by the airport; EUR 4 000 for the
purchase of office equipment; free provision of 100 m3
of office space; 100 m3 of ‘engineering store'; the right
of access to the training room; and a minimum or zero
contribution for
for aircraft
maintenance).

the use of a hangar

and crews

(10)

In addition, the price fixed for ground handling services
for Ryanair is EUR 1 per passenger, a mere 10 % of the
price publicised by BSCA for other users.

concession mentioned in Article 1.1 [the

(6) ‘The concession holder is authorised to collect air-traffic fees and
fees corresponding to any services that it is required to provide
[…]. The
service
concession] is granted through a payment to the Walloon Region
of an annual total of 35 % of the air-traffic fees collected by the
concession holder during the previous year. The term “air-traffic
fees” means the fees connected with landing, embarkation and
parking […]. The sum total of the fees mentioned in Article 18.4
[35 %]
resolution of
environmental problems caused by operation of the airport'. Article
18 of the 1991 Concession Agreement.

forms a fund allocated to the financial

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L 137/3

(11)

(12)

(13)

Ryanair and BSCA have formed a joint advertising and
publicity company, which finances all Ryanair's publicity
and marketing in relation to its activities at Charleroi.
For example, the company finances part of the price of
Ryanair's promotional
tickets. BSCA and Ryanair
contribute in the same proportions to the Promocy
operation (EUR 62 500 to put
together Promocy's
authorised capital, and a ‘marketing' contribution of
EUR 4 per passenger to its annual budget).

(14)

least

In return, Ryanair undertook vis-à-vis BSCA to base a
number of aircraft at Charleroi (between two and four)
and to operate at
three rotations per aircraft
leaving Charleroi over a 15-year period. The Irish
the airport manager with
company thus provides
to anticipate
airport passenger
through
income,
non-aeronautical activities. If Ryanair had to cease its
operations at Charleroi, the company would be required
to repay to BSCA the ‘participation' in the expenditure
connected with the opening of Ryanair's base and the
‘marketing contribution'.

traffic that allows it

through airport

taxes or

either

measures are specific, granted through State resources
and likely to distort competition and intra-Community
trade, and could thus be considered to constitute State
aid.

The Commission judged that the bearing by BSCA of
certain air service running costs also had the effect of
putting Ryanair in a more advantageous situation than
its competitors, whether they were companies operating
out of Charleroi or other companies operating out of
other airports and required to finance their own
publicity, pilot training, employee accommodation etc.
With regard to the principle of private investor in a
market economy,
it
would be difficult to apply it to this case, as the role of
the Walloon Region as a public authority and that of
BSCA as an airport business were strongly intertwined.
It
to determine with any
certainty whether BSCA had acted like a private investor
by concluding the agreements with Ryanair, an action
that left doubt as to whether the public authorities and
the public company BSCA, controlled by them, would
have granted illegal and potentially incompatible aid to
the Irish company.

the Commission considered that

therefore seemed difficult

2.2. INITIAL ASSESSMENT BY THE COMMISSION,
APPEARING IN THE DECISION TO INITIATE THE
PROCEDURE

in a bilateral agreement

In its decision to initiate the procedure, the Commission
considered first of all that the granting by the Walloon
Region of a reduction in airport taxes to one airline
company only, on all its flights for a period of fifteen
years,
that was given no
publicity and deviates from the stipulations of the law,
amounts to granting a tax exemption to a company.
This places
the company in a more advantageous
position that its competitors flying out of Charleroi. A
compensation guarantee in favour of Ryanair in the
event that the Walloon Region exercises its fiscal powers
(by increasing taxes) or regulatory powers (by altering
the airport opening times) allows it
to operate in
conditions and in a commercial environment that are
quite stable and safe from any commercial risk; this
constitutes a privilege that favours that airline company
alone. The Commission also considered that
the
principle of a private investor in a market economy was
not applicable to the action of the Walloon Region in
the exercise of its regulatory and fiscal powers (7). These

(15)

The Commission concluded, in the decision to initiate
the procedure, that insofar as the advantages granted to
Ryanair constituted State aid within the meaning of
Article 87(1) of the Treaty, it doubted that this aid could
be compatible with the common market on the basis of
the exemptions provided for in Article 87(2) and 87(3)
of the Treaty.

3. COMMENTS BY INTERESTED PARTIES

(16)

The Commission received critical comments with regard
to the agreements as well as contributions from third
parties who defended their validity.

3.1. SUMMARY OF COMMENTS BY INTERESTED PARTIES

(7) See Point 76 of the decision to initiate the procedure. ‘The principle
of private investor in a market economy cannot be applied in this
case. It can only be applied within the framework of economic
activity and never within the framework of
the exercise of
regulatory powers. A public authority may not use an argument
according to which it could withdraw economic advantages in its
capacity of an airport-owning business in order to justify aid
adopted in the form of discriminatory exercise of its regulatory or
fiscal powers'.

(17)

The interested parties are less critical of the financial
incentives granted to Ryanair than of
the conditions
under which they were provided (magnitude, absence of
proportionality
unlimited
phased
duration, absence of transparency, discrimination and
inequality of companies in relation to airport tax rates).

reduction,

and

(18)

(19)

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Almost all the interested parties stress the competitive
impact of the aid on other airlines and even on other
modes of transport. Some third parties have also raised
factual questions (payment of 65 % of airport taxes to
BSCA as a public service compensation, re-capitalisation
of BSCA by the Walloon Region, making the airport
infrastructure available to BSCA's benefit; bearing of
safety costs by the Walloon Region; opening up the
ground
in
handling market
accordance with Directive 96/67/EC).

operators

other

to

volumes

and generate

The interested parties, defending the validity of these
agreements explain that they are consistent with current
practices in the airport industry and that it is normal
for airports to grant advantages to airlines that bring
them passenger
significant
income. They consider that the Walloon Region and
BSCA behaved as private investors in a market economy
by negotiating agreements with Ryanair. The interested
third parties stress that
the Commission were to
if
conclude that it was tantamount to State aid, it would
be practising discrimination between private and public
in breach of Article 295 of the Treaty. The
airports,
Commission
agreements
require
negotiated between public airports and airlines to be
made public, as this would put public airports at a
competitive disadvantage in relation to private airports.

should

not

the

airlines and also allowed the creation of new companies
that developed new business
is of
fundamental importance that this competition complies
with the regulatory framework applied transparently
and without discrimination.

concepts.

It

3.2.3. KLM ROYAL DUTCH AIRLINES

(21)

KLM explains that
low fares airlines and traditional
airlines offer different products and that each one of
them has their ‘raison d'être' at both commercial and
operational level. Low fares airlines generally avoid large
airports, for which the logistics can be complicated and
the utilisation costs high; they choose regional platforms
that allow them to operate rapid rotations at a reduced
cost. These developments should not be called into
question, but
they should not be based on aid.
According to KLM, the advantages received by Ryanair
at Charleroi go well beyond what is permitted under
the Treaty, and the compensation
Article 87(1) of
granted by Ryanair, consisting of basing a number of
aircraft at Charleroi airport, changes nothing in this
state of affairs.

3.2. COMMENTS BY INTERESTED PARTIES CRITICAL OF
THE AGREEMENTS

3.2.1. BRITANNIA

3.2.4. AIR FRANCE

it

is normal

The airline Britannia considers that
for
airports to be able to provide marketing support and
reductions according to volumes of passengers supplied
by the companies, especially in the case of airports that
are not yet well established. However, these advantages
must
realistic and limited in
duration. Britannia is worried by the inequality created
between competing airlines in this specific case. The
taxes are unequal and unrealistic, while the
airport
low-cost companies use the runways,
terminals and
security facilities in the same way as the other airlines.

remain proportional,

3.2.2. SCANDINAVIAN AIRLINES

(20)

SAS recalls that the deregulation of European airspace
led to increased competition among the traditional

(22) Air France considers that

on

provide

throughout

connections

the reduction of Ryanair's
running costs and their absorption by the Walloon
Region and BSCA create a disadvantage for Ryanair's
the
competitors who
intra-Community market. The reduction in landing
charges allows Ryanair to reduce its running costs and
in fact makes it more competitive than its competitors,
not only on the flights that it operates into or out of
Charleroi but
the Ryanair network. The
compensation commitment given by the Walloon
Region is also regarded as an advantage that guarantees
stability of operating conditions to Ryanair, while ‘the
practice of operating any airport platform demonstrates
that
is
the commercial and regulatory environment
never rigid. Total airport taxes can thus easily rise if the
manager is forced to finance specific measures with the
possible aim of accommodating other carriers wishing
the
to establish themselves at Charleroi.
development of environmental measures can alter the
conditions of operation of an airport'. Air France also
draws a parallel between the situation at Charleroi and
that obtaining in other Member States, especially in
France.

In addition,

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3.2.5. AUSTRIAN AIRLINES

3.2.8. INTERESTED PARTY B

(26)

(23) According to Austrian Airlines, the arrival of low fares
airlines gave rise to a subsidies race between airports
and regions wishing to be served by those carriers.
These developments called the principle of payment for
availability of infrastructures into question, at a time
when it is one of the basic rules of the civil aviation
world. The
is
independent of the success realised by Ryanair on the
connections that it serves and benefits one airline only,
and this generates discrimination. Austrian Airlines
that observed
concludes
between Ryanair and the Walloon Region leads to
significant distortion of competition between airlines
and is largely incompatible with the smooth operation
of the internal aviation market.

aid granted is not degressive;

‘cooperation'

such as

that

it

that

to apply lower

fares. These practices affect

the advantages
Interested Party B points out
granted to Ryanair reduce its cost structure and enable
it
the
conditions of competition, whether
these companies
operate out of Charleroi or Brussels National Airport at
Zaventem, whatever
the route served. Competition
between the so-called ‘low cost' airlines is not merely
competition that has to be analysed on a route-by-route
the Venice or Barcelona
basis. For many travellers,
interest
destinations
aroused by low-cost flights amongst these passengers is
not in the fact of travelling to a specific place, but
rather in making a break in their day-to-day routine,
whether
to Venice or Barcelona. Competition
therefore occurs on every route.

are wholly exchangeable. The

is

it

3.2.6. ASSOCIATION OF RESIDENTS AND INHABITANTS

OF TOWNS CLOSE TO CHARLEROI-GOSSELIES
AIRPORT (ARACH)

(27)

This company explains that
the direct costs out of
Brussels are EUR 32,14 per passenger compared with
EUR 5 for Ryanair operating out of Charleroi (8).

(28)

(24) ARACH draws the Commission's attention to the fact
that it had asked the competent minister for copies of
the agreements between Ryanair, the Walloon Region
and BSCA in accordance with the right of access to
information on the environment and that it did not
obtain the information. The Association is concerned
that the financial aid granted to Ryanair will
lead to
‘unbridled development of the airport' within an urban
in these terms ‘as both citizens and
site, and that
taxpayers, we are concerned about
the questionable
government aid granted to a private company as this
involves
the Walloon Region's
budgetary resources'.

improper use of

3.2.7. INTERESTED PARTY A

that

the ground handling market

Even though the ground handling services are more
limited for Ryanair than for other airlines, the interested
party points out that a considerable amount of ground
handling services is necessary for all companies. The
fact
is open to
competition at Brussels National airport means that
assistance costs should not normally be much higher in
Brussels than at Charleroi. Assistance costs are, generally
speaking, higher at small airports than at large airports,
insofar as the companies generally do not manage to
reach the critical size for making savings of significant
scale. The interested party estimates that Ryanair saved
EUR 17 million in 2003 on actual ground handling
costs and landing charges. It also appears that BSCA has
not taken account of Council Directive 96/67/EC dated
15 October 1996 on access to the ground handling
market at Community airports (9): the airport should
reach two million passengers a year quite soon and
BSCA will need to apply the Directive to this threshold
and open the ground handling market
to other
operators.

from

public

subsidies

(25) An interested party states that it is ‘very concerned' at
the subsidies granted by the local authorities, which
affect the conditions of competition between various
modes of transport. ‘In this way, Ryanair is benefiting in
particular
the
Charleroi-London connection, while Eurostar, operated
jointly by SNCB, the British Railways and SNCF, is not
benefiting from them. Both means of
transport are
however in direct competition on the Brussels-London
link. It is up to the railway operators alone to make
their
the
equipment and engines, pay infrastructure and tunnel
tolls, etc. The equality of treatment between competitors
is therefore disrupted'.

communications

link, purchase

the

for

for

(29)

BSCA would have acted not as a private investor in a
market economy but for political and social reasons, on

(8) Direct costs per aircraft and rotation out of Brussels National,
including landing charges, passenger fees and ground handling
costs. On the basis of a forecast volume of 1 700 000 passengers in
2003, the difference in cost is EUR 23 million.

(9) OJ L 272, 25.10.1996, p. 36. Directive last amended by Regulation
(EC) No 1882/2003 of the European Parliament and of the Council
(OJ L 284, 31.10.2003, p. 1).

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the instructions of the Walloon Region. The 15-year
contract will probably not allow BSCA to establish itself
as a profitable business and it is expected to continue to
experience operational problems. The prospect of a
return on investment could be undermined if Ryanair
withdraws (10).

BSCA would obtain contributions from the Walloon
Region, whether from airport tax revenue at a rate of
65 % or from the free availability of the infrastructure,
while the Walloon Region paid a contribution to the
Walloon Airports Company (Sowaer). In principle, each
payment from the Walloon Region should be limited to
compensation for the costs connected to public service
obligations and incumbent on BSCA, and the situation
is not very clear in this regard.

For
it
this company, which acknowledges also that
benefited on occasion from ‘marketing' advantages for
the
from
launch of new destinations but never
reductions in airport taxes or in ground handling costs,
the advantages granted to Ryanair at Charleroi go well
beyond the bounds of current practice.
It estimates
however that it took commercial risks just as important
by setting itself up at Brussels National Airport at a
time when competition from Sabena was very strong.

that

some other airport managers grant
The fact
advantages
in
to Ryanair would not be
demonstrating that Charleroi Airport acted as a private
investor in a market economy. The company refers to
the Steinike & Weiling judgment delivered by the Court
of Justice of the European Communities (11).

relevant

(30)

(31)

(32)

3.2.9. INTERESTED PARTY C

airports (12). The

advantages granted was different from that granted by
other
receives
fact
advantages from other airports was not relevant at all,
as they could also constitute State aid.

that Ryanair

(34)

The Interested Party draws the Commission's attention
to several factors that must be taken into account in the
analysis of
the potential profitability to BSCA and
appear to exclude medium-term profits:

— BSCA benefited from a re-capitalisation from the
in

totalling EUR 4 million,

Walloon Region,
December 2002.

— It ‘benefits from exemption from half of the total of
its fee due to the Walloon Region for the period
2001-2006. This advantage totals one million euros
per year, which BSCA will however have to pay
back from 2007 onwards'.

— The Commission should take account of the total
costs relating to the Charleroi Airport expansion
project, valued at EUR 95 million, and the methods
of finance. If this work is not covered by BSCA,
there will be a need to verify the conditions under
which the Walloon Region makes the infrastructures
available to BSCA. The Interested Party doubts that
given the current state of
the
airport would be in a position to cater for sufficient
passengers to ensure the financial balance of BSCA.

its infrastructures,

(33) According to Interested Party C, BSCA had not behaved
like a private investor insofar as the magnitude of the

(10) The company quotes the example of Shannon, in Ireland. Shannon
granted advantages to Ryanair for a time, but
they were not
renewed. Ryanair decided to transfer its operations to another
airport and Shannon did not receive the expected return on
reasonable investment.

(11) Court Judgment of 22 March 1977 in Case 78/76, Steinike &
Weinlig/Germany; ECR p. 595. ‘Any breach by a Member State of
an obligation under the Treaty in connection with the prohibition
laid down in Article 92 cannot be justified by the fact that other
Member States are also failing to fulfil this obligation. The effects
of more than one distortion of competition on trade between
Member States do not cancel one another out but accumulate and
the damaging consequences to the common market are increased'.
(Ground 24).

— The Walloon Region supplies BSCA free of charge
with the equipment and staff needed for all
the
security operations at Charleroi Airport, namely
passenger and luggage control prior to embarkation,
‘The Commission has
and Interested Party C adds:
certainly been informed that as a general
rule
security costs are borne by the airport users, either
through a security fee payable to the airport
operator or through a tax when these services are
provided by the public authority'.

(12) The rates imposed by Frankfurt-Hahn and London Stansted would
be higher, and the reductions less, while Ryanair operates 49
destinations out of London and 15 out of Frankfurt-Hahn,
compared with 9 out of Charleroi.

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3.3. COMMENTS BY INTERESTED PARTIES DEFENDING
THE VALIDITY OF THE AGREEMENTS

improvement in image and in passenger numbers.
TBI offers this type of contribution, especially when
an operator establishes a new service or increases
the frequency of certain flights on a given route.

3.3.1. TBI

(35)

(36)

TBI is a company that has several airports across the
world and provides various types of airport services. It
owns and manages London Luton, Cardiff International,
Belfast International and Stockholm Skavsta airports. It
manages four other airports belonging to local regions
it supplies specialised airport
and authorities. Finally,
services at 28 other airports.

states

TBI
that negotiations were in progress with
Ryanair for the use of Stockholm Skavsta at the time
when the company was negotiating with Charleroi
Airport and the agreements signed in Charleroi are
to the arrangements concluded by TBI with
similar
Ryanair and other low-cost companies, especially in
Stockholm Skavsta.

(37)

TBI points out that the development of airports such as
Charleroi should not be slowed down in relation to its
private competitors by the simple fact that these are
public airports.

— It would be unfair to impose on public airports an
obligation to publicise the agreements negotiated by
them with airline companies, as this obligation
would place them in a situation of competitive
disadvantage in relation to private airports not
subject to the obligation.

(38)

TBI explains that regional airports were under-used for
years because of the absence of competition between
airlines before the opening-up of markets at European
level, and since that date, because the traditional
companies have become polarised around their hubs.
such as Ryanair, operating
The rise of companies
point-to-point
airports, has
from smaller
reversed this trend and gives them a chance of reaching
break-even point. The experiences of London Luton,
70 % of whose users are low-cost companies (Easyjet,
Ryanair, Hapag Lloyd) (14), Cardiff, used 65 % by
low-cost companies (especially Bmibaby) (15),
, Belfast
(Easyjet, Go), and Stockholm Skavsta (16), which became
Ryanair's base in January 2003, are illustrations of this.

services

— The act of granting reductions on landing charges
and ground handling costs is a standard commercial
practice aimed at attracting companies in a position
to provide a significant volume of passengers. This
volume
the
trading
airport (13). Without these passenger volumes, the
airport would be in a constant struggle to reach
break-even point.

guarantees

income

for

3.3.2. HRL MORRISON AND CO

— Airports belonging to the State should be able to
pay compensation in the event of an increase in
regional authority taxes, as private airports can fix
them for the contractual period.

— Contributions in the form of paying for hotel costs
or the costs of staff training or marketing are not
unusual and should be compared to the investment
made and the risk taken by the carrier basing an
aircraft in a little-known airport.

(39) HRL Morrison and Co. is, via its subsidiary Infratil, the
67 % owner of Glasgow Prestwick, whose history it
briefly retraces. When Glasgow Airport was sold by the
British Airport Authority in 1992, the airport capacity
In 1994, when attracting the
was
the airport
traditional companies proved impossible,
decided to conclude a 15-year agreement with Ryanair
for two daily rotations between Glasgow and Dublin.
114 000 passengers were carried between Ireland and
Scotland in the first year. Since then, Ryanair has

just 1 % used.

— Marketing contributions are common within the
little-used airports. Companies that
framework of
use these airports have to channel a great deal of
effort into marketing their flights. This marketing
an
process benefits

airport, which enjoys

the

(13) It accounts for 55 % of TBI's income.

(14) The number of passengers at Luton increased from 1,9 million in
1995-1996 to 6,7 million in 2002, that is, an increase of 250 %
against
of
a
11 September 2001.

overshadowed

background

attacks

the

by

(15) The number of passengers at Cardiff rose from 1 million in the

early 1990s to 2,25 million in 2003.

(16) Before the coming of Ryanair in 1997, there were less than 20 000
passengers at Skavsta. The number totalled 315 000 in 2002. The
launch of the Ryanair base will increase this figure fourfold, taking
it to 1,5 million in 2003.

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developed several routes there and should carry 1,7
million passengers in 2003. Thanks to Ryanair,
the
airport has been able
commercial
operations, reaching critical size and break-even point.

to develop its

that Morrison would be interested in acquiring a
holding in BSCA, although it has not had access to
BSCA's accounts.

(40) According to Morrison, a private investor could adopt
the approach taken by Charleroi Airport. It would base
its offer on certain determining factors: the volume of
passengers that a company could bring to the airport,
its willingness to commit itself long-term by means of
contracts; the specific needs of the company; the aircraft
movement timetable and its consistency with airport
activity (existing traffic); the terminal's needs in terms of
resources, and ground handling assistance.
It would
calculate the profits expected under the agreement with
Ryanair overall (and not under the various constituent
such a
taken separately). The benefits of
elements
transaction should be envisaged over a period of some
20 years, with the services taking off after 3-5 years.
When a 15-year agreement is involved, the shareholders
it could be commercially
in Morrison consider that
acceptable if a return on investment occurs some five
years after signature of the agreement.

(44)

(41) Morrison,

in essence, made the same remarks as TBI
with regard to reductions in fees, contributions and
financial incentives, specifying that:

taxes and ground handling costs

— It is not unusual for airports to negotiate reductions
in airport
in
exchange for volumes of passengers and a long-term
commitment
thus preventing the
from Ryanair,
company from choosing another airport (17);

(43) Morrison considers that

the Commission would be
wrong to oblige an airport
to concede the same
conditions to just any company without applying a
distinction according to the volume of traffic generated.
It would also be wrong to impose a publicity obligation
on private commercial
this
would provide
airports with sensitive
information covered by professional secrecy.

transactions,

insofar as

competing

3.3.3. RYANAIR

stresses

remark, Ryanair

the
By way of a general
consequences of
the Commission Decision on the
survival of regional airports and the deregulation of air
transport services in the next twenty years. By taking
risks, the low-cost companies have succeeded in doing
what the traditional companies failed to do: they made
underused regional airports such as London Stansted,
Glasgow Prestwick, London Luton, Belfast etc. viable.
These airports are now in competition with major
airports, forcing the old monopolies to lower their costs
and improve efficiency.
is consumers who benefit
from this situation as they have access to plane tickets
at good prices. The Commission should not deprive
continental secondary airports of the experiences of the
United Kingdom airports, which also offer incentives.

It

— Airports are in a difficult situation with regard to
the only really effective way of
advertising, as
providing it is to promote air services that leave that
airport. The fact that the name of the airport does
not appear in the first line is not paramount; what
counts is the benefit arising from the advertising
in passenger
campaign,
numbers.

increase

that

the

is,

(42)

The best proof of
the
agreements negotiated in Charleroi would lie in the fact

the commercial character of

(45)

the Commission were to conclude that

If
involved State aid, it would do so:

this case

— in violation of Article 295 of

the Treaty, by
introducing discrimination between public
and
private airports; the Commission cannot prejudge
the ownership regime in Member States;

— by preventing a public airport from offering the
same financial conditions as those offered by private
airports, which would be unacceptable at political
and legal level;

(17) Morrison recalls that, faced with an increase in the fees charged by
the Irish airport manager at Shannon (Aer Rianta), Ryanair decided
to transfer the greater portion of its flights to Kerry airport in
Ireland. See also the Ryanair press communiqué dated 13 February
2003 on the transfer of the Frankfurt Hahn — Shannon route to
Frankfurt Hahn — Kerry (www.ryanair.com).

— by compelling an airport to publish all its charges
when there are no legal obligations on this point,
the Commission would be abusing the power that it
holds under the provisions of the Treaty on State
legal
aid, whereas the Treaty provides a distinct

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basis, Article 80, for legislating on airport fees (18).
The proposal
for a Council Directive on airport
fees (19) rested on this legal basis.

3.3.3.1. Relations between Ryanair and the secondary

airports

(46) After recalling what

the relations with the Walloon
airport were, Ryanair points out that the agreements
negotiated between Ryanair, BSCA and the Walloon
Region did not contain any elements of State aid, for
three reasons:
the principle of private investor in a
market economy applies, there is no selectivity, and the
agreements do not distort the competition.

(47)

To attract investments in their infrastructure, secondary
airports need a critical mass of passengers that can be
obtained only through long-term agreements with an
airline. The guaranteed volumes of passengers are
for bases or routes opened by Ryanair, as
different
Tables 1 and 2 show.

Table 1 — Ryanair bases (volume of passengers)

Airport

Number of passengers in
year preceding arrival of
Ryanair

Total number of
passengers (2002)

Total number of Ryanair
passengers (2002)

% of Ryanair traffic
(2002)

Dublin

2 600 000 (1985)

15 085 000

London Stansted (20)

1 047 000 (1988)

16 048 700

Glasgow Prestwick

10 000 (1993)

1 486 439

Charleroi

< 20 000 (1997)

1 271 596

Frankfurt-Hahn

< 20 000 (1997)

1 457 527

4 189 509

8 301 356

1 320 920

1 242 087

1 422 566

28 %

52 %

89 %

98 %

98 %

Table 2 — Ryanair routes (volume of passengers)

Airport

Total number of
passengers in year
preceding arrival of
Ryanair

Total number of
passengers (2002)

Total number of Ryanair
passengers (2002)

% of Ryanair traffic
(2002)

Pisa

1 065 691 (1997)

1 654 570

Milan (Bergamo)

1 061 397 (2001)

1 252 878

Pescara

114 024 (2000)

Bologna (Forli)

45 933 (2000)

295 875

150 309

Liverpool

Derry

333 000 (1987)

2 835 088

49 000 (1998)

199 543

627 985

360 389

196 389

112 508

252 310

129 298

38 %

29 %

66 %

75 %

9 %

65 %

(18) Article 80 of

the Treaty provides that provisions relating to
transport sector according to the
transport apply to the air
following procedure:
‘The Counci may, acting by a qualified
majority, decide whether, to what extent and by what procedure
appropriate provisions may be laid down for
sea and air
transport'.

(19) COM(97) 154 final (OJ C 257, 22.8.1997, p. 2).
(20) When Ryanair began its flights from Stansted in 1989, the airport
was relatively unknown and had no new terminals. Ryanair
opened a base there in 1991, followed by other companies such as
Go (1997) and Buzz (1997). The same situation occurred in 1992
at Glasgow Prestwick, Bristol, Cardiff and Edinburgh.

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(48)

(49)

Ryanair

provided

To attract companies, airports are ready to negotiate
reductions, as was shown in a study requested by the
Commission (21).
confidential
information to the Commission on what the company
pays at Charleroi and at
‘private' airports such as
Stockholm-Skavsta, Glasgow Prestwick, Frankfurt-Hahn,
Ancona, Bournemouth, Liverpool or Knock, showing
that the net payment provided as a benefit at Charleroi
is higher than those provided at other airports (22).

In four years,

Before Ryanair set up at Charleroi, the airport received
only 20 000 passengers per year, an average of 50 per
day. Thanks to the Charleroi-Dublin route, opened on 1
May 1997, Ryanair transported 178 000 passengers in
2000.
transported more passengers
between these two cities than all the traffic in existence
on the Brussels-Dublin route in 1997.
the
airport received over 1,25 million passengers, almost
4 000 per day, for ten destinations across Europe. The
volume of traffic increased by 1,455 % between 1997
and 2002.

In 2002,

it

(50)

Ryanair has made a number of remarks on how its
negotiations with the airport developed, in connection
with the description given in the decision to initiate the
procedure:

— During

and

summer

autumn 2000, Ryanair
commenced negotiations with other airports, either
for the creation of a new Ryanair base or to add
new aircraft
to certain lines from summer 2001
onwards.

airport manager would by maximising the profitability
of the airport, and to the Walloon Region, the airport
owner, which is acting as any airport
shareholder
seeking to maximise the value of
the airport. The
agreements were
concluded under normal market
as has happened with several private
conditions,
airports. In addition, Ryanair received more favourable
conditions from London Luton.

(52)

The profits generated by the arrival of Ryanair for the
owner and manager of
the airport exceed those of
Ryanair, guaranteeing, for example, an increase in the
value of the airport (a huge investment in the form of
four aircraft based permanently at Charleroi, an average
of 4 000 passengers a day, over 1,5 million passengers
in 2003, efficient use of the airport, substantial profits
in two years, growth of the most significant kind for a
European airport based on a 150-year agreement, ten
destinations in four European countries,
investment in
the marketing of the airport, heavy financial penalties
for Ryanair
the
in relation to
conditions laid down in the contract
passenger volumes, experience in dealing with one of
the most effective companies in the world and more
experienced staff, increase in rental income, increase in
the business value of the airport, and a more attractive
airport for new investors).

failure to respect

in the event of

(53)

The duration of
is not
the agreements
unusual. Ryanair has agreements lasting 10 to 20 years
with almost all the airports that it uses. These durations
guarantee stability of income, which makes investment
in long-term infrastructures possible.

(15 years)

— The agreements between BSCA, Ryanair and the
Walloon Region were approved in February 2001.
Their signature in November 2001 is merely their
formalisation. The negotiations with Charleroi were
conducted like all trade negotiations.

Application of the principle of private investor in a
market economy

(51)

The principle of private investor in a market economy
must be applied both to BSCA, which is acting as any

(21) Cranfield University, Study on Competition between Airports and
the Application of State Aid Rules, September 2002, available in
English on the Commission's website http://europa.eu.int/comm/
transport/air/rules/studies_fr.htm. See in particular Chapter 5.1.4
on the various types of discount granted by airports, as well as
Chapter 4.1.3.

(22) This information, protected by commercial secrecy, could not be

sent to Belgium for comment and is not reproduced here.

(54)

(55)

Application of the principle of private investor in a
market economy to the Walloon Region

Ryanair considers that the principle of private investor
in a market economy is applicable to the Walloon
Region, as the measures taken by the Region were taken
purely in its capacity as an economic actor and not as a
regulator exercising public power prerogatives. Ryanair
asks the Commission to bear in mind that the Walloon
Region is acting as the airport owner. In addition, as the
Walloon Region is the main shareholder in BSCA, any
benefit for BSCA also benefits the airport owner.

value

of Charleroi

The
increased
considerably since Ryanair set up there six years ago,
especially over the last four years. As for any other
airport, this value is commensurate with the volumes of

airport

has

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by

especially

transported,

low-cost
passengers
companies (23). The commercial success of BSCA is
demonstrated in the interest shown by businesses such
as Morrison, Vinci and Aéroports de Paris
in the
purchase of 25 % of BSCA. As examples of this increase
cites Glasgow and Copenhagen
in value, Ryanair
airports and those belonging to the British Airport
Authority (24).

is 36.7 % on average and not 50 %. If this particular
agreement did not exist, Ryanair would be eligible for
the system of reductions provided for in the Belgian
legislation of 1998, which makes provision for
reductions of 5-25 %.

(56)

By modifying the landing charges for Ryanair,
the
Walloon Region would have acted as a market actor and
not as a regulator or fiscal authority that raises or
lowers ‘tax'
levels. In addition, we are not looking at
‘taxes' here, but at ‘fees', as the Walloon regulations term
them. The ‘fees' are paid entirely to BSCA and not to
the Walloon Region. In general and in practice, these
fees are collected by the airports (after agreement and
negotiation) from the airlines. The rates published may
be approved by the governments, but in essence they
are determined by the airports and negotiated directly
between airports and airlines.

(57)

Reductions in landing charges for the launch of new
services or the strengthening of new frequencies are
common in the
exception of
congested hubs
such as Heathrow and Charles de
Gaulle.

industry, with the

‘comfort

compensation guarantees or
(60) With regard to the
‘obligations not
to do', undertaken by the Walloon
Region in the event of changes to airport fees before
2015 and alteration of airport opening times, these are
not matters of a ‘regulatory' nature but commercial
decisions essential for the establishment of a Ryanair
base. These guarantees would be similar to ‘stabilisation
clauses' or
letters' used in the context of
long-term agreements between private companies and
state bodies, for example in the tunnel or pipeline sector
or in the context of privatisation. It would be normal
for parent companies to grant these guarantees to third
parties signing contracts with their subsidiaries.
is
essential for Ryanair to obtain a measure of security
from a government. These guarantees would not limit
the sovereignty of the Walloon Region by preventing it
from changing
no
law:
compensation for changes initiated by other parties
outside the competence of
the Walloon Region (at
These
European
federal,
undertakings, according to Ryanair, cannot be seen as
limiting or
exercise of
calling into question the
regulatory power.

there would

international

level).

the

be

or

It

(58)

The Commission appears to consider that it is unusual
or even illegal to fix the total
landing charges on a
passenger basis and not according to the weight of the
aircraft. Ryanair, however, has agreements with several
airports based on this model.

(61)

the Commission were to decide that

If
the Walloon
Region did not have the right to give this assurance
without even considering whether a private investor in
a market economy would have done so,
it would be
discriminating between public airports (whose fees are
often fixed and controlled by a government or
regulatory authority) and private airports (which are
free to fix fees for the duration of a contract).

(59)

that

Ryanair points out
the weights quoted in the
decision to initiate the procedure are not correct. The
weight of a Boeing 737-800 developed for Ryanair (the
only type of aircraft now used at Charleroi) is 67 tonnes
and not 78. On this basis, the amount of the reduction

(23) Ryanair cites the experience of Belfast (EasyJet), Liverpool (EasyJet),
London Luton (EasyJet), Glasgow Prestwick (Ryanair), Bristol (Go),
East Midlands (Go) and London Stansted (Ryanair, EasyJet and
Buzz).

(24) For Glasgow, see point 52 of the decision to initiate the procedure.
For Copenhagen, Ryanair explains that between 1994 and 2002
the number of passengers increased from 14,1 million to 18,7
million and the value of the airport from EUR 525 million to EUR
956 million between those two years. A 32 % increase in
passenger numbers had increased the value of the airport by 82 %.
The British Airport Authority airports saw their value increase
from EUR 7 000 million to EUR 12 300 million,
is, an
increase of 75 % between 1993 and 2002 based on an increase of
56 % in passenger numbers (from 77,1 million to 121,6 million).

that

Application of the principle of private investor in a
market economy to BSCA

(62)

Ryanair is criticising the fact that the Commission, in its
decision to initiate the procedure, saw difficulty in
applying the principle of private investor in a market
its
economy to BSCA because of
relations with the Walloon Region. The Commission
will have to apply this principle by separating the
various activities of BSCA from those of the Walloon
Region, basing itself not on the present moment but on
the duration of the contract (15 years) or even on the

the complexity of

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Since BSCA's projections have

duration of the BSCA concession (50 years). The fact
that BSCA showed losses for the first few years is not
significant, as the return on investment is realised after a
few years (25).
a
reasonable foundation and indicate a reasonable return
the
a
on
Commission would not have any objective reason for
concluding that State aid was present. The Commission
should not be indifferent
to any proof showing a
posteriori that the investment decisions were the right
ones.

investment within

five-year

period,

travel

the whole of

The Commission must consider
the
income collected by BSCA according to the ‘single till'
principle, that is, without making a separation between
linked to BSCA's
and income
air
commercial
critical mass of
the
passengers (which generally corresponds to two million)
has been reached, BSCA may expect its business revenue
to offset any possible shortfall in air travel revenue.

activities. Once

revenue

The profitability of the airport will increase thanks to a
‘network effect', as there are positive external factors
between an airport and the airlines; the expansion of
one party provides an incentive for
to
develop (26). A second reason for the profitability of the
airport is linked to the ‘learning curve' and economies
of scale, which also lower the airport's unit costs. Given
the rapid expansion in traffic at
is
probable that at this stage, the managers' attention was
focused on the needs relating to handling these volumes
of passengers, and not to any economies of scale.

the airport,

the other

it

these

The Commission should not take account of the costs of
such as
the infrastructure in the case of airports
Charleroi;
as
costs
irrecoverable or ‘sunk' costs financed many years ago,
a
sometimes under
the military
government.
the
Commission's policy was generally one of considering
that the financing of infrastructures does not constitute

In addition, Ryanair

expenditure of

considered

should

recalls

that

be

(63)

(64)

(65)

State aid when it falls within the framework of national
or European transport policy.

(66)

The advantages for BSCA in having a contract with
Ryanair include in particular the revenue from airport
taxes, which Ryanair estimates at EUR 243 million
during the period 2001-2015, and the services provided
by Ryanair in relation to marketing, sold to it at much
lower prices than to other partners (value of publicity,
of a link with the Ryanair.com site, of promotional
tickets etc).

(67)

Ryanair specifies, with regard to the advantages that it
receives:

— The ‘one-off'

incentives, estimated to total 2,5
million, are aimed at developing new geographical
connections rather than at operating fewer routes at
a higher frequency. They are paid on the basis of
invoices and must be repaid if Ryanair withdraws.
This is common practice in the airport industry (for
example Waterford, Belfast, Bristol, Liverpool, Luton
and Stansted) and Ryanair benefits
from it at
Stockholm Skavsta.

— The marketing contribution is probably a better tool
for promoting an airport than a reduction in airport
fees. The owner and manager of the airport both
benefit from the Promocy campaigns, which help
increase passenger volumes, revenue and the value
of the airport. Such campaigns are common in the
airport industry (27).

— With regard to the provision of offices and the EUR
for office equipment, Ryanair points
4 000 grant
out
the sum of EUR 4 000 is scarcely of
that
importance and indeed is a ‘minimum' amount.
Ryanair did not use the office space offered and no
building work was carried out in Ryanair's favour.

(25) Stansted showed losses during the first few years, but these were

subsequently offset.

(26) According to the glossary of terms used in the field of European
Union competition policy, network effects appear if the value of a
product increases for a user together with the number of users of
the same product or compatible products. Economists then speak
of an ‘external network factor' as when additional consumers join
the network of existing consumers,
they will have a positive
influence on the consumers who are already network
‘external'
members.

(27) Ryanair quotes the example of Morrison, which offers financial
incentives to companies operating out of Prestwick for each new
three years and
line opened. These incentives are valid for
diminish each year. In the same way as Ryanair has to justify use
of funds to BSCA, Morrison requires invoices before any sum is
paid. In 1997, Morrison offered £ 1 million per year for five years
to the company that would take on the Glasgow-New York service
discontinued by British Airways. Bristol and Cologne/Bonn
airports also offer financial incentives.

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3.3.3.2. Absence of selectivity

(68)

Ryanair recalls that the Charleroi agreements were given
a measure of publicity. They were known to the
industry and received press coverage in Belgium, the
and were
United Kingdom and Ireland in 2001,
confirmed by the Walloon authorities
in a press
the
communiqué in July 2001, which indicated that
advantages granted would be available to other airlines
investing in Charleroi under similar conditions. Ryanair
considers that a publicity obligation would lead to
discrimination between public airports and private
in contradiction of
airports
Article 295 of the Treaty. The decision taken by the
Commission in the Manchester case (28) should not be
used as a base for compelling public airports to offer
companies, without
to all
the
considering their position.

(which are exempted),

conditions

same

(72)

In fact, they benefit more from the
effect on them.
marketing campaign, developed by Ryanair and BSCA,
which has turned Charleroi
into a known airport. In
addition, charter companies do not generally pay much
attention to the costs linked to the use of their airports,
as they operate costly and irregular services for which
ground handling costs or air travel costs only form a
small part of
‘package'.
Conversely, airport costs make up a very large part of
the Ryanair ticket price.

travel costs or

the overall

There is a level of competition between Ryanair and the
companies that operate out of other airports, but it has
not been distorted because the other airports offer other
competitive advantages. Ryanair's direct competitors,
such as Easyjet and Virgin Express, have refused to use
Charleroi airport; their competitive positions would not
therefore
the Charleroi
agreements.

affected

been

have

by

(69)

The selectivity criterion would be absent in this case, for
a number of reasons put forward by the company: the
agreements would not be exclusive and reductions could
be granted to other users, and in addition Belgian law
provides for a system of reductions and the Charleroi
Airport promotional documentation mentions
the
possibility of reductions. The airport would have taken
steps with 35 airlines before and after the agreements
with Ryanair, and would have additional capacity to
welcome other airlines.

3.3.3.3. Impact on competition

(70)

(71)

Ryanair considers that
the conditions of competition
were not affected on the relevant market, which it
defines by analogy with competition law to extend it to
include rights to State aid. There would not in fact be
any competition in relation to the type of products
covered (charter flights and scheduled flights) and the
geographical area covered (the routes served).

Contrary to the Commission's assertion, the companies
operating out of Charleroi airport are not competitors
of Ryanair. They are charter companies, which offer one
or two flights per week from Charleroi, mostly during
the summer. In addition, Ryanair supposes that these
companies have not lodged a complaint. This can be
explained by the fact that the agreements between the
Walloon Region, BSCA and Ryanair do not have any

(28) Commission Decision of 14 June 1999, United Kingdom —

Manchester Airport, State Aid NN 109/98.

3.3.3.4. Compatibility of aid

(73)

frameworks, on the basis of

If the Commission concludes that State aid is present, it
would be obliged to determine the compatibility of the
measures with the common market on the basis of the
the exemption
relevant
rules, or on their own merits. The socioeconomic
benefits brought to the region should be analysed, and
Ryanair states that it reserves the right to adopt a more
detailed position if the Commission were to examine the
measures for compatibility on the basis of Article 87(3)
of the Treaty.

(74)

In an annex to its response (29), Ryanair explains that
the economic impact of
the airport activity on the
region is higher than for other airports, insofar as the
passengers are not in transit. By 2005, Ryanair should
be transporting about 1,95 million passengers and the
number of
least 1 400,
jobs generated should be at
including the 120 Ryanair employees (30). By 2010, with

(29) A report by the University of Westminster titled ‘The economic
impact of Ryanair at Charleroi/ Brussels South Airport', and a
Ryanair report titled ‘Socioeconomic impact of the arrangements'
were sent as Annexes 19 and 20 to Ryanair's response.

(30) As a general rule, according to Ryanair 1 100 full-time jobs would
be generated by an annual volume of 1 million passengers.
Ryanair's activity on its own could potentially create 2 200 jobs,
which should be compared with the aims of the Walloon Region's
employment policy for seven years (target of 8 500 people for
expenditure of EUR 1 300 000 000).

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60 rotations, Ryanair would be in a position to create
jobs (2 329 direct and 290 indirect).
4 235 additional
lead other businesses to set up in the
Its activity will
region, with the
to
international activity. Ryanair also contributes to the
development of tourist activity and income in Belgium;
it encourages passengers to come back to Belgium
because of its low-price ticket policy.

airport opening

door

the

(75)

Ryanair recalls that the Hainaut region is one of the
poorest in Belgium and falls within Article 87(3)(c) of
the Treaty, and that although the aid does not fulfil a
the conditions defined in the various
priori all of
frameworks and exemption rules,
the Commission
would however be required to judge each case on its
individual merits (31). In particular, Ryanair is asking the
Commission to assess the compatibility of aid for pilot
training on the basis of Commission Regulation (EC) No
68/2001 of 12 January 2001 on the application of
Articles 87 and 88 of the EC Treaty to training aid (32).

4. COMMENTS FROM BELGIUM

(76)

comments when

Belgium communicated
the
its
procedure was initiated in February 2003. In addition to
remarks on the development of secondary airports and
relations with Ryanair, and on the private investor
behaviour of the Walloon Region, the response included
a demonstration of the behaviour of BSCA as a private
investor in a market economy. The company's business
plan dated April 2002, together with a specialist report
by the consultant Deloitte & Touche dated 2003 and
intended to assess plausibility in relation to the
company's results, was sent to the Commission. The
report,
submitted to the Commission, allowed the
consultants to validate the structure and the general
hypotheses that underlay the BSCA business plan. The
consultants even concluded that the future results to be
expected today are better
than those shown in the
business plan, and that ‘although a first reading creates
the Board of Directors, by
the
is considerably
committing the company to Ryanair,
increasing activity at
expense of profitability,
developments in years to come show that on the
contrary, the business plan brings the results back to a
positive total
in 2004 and they will continue to
improve, as our comments on the profitability of the
investment in terms of equity funds demonstrates. […]
It can therefore be considered that the Board's decision
was justified by a business plan that has so far turned
out to be prudent and reliable, and that a period of
negative profitability lasting three years represents a

impression that

the

(31) Court Judgement of 17 September 1980 in Case 730/19, Philip

Morris/Commission, ECR p. 2671, Ground 24.

(32) OJ L 10, 13.1.2001, p. 20.

(77)

(78)

(79)

normal transition between the differing conditions of
operation' (33).

In response to the comments from the interested third
parties, Belgium submitted some additional elements to
the Commission in May 2003. On this occasion it
pointed out that thanks to the successful management
of its activities and the faster than anticipated increase
in commercial income, the Board of Directors of BSCA
approved a 2003 budget that showed a positive result
and the results for the third and fourth quarters of
2002 showed a profit of EUR […] (*) and a break-even
result respectively.

The Commission requested meetings with the Belgian
authorities in order to clarify a number of questions still
outstanding in relation to BSCA's behaviour as a private
the
investor
environment fund, the maintenance/fire compensation
and the re-capitalisation of BSCA.

in a market economy, airport

taxes,

that

The central question addressed during these meetings
was the behaviour of BSCA. The Commission pointed
to the
the BSCA business plan sent
out
Commission,
report,
together with the consultant's
could not be used as an appropriate basis for applying
the private investor principle. This plan was dated
spring
BSCA's
therefore
itself with regard to
investment decision to commit
Ryanair
even less
in 2001. The 2002 plan was
admissible as it was based on operating parameters
different from those known to BSCA in 2001. In fact, it
included elements that reflected the modification made
to the concession conditions in 2002 (34) and described
in the decision to initiate the procedure.

post-dated

2002,

and

(80)

The Commission therefore asked the Belgian authorities
to send it the business plan produced by BSCA in 2001,
together with any other useful document that would, in
accordance with its practice and Court of Justice case

(33) The cause of the financial trend is the growth in commercial
activity and the development of income linked to the new, larger
and more attractive terminal from 2005 onwards, the expiry of
the ‘one-shot'
incentives, the opportunity for BSCA to negotiate
new commercial conditions with Ryanair beyond the 26 rotations
provided for in the current contract, the abolition of the car park
shuttle services that will cease to be necessary once the new
terminal opens and will represent a saving of EUR […] and
economies of scale in operating the airport.

(*) Parts of this text have been edited to ensure that confidential
information is not disclosed; those parts are enclosed in square
brackets.

(34) These modifications are set out in points 60-62 of the decision to

initiate the procedure.

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L 137/15

law, allow it to analyse the private investor reasoning at
the time of the decision to invest. This business plan,
sent by Belgium, is the one used by the Commission for
the financial analysis carried out with the present
decision in mind.

4.1. DEVELOPMENT OF REGIONAL AIRPORTS AND
RELATIONS WITH RYANAIR

(83)

(81) As in the case of many other regional airports, Belgium
the infrastructure of Charleroi Airport
indicated that
was being under-used and could not be made profitable.
When management and operation of regional airports
was transferred to the regions in 1988, the Walloon
government decided to use the economic potential
presented by these airports and made a number of
investments aimed at developing them (35). In a decision
of 20 July 2000,
it approved the guidelines of an
investment programme for Charleroi valued at EUR
113 730 000 (BEF 4 588 000 000) (36).

scope of
development decisions
application of this communication insofar as they are
aimed at meeting planning needs or
implementing
national environmental and transport policies'.

for outside

the

small

cannot

finance

survive without public

Belgium pointed out that according to the University of
regional
Cranfield study mentioned in (48),
airports
if
passenger volumes are less than one million per year,
and the impact of passenger volumes on the unit costs
to be borne by the airports is a determining factor. Unit
cost falls significantly from 500 000 passengers onwards
and stabilises at around 3 million passengers. In order
to attract these passenger volumes, efforts have been
made to attract airlines to the Charleroi site from 1995
and 1996 onwards.

(82)

Belgium stresses that the provisions on State aid laid
down in the Treaty do not apply to this type of funding.
The Commission guidelines relating to the application of
Articles 92 and 93 of the EC Treaty and Article 61 of
the EEA agreement
to State aid to the aviation
sector (37)
(hereinafter ‘the aviation sector guidelines')
indicate
enlargement of
infrastructure projects (such as airports, motorways,
bridges, etc.) represents a general measure of economic
policy which cannot be controlled by the Commission
Infrastructure
under

the Treaty rules on State aid.

construction of

that

‘the

(35) In a decision dated 2 May 1989, the Walloon Government ratified

for

this area of competence is defined,

the Ministry of Transport analysis according to which:
the
‘The transfer of
Walloon Region, as the transfer of a deficit estimated at 130
million francs for 1989. The main aim of
the Executive is
therefore to do everything to ensure that Walloon airports and
aerodromes reach their breakeven point quickly. To achieve this
goal, several actions have to be carried out together, especially in
relation to infrastructure. The development of our airports in fact
passes through significant increases in our income, something that
can only be achieved by welcoming new activities on their site,
such as charter flights,
transport, business flights and
excellent customer service. (…) It must be noted that the basic
equipment
for meeting the requirements
linked to development of new activities (…). As for Gosselies,
although it has suitable buildings and sufficient parking areas for
the present, the limited length of its runway will be a disadvantage
in terms of the types of activity that it can accommodate'. Annex
1 to the response from Belgium of 14 February 2003.

is far from sufficient

freight

(36) In addition,

the costs connected with altering the economic
development zones around the airport,
including compensation
for owners of buildings, were assessed at EUR 75 350 000 (BEF
3 040 000 000) at the time.
(37) OJ C 350, 10.12.1994, p. 5.

(84)

Contacts were made with low-cost companies (Virgin
Express, Ryanair, Easyjet and Debonair), a large number
of regional companies and some charter companies
(Neckermann, Sunsnacks, Pégase, Sunair,
Jet Air, Best
Tours, Bosphorus), and the airport was able to develop
charter flights in association with Thomas Cook, British
World Airlines and Wasteels Travel as well as flights to
Algeria and Yemen. However, a series of handicaps that
affected the airport (38) and a number of
reasons
particular to the airlines canvassed made it difficult to
set up airlines departing from Charleroi (39).

(38) Belgium quotes:

the distance between it and Brussels and the
absence of rail connection; the dilapidated state of the current
terminal, which is lacking in commercial attraction; the preference
of charters for Zaventem; the closure of the airport at night; the
presence of a Virgin Express base at Zaventem; the prestige of
Zaventem; the absence of sufficient technical maintenance for the
aircraft based there; the absence of sufficient work for an aircraft
based there, hence the need to work in a W (Zaventem, Malaga,
Charleroi, Malaga, Zaventem) or via flight
the airport
opening times; and the insufficient lengths of runway for flights
over two hours (no ILS III).

ferry;

(Geneva

two new continental bases

(39) The contacts with Virgin (1997-2000) did not produce results,
most notably because of the agreement currently in force and
correspondence with Sabena. EasyJet was not interested because it
was developing
and
Amsterdam) in 2002, considered the absence of rail connection
to be a major obstacle to setting up, and
close to Charleroi
considered the French market more interesting than the Belgian
market. The development strategy followed by Go, approached by
BSCA in 2000, was suspended in anticipation of a buyer for the
company. Buzz studied the possibilities of the Charleroi-Stansted
route, but withdrew from it for fear of lack of profitability. City
Bird demanded that the Walloon Region acquire a share in its
capital as a prerequisite for setting up at Charleroi;
this was
refused because of the poor financial health of the business. In
2002, BSCA canvassed some 35 airlines in the so-called ‘ethnic'
charter
flight
companies.

the East European countries and the

sector,

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Official Journal of the European Union

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the company Grands Travaux de Marseille
In 2001,
(GTM), interested in a holding in BSCA, carried out a
study of the development potential of the airport. The
study revealed that Ryanair was the only immediately
feasible option for BSCA for transforming the airport
into a commercial operation that would realise profits
short or medium term. Belgium specifies:
in the
‘Although it
the financial concessions
requested by Ryanair were higher for BSCA than those
that could be envisaged for other low-cost companies
contacted, the interest shown by these other companies
was low or zero, so that they could not constitute a
possible alternative to the setting-up of Ryanair at
Charleroi'.

true that

is

(88)

(89)

Belgium stresses that
the regional airports and the
charter companies are ‘a winning team'. On one hand,
these airports are able to grant good time slots, a
congestion-free environment, very rapid aircraft rotation
and greatly reduced airport taxes, and can offer flexible
services that are suitable for this type of airline. On the
other hand,
these alliances have allowed previously
under-used regional airports to enjoy a truly dramatic
growth (40). The number of new passengers generated
by each new destination launched by Ryanair, on the
basis of daily frequency, is increasing by about 100 000
per year. An airport
therefore derives considerable
benefit from the opening of a route. The opening of a
base allows a critical mass of various revenue types to
be realised, thus ensuring that costs are covered more
quickly. Thanks to the opening of the Ryanair base,
passenger numbers increased from 773 431 in 2001 to
1 271 979 in 2002. The passenger volume for 2003 has
been estimated at 1 700 000. The network of multiple
destinations available immediately further increases the
success of the airport. Stansted, Liverpool and Luton
airports incurred losses after granting fee reductions to
the low-cost companies, but then enjoyed phenomenal
growth because of the passenger volumes generated by
these companies and showed profits.

(85)

(86)

(87)

establishment of Ryanair, a number of sub-agents set
themselves up at Charleroi (41). The guarantee duration
of the contract also made it easier to fix the profitability
parameters for the construction of the new terminal,
which will allow the commercial capacity of the airport
to be increased by improving reception for more
passengers and increasing the business surface area.

for BSCA,

Belgium underlines the interest in having private airport
managers
such as Grands Travaux de
Marseille (42) or Morrison, who have expressed an
interest in acquiring 25 % of the capital:
‘The fact that
private partners such as Vinci and Morrison have shown
an interest in acquiring a 25 % shareholding in BSCA
clearly demonstrates that the agreement reached with
Ryanair could have been reached with a private investor
insofar as it appears that BSCA will become a profitable
business in the near future'.

In terms of airport capacity, Belgium has specified that
it is inaccurate to consider that the airport is saturated.
At present,
the remaining capacity is 25 % from a
commercial viewpoint and 50 % from an operational
the current
viewpoint. The theoretical capacity of
infrastructure is estimated at 5,5 million passengers, and
in more realistic terms, it could quite reasonably cater
for 2,5 million passengers;
this leaves a progression
margin of about 50 % in relation to the volume of
the new
passengers for 2002. BSCA considers that
terminal will increase capacity by 100 %, thus allowing
at least two new airlines to open a base at Charleroi.
New users could set up at Charleroi, such as Flyeco,
which intends
in
December 2003 and is counting on 300 000 passengers
in the first year of activity.

to introduce

destinations

five

infrastructures. Commercial

The airports have learnt to diversify their sources of
income and understood that their profitability depended
mainly on the volume of passengers passing through
their
income tended to
exceed income from aeronautical activities more and
more, especially at
the main airports. Consequently,
these airports, which have become mainly commercial
companies, negotiate
conditions on a
case-by-case basis in order to attract airlines and thus
the
increase

favourable

following

volumes.

traffic

Thus,

(40) The airports mentioned are Liverpool, Luton, Glasgow Prestwick,
Frankfurt-Hahn, Paris Beauvais, etc. Liverpool airport, a subsidiary
of the private group Peel Holdings, has seen three times as many
passengers after its privatisation and the arrival of EasyJet in 1997.
The arrival of EasyJet did not prevent
the arrival of other
companies such as Ryanair and Euroceltic Airways, and some
companies. Following the
charter
the new
in 2002, the airport granted numerous reductions on
terminal
official prices.

inauguration of

(41) The following are mentioned: a bookshop, a contract with
Coca-Cola for drink distributors and another with Air Terminal
Publicity, which manages advertising on behalf of
the airport
(February 2002); a ‘Guide du Routard' clothes shop (March/April
2002); an internet terminal supplier (June 2002); a Belgian Sky
Shops duty-free store (July 2002); a new cafeteria (August 2002);
Budget car hire company (October 2002); a branch of Dexia Bank
(November 2002); and a bureau de change (February 2003). BSCA
also succeeded, in 2002, in re-negotiating its commission rates on
a number of concessions (cafeteria, car hire, Brussels shuttle bus
service, supplies of motor fuel).

(42) In this

that

regard, Belgium states

the
contrary to what
Commission asserts in point 9 of
the decision to initiate the
procedure, the fact that GTM did not buy into BSCA has nothing
to do with the conditions granted by BSCA to Ryanair. Two letters
dated April 2001 from the Vinci Group, the group that purchased
GTM, certify that the group is still interested in the possibility of
buying into BSCA.

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4.2. APPLICATION OF THE PRINCIPLE OF A PRIVATE
INVESTOR IN A MARKET ECONOMY

4.2.1. APPLICATION OF THE PRIVATE INVESTOR PRINCIPLE

TO THE WALLOON REGION

4.2.1.1. Reduction in landing charges

(90)

it

its

that

Belgium believes
is advisable to apply the
principle of private investor in a market economy to the
Walloon Region because its policy ‘is effectively part of
the exercise of business activity and not part of the
exercise of
regal powers'. Contrary to its past
assertions, Belgium has now explained that airport taxes
should be considered fees and not taxes; the fees are
levied on users according to their levels of consumption,
while the concept of tax implies equality of all the users
faced with it. It would involve ‘a fee that constitutes a
price for the use of the airport by users in return for
serviced rendered'.

(91) During the meeting on 24 June 2003, the Commission
asked to what specific service the fee related. Belgium
answered that this fee did not relate to a specific service
rendered but was a partial financial contribution for the
use of the airport infrastructure under the terms of the
Walloon Decree of 16 July 1998.

(92) During this meeting,

the Commission also asked
whether
the revenue from the tax is held by the
Walloon Region or by BSCA. Belgium answered that it
is initially held by the Walloon Region, which transfers
65 % of the revenue to BSCA. The Commission asked,
seeing that the decree of 16 July 1998 stipulates that
BSCA ‘collects'
the word
‘collect' simply means ‘levy' or whether BSCA holds a
right of ownership over the revenue. Belgium answered
that it was a simple collection process.

taxes, whether

the airport

(93) However,

in its letter of 27 August 2003, Belgium
supplied other explanations. It explained that BSCA is
the owner of the taxes from the time of their collection
the 35 % paid to the
for
from the users, except

a

it,

that

services,

concession of public

environment fund (43). Belgium explains that BSCA is
responsible for providing a public service concession: ‘It
is
the
management by a private individual of a public service
at his expense, risk and peril, under the control and
according to the methods determined by the licensor, in
return for a payment collected by the agents at the
expense of the users'. Insofar as BSCA is the entity that
manages and operates the airport and supplies the
services to the users,
‘it is logical that it should collect
and keep the fees that constitute a consideration for the
services rendered to the users'.

(94)

Belgium believes that BSCA's holding of 65 % of the
airport
taxes does not constitute State aid from the
Walloon Region in favour of BSCA, as there is no
transfer of public resources from one entity to another.
In support of
it quotes the case law
concerning PreussenElektra (44).

its argument,

(95)

Belgium stresses that it is up to each Member State or
public authority to fix the airport taxes for the airports
that fall within their competence. Some airports fix their
tariff levels themselves, under the control of a regulating
authority. These tariffs cannot be easily compared as
they correspond to structural costs, business policy,
development phases,
very
different airports. Regional airports would have lower
structural costs and taxes than the main airports. With
regard to comparisons with other airports, Belgium
to which
considers
Interested Party B has to pay charges of EUR 32 at
Zaventem while Ryanair pays a mere EUR 4 for the
same services is incorrect. It points out that for each
passenger Ryanair pays EUR 1 for landing, EUR 1 for

assertion according

transport policies

that

and

the

(43) ‘In accordance with the concession agreement dated 9 July 1991
concluded between the Walloon Region and BSCA, the right to
collect the fees was transferred to the agent, so that BSCA is in
fact the owner of the fees as soon as they are collected from the
users, because of the services that it provides to the users on the
basis of the concession, with the exception, of course, of the 35 %
paid initially to the Environment Fund and then the fixed-ceiling
total paid to Sowaer from 2002 onwards. This is developed more
specifically in the schedule of conditions dated 9 July 1991. In fact,
Article 7 provides that the agent shall collect the fees connected
with air traffic, while complying with the regulatory provisions in
force or to be issued by the Walloon Regional Executive. Where
necessary, the collection of these fees shall, for the purpose of the
present document, be considered as a transfer to the agent'.

(44) European Union CoJ

to purchase

Judgment of 13 March 2001 in Case
C-379/98, PreussenElektra & Schleswag, ECR p. I-2099, Grounds
59 & 61: ‘In this case, the obligation imposed on private electricity
supply undertakings
electricity produced from
fixed minimum prices does not
renewable energy sources at
involve any direct or
to
transfer of State resources
undertakings which produce that type of electricity. (…) In those
circumstances, the fact that the purchase obligation is imposed by
statute
advantage on certain
an undeniable
undertakings is not capable of conferring upon it the character of
State aid within the meaning of Article [87] (1) of the Treaty.'

indirect

confers

and

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ground handling, EUR 7 for the passenger fee and EUR
4 for the contribution to Promocy, making a total of
EUR 13.

(99)

Belgium asserts that Charleroi airport is ready to grant
such rebates to any other airline that brings in a volume
of passengers comparable to that generated by Ryanair.
Moreover, the BSCA business plan was compiled on the
basis of the principle of a landing tax total equal to that
paid by Ryanair, namely EUR 1 per passenger for all
airport users; this would be proof of the fact that the
measures are not selective. Belgium submitted to the
Commission the offers made by BSCA to three airlines
([…]), made with the same total of EUR 1.

(100) Belgium explained that the Walloon public authorities
were preparing an amendment to the Walloon decree of
‘which would allow more accurate
16 July 1998,
consideration to be taken of
the various objective
criteria that distinguish different types of users of the
Walloon airports'.

4.2.1.2. Compensation clause for the Walloon Region

(101) Belgium contests the Commission's statement that the
principle of private investor is not applicable to the
Walloon Region when it exercises its regulatory powers.
It answers that ‘the Commission cannot however force
the Walloon Region to act according to the criteria of
the private operator
in a market economy, which
include the conclusion of synallagmatic contracts, and at
the same time deny its right to give its co-contractor
the legal security that it has the right
It
would be quite normal for the Walloon Region, within
its specific competence, to be able to commit itself to its
co-contractor to ensure a level of legal security for a
contract concluded for a 15-year period.

to expect'.

(102)

It should also be stressed that the Walloon Region did
not shrink from exercising its regulatory power, either
in relation to taxes or in relation to Charleroi Airport's
opening hours. The compensation clause would only be
effective in the context of its commercial relations with
Ryanair. These clauses would not be discriminatory
insofar as no real competitor carries on any activities
similar to those of Ryanair at Charleroi. The Walloon
Region states that it is willing to grant such a clause to
any potential competitor of Ryanair wishing to operate
regular flights there.

(96)

(97)

(98)

Belgium justifies the reduction granted to Ryanair on
the landing tax by ‘the volume of passengers that will be
brought in by the company, that it, at least 27 million
passengers during the contractual period of 15 years'.
‘The Walloon public authorities can grant discriminatory
reductions in order to attract new users such as Ryanair,
which will allow a regional airport such as Charleroi to
exceed
reach
It should not be forgotten that a
break-even point'.
reduction in landing taxes will
tax
revenue significantly thanks to Ryanair: it has increased
to EUR 5,2 million, while without the Ryanair traffic,
only EUR 310 000 would have been collected.

raise the total

one million

passengers

thus

and

a

that

confronted with a

Belgium considers that ‘BSCA [the Walloon Region (45)]
was
“commercial need” when
granting the reductions on the landing charges, since
there was a risk of substitution in relation to Ryanair,
which could easily have contracted with another airport'
and refers to the Van Der Kooy case law in a case
relating to gas supply prices in the Netherlands (46). In
its judgment of 2 February 1988, the Court of Justice
considered
to
preferential
horticulturists did not constitute an aid measure ‘if it
were demonstrated that the preferential tariff was, in the
context of the market in question, objectively justified
the need to resist
by economic reasons
competition on the same market from other sources of
energy the price of which was competitive.' The Court
confirmed this case law in a judgment of 29 February
commercially
1996,
necessary,
is common commercial practice for an
undertaking to grant a discount if it is economically
maintainable' (47).

according to which ‘if

such as

granted

rate

is

it

it

Public airports should not be bound by any publicity
obligation when they grant
reductions on landing
charges while private airports, which also have recourse
to this type of negotiation, are protected from any of
the Commission's measures
aid.
Belgium quotes several examples of airports that have
agreed
any prior
publication.

relating to State

fees without

to reduce

their

(45) The Commission assumes that Belgium was referring to the

Walloon Region and not to BSCA.

(46) Judgment of 2 February 1998 in the joined cases 67, 68 and
70/85, Kwekerij Gebroeders van Der Kooy BV and others v.
Commission, ECR p. 219, Ground 30.

(47) Judgment of 29 February 1996 in Case C-56/93, Belgium v.

Commission, ECR p. I-723, Ground 82.

(103) During the meeting on 24 June 2003, the Commission
asked whether, if a new tax were introduced (such as an
environment tax), Ryanair would be required to pay it
during the contractual period. Belgium explained that
introduce any new
the Walloon Region would not

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L 137/19

airport tax on its own initiative, but that this does not
preclude the introduction of new regulations by the
Community or the Belgian Federal State under which
Ryanair would be charged.

4.2.2. APPLICATION OF THE PRINCIPLE OF PRIVATE

INVESTOR TO BSCA

image of Charleroi Airport

triggered by the publicity centred on the airline's
operations. The
is
improving because it benefits from publicity via the
Ryanair site, which is the most visited travel site in
the European airport sector. Regional airports are
less known to consumers and airlines and have to
make a greater effort in order to create a reputation
for themselves and be seen as a viable alternative to
the larger main airports, which benefit from better
rail
established
reputation.

and road links

and a more

4.2.2.1. Type of advantages granted to Ryanair

4.2.2.2. The BSCA decision-making process

(104) The Belgian authorities'

type of
advantages granted to Ryanair are joined to those
formulated by the Irish company, TBI and Morrison:

remarks on the

— The ‘one-off'

incentives were granted in return for
the significant
risk taken by Ryanair and the
investment made within the development of new
destinations from a regional airport that has not yet
proved its worth. BSCA would be ready to grant
these incentives to other companies.

— The relatively low price for ground handling is
explained by the limited and basic services and an
optimal
allocation of human resources. These
services should continue to be rationalised in order
supplied to
to minimise losses on the benefits
Ryanair. These transitional losses must be envisaged
in the overall context of
the transaction with
Ryanair:
they are offset by income generated by
airport taxes and commercial activity.

ground handling market
‘at present,

— Following the remark by Interested Party B on the
in
the
opening of
Charleroi, Belgium specifies that
this
directive [Directive 96/67/EC] is not applicable to
Charleroi Airport as that airport has not yet passed
the
threshold. When the
criteria for applying this directive are fulfilled, BSCA
will of course take all
the required measures to
comply with it'.

two-million-passenger

(105) On the development of negotiations with Ryanair,

Belgium specified that:

— A first business plan was submitted to BSCA's Board
of Directors during 2000. However, this plan was
not considered to be greatly credible because of the
certain charges and
tendency to underestimate
overestimate revenue.

— New contacts were made with Ryanair in order to
re-negotiate these conditions. After three months of
intensive negotiations, an agreement
in principle
was reached in February 2001, providing for a
passenger tax increase from BEF 200 (about EUR 5)
to EUR 7 (48), an increase in taxes over time to take
account of inflation, and the removal of the upper
limit on landing tax, which originally applied only
to the first 130 passengers on each flight.

— These

elements were

incorporated into a new
business plan, which was then formally approved by
the
the Board of Directors of BSCA before
contractual texts were signed.

— The BSCA Board of Directors includes a number of
business managers experienced in the management
large private companies. Their approval of the
of
agreement,
therefore, was naturally based on a
detailed examination.

— With regard to the marketing contribution, Belgium
considers that there is no interest in promoting an
airport as such, as passengers favour an airline
rather than a specific airport infrastructure. It is the
airline that is the vector for passenger flows, that
provides the airport with its income on a correlative
basis. Although it is true that marketing activity is
centred on Ryanair flights, they contribute directly
to the creation of BSCA's airport and commercial
income thanks to the increase in passenger numbers

(106) During the meeting on 24 June 2003, the Commission
asked the Belgian authorities what was the precise date
of the decision by BSCA to invest in Ryanair. In their
written replies, Belgium and Ryanair pointed out that

(48) This agreement was laid down in an amendment to the 16 July

1998 decree made on 22 March 2001.

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signature of

the agreements between
the date of
Ryanair, BSCA and the Walloon Region (November
2001) was simply the formalisation of an agreement
reached in February 2001 (Ryanair) or April 2001
(Belgium). Belgium answered that the Board of Directors
of BSCA took the decision on 31 July 2001. The reports
of
the Board of Directors of BSCA allow the
development of the negotiations to be traced.

just

elected

(107) During the meeting on 30 May 2001, the Board of
Directors of BSCA, which had
its
Vice-President and a new management committee, was
informed by the Walloon government representative
responsible for airports
the negotiations with
that
Ryanair were in the final stages. The agreement would
soon be submitted to the Board of Directors, which
wanted ‘as
to have a financial
projection relating to the
future operations with
Ryanair' (49).

soon as possible,

(108) During its meeting on 15 June 2001, a point was made
on the state of the negotiations with Ryanair. These
negotiations were led by two BSCA Directors who were
also members of the Walloon Prime Minister's office and
that of the Walloon Transport Minister's. This meeting
was, first and foremost, an opportunity for the Board of
Directors to hear a presentation from the company's
auditor on the tasks to be carried out by BSCA under
the 1991 concession agreement. The following points
were covered: fire services, with strict compliance with
ICAO standards; maintenance services
for buildings,
runways and surrounding areas; the sale of aviation fuel;
the management and
the management of hangars;
development of the car park service; the management of
premises within the administrative buildings, cafeteria
and restaurant; the management of advertising spaces;
ground handling; catering; business areas; the tax-free
shop; and the passenger information service. The agent
must
area
management agreement, provide maintenance for the

the private

context of

in the

also,

of

a
the

promotional

airports, makes

(49) During this meeting, the question of the existence of potential
State aid was addressed. ‘[The Walloon government representative]
emphasised that the European Commission appears to admit that
the regional public authority, whose legal task was to develop the
effort. This
activities
composition of BSCA's
involvement, which because of
shareholding will be treated as expenditure of public funds, should
escape criticism by the Commission because of the purpose of the
expense. Some members of
that unofficial
contact should be made with one of the representatives of the
Commission to assess the Commission's views on the compatibility
of the agreement signed with Ryanair in relation to State aid and
competition rules. Most members believe that it is advisable to
wait for the end of the negotiations, which will be conducted
naturally subject
to the Board's approval, and then assess the
conditions that may have been obtained before approaching the
Commission's departments, albeit unofficially'.

the Board suggest

land, buildings, equipment and structures included in
the concession or made available, so that
they are
always suitable for the use for which they are intended.

(109) The meeting of 29 June 2001 was largely devoted to the
negotiations with Ryanair. The Walloon government
representative explained that the contract was ‘still at
the draft stage, but a verbal agreement has been reached
between the parties'. Several questions were touched on:

— The number of based aircraft, fixed between two

and four.

limitation

— The limitation of the number of flights to 26 per
day, because of ‘the capacity of the airport and the
contribution. The
financial
long-term objective is also to be able to diversify
and find other companies, as it is not wished that
Ryanair
should be the sole client at Charleroi
Airport'.

the

of

— The landing tax: ‘[the director] recalls that for points
1.2 and 1.4, the landing tax is fixed by the Walloon
Government. The Minister may grant a preferential
rate, collected by BSCA and remaining the property
of the operating company. In addition, the Minister
was challenged on this matter in Parliament, and he
answered that
for any company operating in a
Walloon airport, the tax will be the same'. ‘[Another
director] asks whether the EUR 7 in point 1.4 and
the euros in point 1.2 remain the property of BSCA.
[The director] replied in the affirmative'.

(110) The meeting of 10 July 2001 was also mostly given over
to negotiations with Ryanair, the Walloon government
representative commenting on the draft contract to the
members of
the Board of Directors. One director
‘pointed out that there was not much left before the
contract was finalised in terms of content, but that the
directors had little information on which to assess the
financial side of the contract. This financial side is very
important because it commits the airport and therefore
the responsibility of the directors'. The directors wish to
obtain precise information on the possibility of Ryanair
obtaining financial advantages beyond the four aircraft
based there (50).

(50) If the number of aircraft exceeds the four provided for in the
contract, the terms of the contract must be re-negotiated. Ryanair
could not obtain any additional
financial advantages without
basing further aircraft, as the advantages cover only 26 flights per
day.

30.4.2004

EN

Official Journal of the European Union

L 137/21

(111) The meeting of 31 July 2001 allowed discussions to be finalised on the contract with Ryanair. The
Board of Directors then had two documents that could be used as a basis: a business plan in the
form of a table, showing revenue and expenditure spread over several years, and a strategic
guidelines note. 31 July 2001 was therefore the date on which the Board of Directors of BSCA took
the decision to finalise an agreement with Ryanair. The minutes of the following meetings indicate
that if there was any delay in signing the agreements with Ryanair, it was because Ryanair had
difficulties relating to the conditions for operating Promocy. After 31 July 2001, however, the Board
of Directors did not address the issue of agreements again.

4.2.2.3. The 2001 business plan and the strategic guidelines note

(112) On 31 July 2001, the Board of Directors examined a business plan, shown in Table 3, and its
various components, most notably ground handling income, land royalties, issues connected with
the environment fund, and passenger volumes. It addressed once again the issue of airport taxes
and opening hours, the Walloon government representative stressing that ‘if the Walloon Region
does not fulfil its commitments, there will be no effect on BSCA', and that it was the Walloon
Region that would be held liable if airport opening hours were changed or taxes increased. He also
specified that ‘the passenger or boarding taxes are fixed for the whole of the period, and total one
euro for all airlines. Commercially, the passenger tax has just been increased from EUR 5 to EUR 7
and the boarding tax can therefore now be reduced'.

Table 3

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

(Figures in Euros)

(pss = passengers)

Ryanair pss.

360 000

600 000

700 000

700 000

700 000

700 000

700 000

700 000

700 000

700 000

Charter pss.

7 800

7 800

7 800

7 800

7 800

8 034

8 275

8 523

8 779

9 042

Other low-cost pss.

0

0

0

50 000

100 000

160 000

220 000

300 000

375 000

450 000

Other pss.
(scheduled flights)

Total number of
departing pss.

Total number of
pss.

16 600

20 000

25 000

40 000

60 000

63 000

150 000

200 000

250 000

300 000

384 400

627 800

732 800

797 800

867 800

931 034

1 078 275 1 208 523

1 333 779

1 459 042

768 800 1 255 600 1 465 600 1 595 600

1 735 600 1 862 068

2 156 550

2 417 047 2 667 558

2 918 085

Operating revenues 10 019 659 14 401 057 16 450 001 18 051 427 17 909 997 19 789 645 24 256 665 28 232 849 31 702 696 35 291 343

Aeronautical
charges

passenger tax

boarding tax

total per pss.

Total aeronautical
charges

Handling

Government
royalties

[…]

[…]

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[…]

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[…]

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[…]

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[…]

[…]

L 137/22

EN

Official Journal of the European Union

30.4.2004

(Figures in Euros)

Sale of fuel

Tax-free shop

Car park

Sales commission

Advertising

Fire services

Promotional
subsidy

Expenses

Purchase of fuel

Purchase of good
in tax-free shop

Total purchases
(heading 60)

Misc. goods and
services

Labour cost &
social security (1)

Depreciation

Environment fund

Development
expenses

Operating result

Capital subsidies

Financial revenue

Financial expenses

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

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[…]

[…]

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[…]

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[…]

[…]

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[…]

[…]

[…]

[…]

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[…]

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[…]

[…]

[…]

[…]

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[…]

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[…]

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Current result

–1 237 707 –1 684 299 –1 066 672

51 536

1 122 828

2 371 725 5 252 696

8 056 127 10 274 947 12 450 238

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

(Figures in Euros)

(1) of which

handling-ticketing
staff costs

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

30.4.2004

EN

Official Journal of the European Union

L 137/23

(113) Moreover, Belgium has provided analytical details of BSCA's operations after 2010 which are

summed up in Table 4.

Table 4

2011

2012

2013

2014

2015

(Figures in Euros)

(pss = passengers)

Ryanair pss.

Charter pss.

Other low-cost pss.

Other pss. (scheduled flights)

700 000

700 000

700 000

700 000

700 000

9 314

500 000

315 000

9 593

525 000

330 750

9 881

551 250

347 288

10 177

578 813

364 652

10 483

607 753

382 884

Total number of departing pss.

1 524 314

1 565 343

1 608 418

1 653 642

1 701 120

Total number of pss.

3 048 627

3 130 686

3 216 837

3 307 283

3 402 240

Operating revenues

37 602 132

39 163 998

40 830 948

42 610 535

44 510 875

Aeronautical charges

passenger tax

boarding tax

total per pss.

Total aeronautical charges

Handling

Government royalties

Sale of fuel

Tax-free shop

Car park

Sales commission

Advertising

Fire services

Promotional subsidy

Expenses

Purchase of fuel

Purchase of good in tax-free shop

Total purchases (heading 60)

Misc. goods and services

Labour cost & social security (2)

Depreciation

Environment fund

Development expenses

Operating result

Capital subsidies

Financial revenue

Financial expenses

Current result

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

[…]

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[…]

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[…]

[…]

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13 703 048

14 129 726

14 577 641

15 047 097

15 538 295

(Figures in Euros)

(1) of which handling — ticketing staff

costs

[…]

[…]

[…]

[…]

[…]

2011

2012

2013

2014

2015

L 137/24

EN

Official Journal of the European Union

30.4.2004

submitted to it. The note sets out

(114) The Board of Directors also discussed a note on strategic
guidelines
the
objectives to be achieved for the airport in terms of
passenger volume (2 500 000 to 3 000 000) by 2010
which would represent a share of the Belgian market
not exceeding 10 %. It outlines a market niche strategy
designed to establish a light structure offering airlines
attractive financial conditions and quick rotation times
and focusing on short flights, for pleasure or business,
to nearby destinations. As potential users it
targets
low-cost airlines and East European airlines while
stressing the difficulty of attracting regional airlines (51).

(115) The implementation of

this strategy is based on the
development of air traffic. Air traffic should increase to
1 400 000 passengers per year thanks to the 26 flights
per day out of Charleroi; Ryanair is expected to bring in
1 million passengers
from 2000 onwards. The
development of Ryanair's activities should be the subject
of re-negotiation and an extension of the agreement to
40 daily flights, or some 2 million passengers per year,
the note specifying that ‘[…]'. It is estimated that with
Ryanair present, it will be difficult for another low-cost
company to set up a base and that [Charleroi] should
make itself available as a potential destination from
another base.

(116) The BSCA company auditor examined the analysis of
the 2001 business plan and judged its hypotheses to be
prudent, but underlined a number of problems.

‘Generally speaking, the hypotheses used in compiling
the business plan are prudent, especially in terms of
revenue from the car park and also in terms of general
expenses if one makes a comparison with what was
actually spent at
the
following points must be highlighted:

June. However,

end of

the

(a) The results take account of a fee for maintenance
and fire operations to be paid from the Walloon
Region's budget, which increases progressively over
time, and of a subsidy for the maintenance and fire
investment for the period 2001-2003. This revenue

must comply with the provisions of the concession
agreement and with the schedule of conditions,
which, as a reminder, expired on 31 December
2000 [emphasised by auditor].

(b) It is necessary to make sure that the tariffs applied
to Ryanair are wholly consistent with the Walloon
Government Decree of 16 July 1998, especially in
relation to the discount of EUR 4 per passenger
[emphasised by auditor].
[…]. An attached note,
“BSCA Comments Business Plan 2001” points out
that the environment fund “shall total a maximum
of BEF 75 million indexed from 2003 onwards (no
agreement signed to date)”.'

4.2.2.4. Analysis of certain parameters underlying the

2001 business plan

Responsibility for fire and maintenance services

(117) The Commission has pointed out that BSCA was paid
financial compensation by the Walloon Region for the
‘fire and maintenance' services that it performs on its
behalf. The compensation is specified in the 2001
business plan in the revenue section.

(118) The Commission considered the issue of who, either
BSCA or the Walloon Region, was responsible for these
services, examining the agreement documents drawn up
between these two parties. Article 12 of the schedule of
conditions attached to the 1991 concession convention
states
responsible for providing and
developing ‘fire services with strict compliance with
ICAO standards' and ‘maintenance services for buildings,
runways, surrounding areas, cartage, etc'.

that BSCA is

(119) However,

the

(Article 25)
transitional provisions
stipulate that between 1991 and 1997,
‘the conceding
authority [the Walloon Region] shall bear the cost of
fire and maintenance services'.

(51) Regional airlines have ‘a strategy which is oriented towards the
leading airline of the alliance to which they belong and they tout
towards the leading
for customers which they then redirect
airline's main hub. In this context, Charleroi airport is of
little
interest to them'. Charter companies ‘all prefer Zaventem because
of the quality of the service it provides and choose Liège as an
alternative because it is open day and night'.

(120) Following an amendment to the concession in August
1999, the principle of BSCA's accepting responsibility
has been retained, but it is once again the Walloon
Region that will finance it from 1997 to end 2000: ‘For
a period of three years commencing on 1 January 1997,
the conceding authority [the Walloon Region] shall bear
the cost of fire and maintenance services as mentioned

30.4.2004

EN

Official Journal of the European Union

L 137/25

in Articles 12 and 19 above. The parties agree to
re-examine these provisions within the framework of
the 2000 budget, according to the financial balance of
the Concession and
budgeted
the
developments in subsequent years in the BSCA profit
and loss account'.

forecast

and

(121) During its meeting with the Belgian authorities on 23
that when
the Commission pointed out
July 2003,
BSCA took the decision to conclude agreements with
Ryanair in July 2001, there was nothing to assure it that
the Walloon Region would continue to bear the costs of
these services in years to come. On the contrary, the
it
concession documents of
should pay these costs (52), as was indicated by the
BSCA company auditor during the Board of Directors'
meeting on 15 June 2001 (53). The Commission
therefore asked Belgium on what basis BSCA could
believe that the Walloon Region would continue bearing
the costs of these services. Belgium has transmitted the
legal bases
the fire and maintenance subsidies
granted to BSCA for 2000 and 2001 (54).

the time provided that

for

(123)

the
In the same statement, Belgium considers that
compensation paid to BSCA for maintenance and
fire-fighting is consistent with Court of Justice case law
in the Altmark case (55).

The environment fund and the infrastructure
provision fee

(124) According to the Walloon Decree of 16 April 1998, still
in force, 35 % of the airport taxes are allocated to an
environment fund. The Commission has asked Belgium
if this 35 % was in fact paid to the fund, as BSCA
appears to have kept part of the revenue.

(122)

In its latest contribution dated 19 December 2003,
Belgium presented a new document relating to the fire
and maintenance subsidy; this was a letter sent by BSCA
to the Walloon Transport Ministry on 5 July 2001,
setting out the costs budgeted by the airport for 2002
for this category of expenses. The letter is said to follow
a telephone conversation between the two parties. No
return letter sent by the Walloon Government to BSCA
was
in
authorities
the
confirmation of their agreement to bear these costs.

transmitted

Belgian

by

(52) Since the concessions were amended in April 2002, these costs

have been borne by the Walloon Region.

(53) The auditor explains that the Walloon Region took care of the fire
and maintenance service until 1997, and then for a transitional
three-year period until 31 December 2000, but that it is no longer
required to do so: ‘In addition, the auditor indicates that had this
not been done, the fire service agreement, which had expired,
would have to be renewed. [The Director of BSCA and the head of
the minister's office responsible for airport management] indicates
that the texts are currently up to date, especially so that the fire
subsidy can be paid more regularly during the year and the
management company does not pay too much by way of funds
before being reimbursed, as happened in the past. These texts will
be supplied shortly'.

(54) For the 2000 subsidy: Budgetary Decree of 16 December 1999
(Moniteur Belge, 28 June 2000), Programme 54.02, Heading
31.04.22 (page 22440). For the 2001 subsidy: Budgetary Decree of
14 December 2000 (Moniteur Belge, 22 June 2001), Programme
54.02, Heading 31.04.22 (Page 21524). In addition, the Belgian
authorities assured the Commission that the compensation granted
did not involve any over-compensation and was calculated on the
basis of the service costs in separate accounts.

the 35 % collected

(125) During the meeting with the Commission on 24 June
2003, Belgium specified that this fund no longer existed
and that
the legislative provision should have been
abolished. The Commission notes that it is still in force
today. BSCA paid
into the
fund in 2001. This contribution should
environment
have reached a ceiling of BEF 75 million (EUR 1,86
million) in 2002. Belgium points out in its contribution
of 19 December 2003 that the environment fund ceiling
of BEF 75 million per year,
indexed at 2 %, was
indicated in Sowaer's financial plan, approved by the
Walloon Government on 23 May 2001 and sent
to
BSCA on 1 August 2001. After the amendments made
the
to
contract
environment contribution was changed into a fee
payable to Sowaer for the use of infrastructure.

2002 (56),

concession

the

in

(126)

In fact, in response to Interested Party C, who asserts
that BSCA is not paying for
the
this assertion is
infrastructure, Belgium replies
incorrect, as ‘the 35 % ceiling for aeronautical fees is
allocated
the
under
sub-concession agreement of 15 April 2002' and that
‘part of the fee payable by users of the infrastructure,
that is both airlines and passengers, are allocated to

the provision of
that

Sowaer

terms

the

of

to

(55) EU CoJ Judgment of 24 July 2003 in Case C-280/00, Altmark

Trans GmbH, not yet published in ECR.

(56) See Points 60-62 of the initiation of the procedure.

L 137/26

EN

Official Journal of the European Union

30.4.2004

Sowaer for participation in the cost of financing the
infrastructure. This assertion is therefore unjustified' (57).

BSCA totalling around 60 million BEF […] and then
distributed over 3 years, 3 times 30 million (capital of
600 million and Sowaer holding 25 % or 150 million)'.

Re-capitalisation of BSCA by the Walloon Region

(127) The meeting of the BSCA Board of Directors on 31 July
2001 was alerted to the losses linked to the setting-up
the
the Ryanair base during the early years of
of
contract. Re-capitalisation of
the business by the
Walloon Region, to the tune of EUR 5 million, was
judged necessary ‘in order to avoid being in a precarious
situation' (58).

(128) The principle of re-capitalisation is mentioned in May
2001 in a decision by the Walloon Government (59) and
its annex, the financial plan of Société Wallonne des
Aéroports. This plan provides for ‘a shareholding in

(57) Still in response to Interested Party C, which believes that BSCA is
benefiting from an exemption of one half of the fees payable by
BSCA to Sowaer, Belgium explains that: ‘The concession contracts
that bind Sowaer to the operating companies of airports located in
the Walloon Region provide that these companies must pay a fee
for the provision of the airport infrastructure as well as for its
development. Under the terms of Article 11 of the agreement for
sub-concession of the land of 15 April 2002, concluded between
Sowaer and BSCA, the annual total was fixed at 35 % of the
fees fixed at a ceiling of EUR 883 689 from 2003
airport
onwards. This total is indexed at a rate of 2 % per year […]. The
ceiling of 35 % of
fees payable to Sowaer will be raised to
2 651 067 from 2007 and increased annually by 2 % from 2008,
that is, shortly after the new terminal is made available to BSCA.
The increase in the ceiling is justified by the fact that the new
infrastructure will allow BSCA to generate higher levels of business
income (shops, catering, car parks etc). The calculation made
consists of tripling the sub-concession price from 2007 onwards
while taking account of an annual indexation of 2 %.'
‘There has
been not an exemption on part of the fees payable by BSCA to
Sowaer, but a gradual alteration of the fee total commensurate
with the development of the infrastructure'.

(58) The strategic note submitted to the BSCA Board of Directors
meeting on 31 July 2001 states: ‘BSCA is expected to accumulate
losses of 164 million over the next three years. Its equity fund at
31 December 2003 should then be reduced to 23 million francs,
that is, less than 20 % of the current capital of 153 million francs.
For this reason, an increase in capital of EUR 5 million should be
provided in order to avoid being in a precarious position.
In
anticipation of the finalisation of this operation, which could take
the large number of shareholders,
several months in view of
Sowaer could be called upon in order to obtain a capital credit
line, as Sowaer has budgeted for 150 million francs intended for
use in increasing the capital'.

(59) Decision of 23 May 2001 entitled ‘Development of airports,
adoption of a financial mechanism and creation of a specialist
company'.
It is in this decision that the Walloon Government
indicates its approval of Sowaer's statutes, financial level, budget
forecasts and management structure. It invites Sogepa to set up
Sowaer, and provides
environmental
‘the
measures, except for isolation, shall be examined by Sowaer in
cooperation with the concessionary companies'.

financing of

that

(129) However, when the BSCA directors decided to conclude
the agreements with Ryanair, they did not seem to have
any guarantee with regard to the re-capitalisation:
[Director A] ‘asked whether a request to increase the
capital had already been submitted to Sowaer. [Director
B] answered that Sowaer is envisaging an increase in
capital of up to 150 million. The increase in capital
should be made in 2002. [Director C] was concerned
that the Board of Directors would have to approve a
the shareholder will
plan without knowing whether
the
follow;
contract? [Director B] proposes including this item on
the next Sowaer Board of Directors'
the agenda of
meeting.
the Board of
Directors' was asked to approve the contract without
being certain of obtaining the increase in capital from
Sowaer.
informed the Board that
Sowaer would send a letter to BSCA confirming that the
Board of Directors of Sowaer had approved the financial
plan in which an increase in capital was provided
for' (60).

in this case, will BSCA be able to fulfil

[Another director] notes that

[Director B]

[…]

(130) On 19 December 2003,

the Belgian authorities
produced a letter sent on 1 August 2001 by Sowaer to
BSCA, containing a copy of the decision taken on 23
May 2001 by the Walloon Government to re-capitalise
the two Walloon airports,
to the tune of BEF 150
million each. The letter specifies that this document was
approved by Sowaer on 1 July 2001.

(131) The question of re-capitalisation of BSCA was raised by
Interested Party C.
In its written replies, Belgium
answered that an increase in BSCA's capital of EUR
3 961 340, agreed in principle in 2001, was actually
made by Sowaer on 3 December 2002.

(132) The operation was carried out in accordance with the
principle of private investor in a market economy. The
consultancy firm Deloitte & Touche,
in its analysis of
the 2002 business plan, pointed out that the Region /
the funds
Sowaer had acted as a private investor,

(60) Minutes of the BSCA Board of Directors' meeting on 31 July 2001.

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invested in BSCA being required to produce a return on
investment of some 27 % in view of the results expected
of BSCA for the period 2001-2010 (61).

in the region of EUR
declared was a net profit
1 500 000, compared with a projected loss of EUR
1 531 793 in the business plan (63).

(133)

the
In their contribution dated 19 December 2003,
Belgian authorities
indicated that on 27 November
2003, Sowaer asked Deloitte & Touche to analyse the
comparison of the 2001 and 2002 business plans. They
also supplied Deloitte & Touche's
response of 27
November 2003, in which the expert considers that the
general conclusions of his study relating to the 2002
business plan can all be extended to the 2001 business
plan.

4.2.2.5. Other comments from the Belgian authorities

(134)

In response to the remarks on the financing of security
operations, made by Interested Party C, Belgium
these operations constitute ‘a public
that
considers
service obligation that
is incumbent on the Member
State' and that
the operations ‘are provided by the
Walloon Region itself, without BSCA being involved in
is up to the Member State to
It
them in any way.
determine the way in which it will
finance these
operations, but the fact that the Walloon Region decided
not to charge BSCA any security fee is based on a
political choice that does not in any way constitute State
aid in favour of the latter'.

(135) Belgium shares the views of Ryanair with regard to the
relevant market:
that use the
airport are charter companies whose transport services
are distinct from those of the low-cost companies, as
the Commission Decisions relating to concentrations
show (62).

the other companies

(136) The Belgian authorities state in their contribution of 19
December 2003 that
the private investor attitude of
BSCA is strengthened by the observation a posteriori
that the results anticipated for 2003 are much higher
than those anticipated in the business plan: the figure

(61) ‘It emerges from this analysis that the average annual profitability
of the funds invested on the basis of the amended business plan
and over an estimated period of 10 years totals […] %', and that
‘this return must be compared with a rate for the market risk for
this type of activity at 15 % per year'.

(62) It quotes the Commission Decision of 5 March 2002 in Case N
IV/M.2672, SAS/Spanair (OJ C 93, 18.4.2002, p. 7), and the
Commission Decision of 11 August 2000 in Case N IV/M.0019,
KLM/Alitalia (OJ C 96, 5.4.2000, p. 5).

5. ASSESSMENT OF THE AID

5.1. EVALUATION OF THE PRESENCE OF AID WITHIN THE
MEANING OF ARTICLE 87(1) OF THE TREATY

(137) According to Article 87(1) of the Treaty and Article
the EEA Agreement, any aid granted by a
61(1) of
Member State or through State resources, in any form,
is incompatible with the Treaty and the EEA Agreement
insofar as it affects trade between Member States and
between contracting parties and distorts or threatens to
distort competition by favouring certain undertakings or
the production of certain goods.

5.1.1. ADVANTAGES GRANTED TO RYANAIR

(138)

In its decision to initiate the procedure, the Commission
distinguished two types of advantages
received by
Ryanair: those granted by the Walloon Region and those
granted by BSCA.

5.1.1.1. Advantages granted by the Walloon Region

(139) Before addressing the

the level

issue of advantages
specific
granted to Ryanair in the form of reductions in landing
charges, estimated at some 50 % of the general tariff but
without
itself being the problem to be
addressed here, the Commission points out that it is not
opposed to reductions being granted to airlines, under
decision,
certain
its
mentioned
that
short-term reductions, which are available and granted
without exercising discrimination between airport users,
do not fall within the scope of Article 87 of the Treaty
as they do not lead to distortion of competition. On the
other hand, the Commission specified that a reduction

In
the Commission decided

conditions.
above,

‘Manchester'

(63) Note: the net loss of EUR 1 531 793 for 2003 is actual, and in
accordance with the analysis presented by Deloitte & Touche on
13 February 2003, the loss anticipated in the business plan of 22
April 2002. The loss anticipated in the 2001 business plan, used
both for the BSCA decision-making process and for the present
analysis, totalled EUR 1 066 672 in the operating result.

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or system of reductions granting preferential treatment
to a specific business was likely to fall within the scope
of Article 87 of the Treaty (64).

Ryanair. The Walloon Region therefore acted as other
airports,
in
Europe, and in accordance with the principle of private
investor in a market economy.

especially private airports, have done

(140) The Commission considers that the case at issue falls
under the second hypothesis: the reduction in landing
like the guarantee of compensation, were
charges,
granted to one company only for a period of 15 years
and not to all the companies set up at Charleroi. Article
87 of the Treaty is therefore likely to apply when a
benefit arising from the granting of an exemption from
justified on
the common law tariff
objective economic grounds.

system is not

(141) The first question to be examined in the present case is
whether an ‘advantage' within the meaning of Article
the Treaty has been granted to Ryanair.
87(1) of
Belgium and Ryanair consider that Ryanair does not
benefit from an advantage within the meaning of the
State aid rules as the Walloon Region has acted as a
private
in a market economy offering a
preferential but economically viable tariff.

investor

(142)

the Walloon Region for

In point 76 of the decision to initiate the procedure, the
Commission noted that the principle of private investor
in a market economy could not be applied to the
actions of
justifying the
the landing ‘tax' and the compensation
reduction of
guarantee if the airport opening hours or landing ‘tax'
levels are altered. It specified that this principle can only
enter
into play ‘in the context of carrying on an
economic activity and never in the context of exercising
regulatory powers' and that ‘a public authority may not
use the argument by which it could obtain economic
benefits as
for
justifying aid adopted in the form of a discriminatory
exercise of its regulatory or fiscal powers'.

the owner of an airport business

(143) During the procedure, Belgium and Ryanair pointed out
that the abovementioned advantages had been granted
to Ryanair in the context of economic activities and not
in the exercise of
the
regal powers,
commitments made and the benefits brought about by

in return for

(64) In its proposal on airport fees, mentioned above, the Commission
stressed the application of
the rules relating to State aid by
pointing out that reductions or exemptions that are not justified
by a difference in cost may distort competition between users.
They may have a discriminatory effect (…). Because in many cases
airports are still controlled directly or indirectly by the public
authorities, such practices could constitute indirect State subsidies
that are in contradiction with Community rules when they affect
or are likely to affect competition.

falls within the

(144) The Commission maintains that the act of fixing airport
regulatory
taxes
competence of
the
principle of private investor in a market economy is not
applicable in these circumstances. The Walloon airport
organisation falls within the following legal framework:

the Walloon Region and that

legislative

and

from a Belgian federal

— The Walloon Region's competence in relation to
airports arises
the
Region was granted the competence in relation to
equipping
and
airports
aerodromes
territory by the
Belgian Federal Law of 8 August 1988, which
amended the special law of 8 August 1980.

and operating public
located within its

law:

— The Walloon Government was

the

under

authorised

certain conditions

to
regulate access to the Walloon airports (Charleroi,
Liège, Saint-Hubert and Spa) on the basis of a
Walloon Parliament act in 1994 (65). This legislative
act allows the Walloon Government to transfer the
operation of the Walloon airports, and authorises it
‘according to the methods that it determines, to fix
and collect fees (…) and, where necessary, transfer
the right of collection to agents'. Thus, although the
right of
Walloon legislature provided that
be
collection could
entrusted to an agent, the right of fixing the fees has
not been, and cannot currently be, transferred. It is
held by the Walloon political and regulatory power.
Neither BSCA nor the Liège-Bierset airport company
may hold the right to fix the fees. They are merely
‘passive' beneficiaries of part of the fee income, and
hold no power
In
particular, the portion payable to the environment
fund, fixed at 35 % of the fees received, has been
regularly altered by the Walloon Region in relation
to whether or not it should be capped, in relation to
its recipient (that is, a dedicated fund or the new
BSCA public shareholder Sowaer), and finally in
relation to the liquidation of the said fund and the
allocation of the sums owed to it by BSCA.

in relation to their

total.

(65) Walloon Regional Council Decree of 23 June 1994 on the creation
and operation of airports and aerodromes located in the Walloon
Region (Moniteur Belge, 15 July 1994).

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— The Walloon Government regulated access to all
Walloon airports and aerodromes in the July 1998
decree, amended by a 2001 decree. This decree fixed
the level of fees to be collected from users, set up a
landing charge reductions available to
system of
(Article
everyone according to weight of aircraft
7(1) and (2)), planned for the meeting of a users'
advisory committee that would deliver opinions on
proposals for changes to the fee system or to fee
levels (66), determined the methods for collecting the
fees, and provided that ‘fees and subscriptions shall
attention of users by all
be brought
in particular by display and
appropriate means,
publication in the AIP (Aeronautical
Information
Publication)'.

to the

(147)

examined by the Court (68) from the point of view of
parafiscal charges.

In the case at issue, the definition of ‘fees', defined as
payment for a service rendered, could be accepted if a
rather broad interpretation is applied. In the Walloon
airport tariff system, however, the clear and direct link
between the level of the charge and the service rendered
to users is weak. The charges levied do not correspond
to a direct payment
services
for
corresponding to the payment are not defined precisely
and the ‘fees' are not fixed by direct reference to a
parameter such as operating costs, but in a relatively
‘abstract' manner (69).

service;

the

a

(145) Through the applicable regulations, published in the
Moniteur Belge,
the Walloon Region is acting as a
public authority that regulates access to Walloon public
property and guarantees it to all, under conditions of
user equality. If, as Belgium and Ryanair maintain, the
Walloon Region involves itself in a sector of economic
activity, its function is similar to that of a regulator. By
fixing the level of the airport taxes payable by users for
the use of the Walloon airports, it regulates an activity
but certainly does not act as a company.

in previous decisions

(148) The Commission must however also take account of its
relating to airport
practices
charges; on many occasions, it has ruled on this idea by
describing them as fees (70). Even though the aim of
these decisions was not generally to distinguish between
taxes and fees, and although the terminology used in
them could be independent from the definition adopted
in the notification proper, the Commission considers
that its practice of considering these charges as fees
rather than as taxes is established. The Commission also
notes that the Court of Justice has not disputed this
definition (71).

‘parafiscal

the Court of

they are what

(146) The decision to initiate the procedure defined the
airport
taxes established by the Walloon Region for
Charleroi airport as ‘taxes', and the present decision has
kept this description unchanged, until now. It can be
Justice
considered that
charges
describes
as
characterised in that
from the
to finance a specified
moment of
the airport
transfer of
charges fixed by the Walloon Region are allocated to the
operation of
the airport and allotted 65 % to the
management company and 35 % to an environment
fund. They allow the financing of a specific transfer of
financing have been
resources. Such methods of

their collection,
resources (67).

they are intended,

In this case,

charges',

that

is,

(66) The Commission remarks

that

respect

in this

the Walloon
Government apparently did not consult
the users' advisory
committee when the 2001 decree altered levels of airport taxes,
in
with the specific aim of taking account of Ryanair's arrival
Charleroi, and increased both passenger and landing taxes for all
users. This consultation is not mentioned in the preamble to the
2001 decree.

(67) See point 167 of the Advocate-General's conclusions in the joined
cases C-34/01 to C-38/01, Enirisorse SpA v. Ministero delle
Finanze (not yet published in the Court Reports).

(149) The Commission therefore considers

it appropriate,
beyond the description itself, to consider legally as fees
the totals established by the Walloon Region for landing
or parking aircraft at Charleroi, and to use the generic
description of airport charges.

(68) Especially in its Judgment of 2 July 1974 in Case C-173/73, Italy v.
Commission, ECR p. 709, in which it specified that ‘as the funds
in question are
financed through compulsory contributions
imposed by State legislation and as, as this case shows, they are
managed and apportioned in accordance with the provisions of
that legislation, they must be regarded as State resources within
the meaning of Article [87], even if they are administered by
institutions distinct
(Ground 35).
Similarly, in its Judgment of 11 March 1992 in joined case C-78 to
C-83/90, Compagnie Commerciale de l'Ouest, ECR p. I-01847, the
Court
charges
constituted aid within the meaning of Article 87 of the Treaty.
(69) See Walloon decree of 16 July 1998: ‘A fee shall be payable for the
landing of an aircraft'
‘A fee shall be payable for
(Article 3.1).
outside parking of the aircraft' (Article 4.1). ‘A fee shall be due for
use of the facilities by the passengers' (Article 5).

aid financed from parafiscal

from the public authorities'

confirmed that

(70) See in particular Commission Decisions 95/364/EC of 28 June
1995 concerning Belgium (OJ
L 216, 12.9.1995, p. 8),
1999/199/EC of 10 February 1999 concerning Portugal (OJ L 69,
16.3.1999, p. 31), and 2000/521/EC of 26 July 2000 concerning
Spain (OJ L 208, 18.8.2000, p. 36).

(71) CoJ Judgment of 29 March 2001 in Case C 163/99, Portugal v.
Commission, ECR p. I-2613, confirming Decision 1999/199/EC.

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(150) The Commission notes in any event that this question
of terminology does not change its analysis regarding
the assessment of these charges, which are established
by the regional authority and for which the regional
authority decides on the allocation partly to the
concessionary airport and partly to the environment
fund that it has created.

(155) Ryanair's assertion that private airports are free to fix
charges while public airports' charges are fixed and
controlled by a public or controlling authority is
unfounded. There are many different methods of fixing
airport fees or taxes in Europe, and they vary between
Member States and sometimes even within the same
Member State (72). These various methods of fixing fees
or taxes cannot be summarised in a dichotomy between
‘public airports' and ‘private airports' as Ryanair states.

(151) Article 7(3) of

the Walloon decree of 16 July 1998
provided that the Walloon Minister of Transport could
grant even more advantageous reductions on landing
charges, on a promotional basis.
that proved
it was also possible to alter the basis for
necessary,
calculating the airport's fees (per passenger or per
tonne) by making changes to the appropriate legal
framework.

If

(152)

Instead of that, the Walloon authorities undertook to
reduce landing charges for one user only, through a
contract under private law that was not intended to be
made public, on a fee basis distinct from that shown in
the regulations, for a period of 15 years and without
creation of rights for other users. The Walloon Region
also undertook to grant a guarantee of compensation if
Ryanair suffered any damages through the application of
its regulatory powers.

(153) The Commission considers that the Walloon Region has
placed itself
in a situation of confusion of powers.
Instead of acting within the framework of its public
powers, it deviated from the rules that it laid down itself
by making the agreement, which it eventually fulfilled,
with Ryanair. The ‘commercial need' to attract Ryanair
to Charleroi thus made it move outside the applicable
framework in relation to fixing charges in Wallonia.
Belgium recognises this implicitly when it explains that
the Walloon public
are preparing an
amendment to the Walloon decree of 16 July 1998 ‘that
will make it possible to take more accurate account of
the various objective criteria that distinguish the various
types of users at Walloon airports'. The principle of
private investor in a market economy cannot be used as
a basis for justifying this confusion of powers or the
advantages granted to Ryanair.

authorities

(154) Ryanair has pointed out that if the Commission were to
decide that the Walloon Region did not have the right
to grant advantages to Ryanair without even considering
whether a private investor would have done it, it would
have discriminated between public airports (whose fees
are often fixed and controlled by a government or
regulatory authority) and private airports (which are
free to fix fees for the duration of a contract). It would
therefore have introduced discrimination between public
and private airports, at a time when ‘the Treaty shall in
no way prejudice the rules in Member States governing
the system of property ownership.' (Article 295 of the
Treaty).

(156) An airport always
its general

fulfils a public function, which
submission to certain types of
explains
regulations even if it belongs to and/or is managed by a
private company. Private airport managers can be
subject to this regulation and their fee-fixing powers are
often contained within the framework of national
regulators'
their monopolistic
position. The airports' position of strength in relation to
their users can thus be controlled by the national
regulators who fix fee levels that must not be exceeded,
known as ‘price caps'. Asserting that a private airport is
free to fix its fees without being subject to certain forms
of regulation is in any case inaccurate.

instructions because of

(157)

It is also inaccurate to assert that a public airport is not
‘free'
to fix its airport charges. There is nothing to
prevent the public airport management company from
fixing the level
itself, as these powers can also be
covered by regulation. The Walloon Region could thus
have decided that the onus was on BSCA to fix a fee in
exchange for services rendered to users, provided certain
complied with.
principles
conditions were
Contrasting between public and private airports
in
terms of airport charges is an inaccurate simplification
of a much more complex reality.

and

(158) The Commission does not discriminate in any way
between public and private airports. It limits itself to
examining the system chosen and freely set up by the
Walloon Region, and to stating that when it fixes the
airport charges (and therefore when it decides to step
outside the framework), the Walloon Region acts not as
a company but as a public power. The Commission
simply assesses
the characteristics of a method of
organisation and is not therefore contradicting Article
295 of the Treaty.

(159) The Commission makes a point of restating that in its
the Walloon Region was completely free to

view,

(72) For the economic regulation of airports, see for example Section
5.1.2 of the University of Cranfield report mentioned above.

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a

reductions,

an airport

that
reductions

establish a system of incentives relating to charges at
Charleroi airport on a legal basis. The transparent
system of reductions provided for in its own regulation
gave it that option. From its side, the Commission had
already acknowledged, for example in the ‘Manchester'
could
decision mentioned above,
introduce
that was
system of
non-discriminatory and limited in time. The system of
so-called ‘promotional'
instigated by the
Minister for Transport, could fall within this definition.
Finally, as the practices of Member States and/or airport
managers are not currently harmonised in Europe with
regard to airport tariffs, the Walloon Region is and will
be in future completely at liberty to introduce a new
public tariff that is more favourable to the airlines and
encourages them to use Charleroi airport more. The
Commission must however note that
the Walloon
Region has not used any of these legal possibilities that
would have allowed the tariff offered to Ryanair to be
a
offered
non-discriminatory basis.

companies

interested

the

on

all

to

investor

(160) The Commission therefore concludes that the principle
of private
in a market economy is not
applicable to the action of the Walloon Region, and that
the reduction in airport charges and the compensation
guarantee constitute an advantage within the meaning
of Article 87(1) of the Treaty. These advantages allow
Ryanair to reduce its operating costs.

(163) Firstly, BSCA has been given an exclusive right

to
manage an airport, through a 50-year concession that
allows it to collect 65 % of airport taxes, the taxes paid
by the businesses set up at the airport, the revenue from
ground handling (which it
freely) and other
fuel and other services provided to
revenue (sale of
users).

fixes

(164) Secondly, BSCA does not bear all

the costs, and
therefore all the risks, linked to the full range of airport
activities at Charleroi (73).
the Walloon
Region is at liberty to alter BSCA's tasks by making
changes to the concession contracts with the aim of
reducing financial obligations, by taking them on or
passing them on to the taxpayer.

In addition,

(165) Thirdly, BSCA's status also remains unclear.

is a
company that has been assigned public service tasks
which
the
corresponding compensation being clearly specified.

identified, without

clearly

not

are

It

5.1.1.2. Advantages granted to Ryanair by BSCA

(166)

these

In
circumstances,
the Commission cannot
the funding which BSCA
effectively verify whether
receives for its general interest tasks do not involve any
excess compensation. This income can then be used to
finance business activities. It is therefore not possible to
exclude the risk of cross-subsidisation between various
types of activity.

(a) Application of the principle of a private investor

in a market economy to an airport whose
financial structure relies on that of the State, the
region or other local authorities

(167) However, the question of analysing BSCA's behaviour as
a private investor is at the centre of
the comments
made by the interested parties, especially those of
Ryanair and of private airport managers, who take the
view that the granting of advantages to an airline in
exchange for the revenue it generates reflects common
business practice.

(161)

In its decision to initiate the procedure, the Commission
considered that it was difficult to apply the principle of
private investor in a market economy to BSCA:
‘the
roles of the Region as a public authority and of BSCA
as an airport business have been mixed up considerably,
making it very difficult to apply this principle (note: the
principle of private investor in a market economy)'.

(162) BSCA, whose financial structure is closely linked to that
of the Walloon Region, does not face all the risks that
define the activity of an entrepreneur.

on

and major

the Charleroi

insurance intended to cover the civil

(73) A number of activities are dealt with by the Walloon Region or by
including construction of new
the Walloon Airport Company,
infrastructure
site,
repairs
environmental, security and airport guarding services (including
for example control of access to the embarkation area and luggage
checks),
liability of staff
responsible for police tasks, security and inspection of transport,
fees paid to lawyers hired to defend the interests of the Region in
relation to airports, studies and conferences on airport-related
issues, the repayment of certain air traffic control payments borne
by Belgocontrol, the purchase of durable furniture specific to the
airport, etc. See for example the income and expenditure budget
for the Walloon Region for 2003 (Organic Division 54-Transports
— Programmes 02: regional airports and aerodromes), Internet
site http://mrw.wallonie.be/sg/db/Depenses/..
\Kubla\KU %20DO5205402.htm.

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(168)

In addition, the ‘Aéroports de Paris' (ADP) judgment has
provided significant clarification in the airport industry,
by defining the management of an airport as business
activity. By analogy with the ADP judgment, it can be
maintained that BSCA is a business as understood by
competition law as its activities may be economic in
nature (74),
the control and organisation of
ground handling activities and the provision of facilities
for shared use by users and service providers operating
at
jointly used
infrastructure requires organisation and coordination of
all the activities carried on there. This type of economic
activity is also required from private airport managers
such as TBI or Morrison.

airport. The management of

that

the

is,

(169) However, the Commission points out the limits of the
private investor argument defined by it in point 82 of
the decision to initiate the procedure. They are as
follows:
‘one cannot consider as consistent with the
principle of private investor in a market economy any
commitments made by an airport operator for which it
cannot be proven that the airport activity as such will
produce reasonable profits within a reasonable time. It
goes without saying that any positive effects on the
economy of the Region surrounding the airport cannot
in any case be included in this evaluation, which is
aimed at determining whether or not the intervention
conceals elements of aid'. At first sight, the Commission
has doubts about determining how the private investor
criterion could be considered to be fully applicable in a
context such as this one, in which the investments in
the airport infrastructure have been financed by public
funds
included in the profitability
calculations. However, in view of the precursory nature
of this case, and as this principle has been mentioned
by
the
during
Commission will examine whether the conditions for
applying the said criterion have been fulfilled.

and are not

procedure,

various

parties

the

(170) Ultimately,

therefore,

in line with the tenor of

the
Aéroports de Paris judgment and despite the difficulty
in implementing it, the Commission has undertaken to
assess whether
the private investor criteria can be
considered to have been fulfilled in BSCA's case in its
contract with Ryanair.

(74) See Ground 107 of the Judgment of the Court of First Instance of
the European Communities of 12 December 2000 in Case
T-128/98, Aéroports de Paris vs. Commission, ECR p. II-3929: ‘It
must first be noted that, under Community competition law, 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 (…) and that any activity consisting in offering
goods and services on a given market is an economic activity'.

(b) Comparisons between ‘public' and ‘private'

airports

(171) Ryanair has

supplied the Commission with certain
confidential information showing that the net payment
made by the airline to BSCA exceeds the payment that
it makes to other private airports with which it has
concluded agreements lasting 10 to 20 years. These
indications therefore tend to give the impression that
BSCA's action is consistent with that of private airports
and therefore consistent with a private investor's action.
However, whether BSCA truly acted as a private
investor can only really be ascertained by considering
the operational parameters of BSCA that determined its
offer.

(172) The analysis cannot be carried out on the basis of
comparisons with offers made by private
airport
managers, for three main reasons.

(173) The first is that the position of other airports is not
necessarily the same as that of BSCA; the task of an
airport manager varies from one airport to the next,
especially in relation to the regulations laid down. The
same applies to their operating costs and income and to
location and stage of development
their geographical
(number of passengers, number of airlines, available
capacity, etc.).

(174) The second, as certain interested parties have indicated,
is that comparisons with other airports can be distorted
by the fact that even if private, airports can receive
public funding of various kinds, especially to allow
them to attract airlines. Therefore Knock airport, which
Ryanair quotes as an example of a private airport that
offers
than those at Charleroi,
receives marketing subsidies from the Irish Government.
These subsidies allow it to reduce the level of airport
taxes
that Ryanair, and to a lesser extent British
Airways, are required to pay (75).

it better conditions

to receive money from the

(175) Thirdly, when Ryanair chooses to set up at airports
managed by a private company, it is not impossible for
surrounding local
it
authorities.
airport,
managed by TBI and quoted on several occasions as an
‘example' during the investigation into the present case,
receiving a
it became apparent
marketing package lasting 10 years and worth 55

that Ryanair was

Stockholm-Skavsta

Thus,

at

(75) See the report, mentioned above, from the University of Cranfield,
pages 5-24 and 5-25. See also the Irish Transport Minister's
report: www.gov.ie/tec/aviation/reports/knockairport.htm.

30.4.2004

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Official Journal of the European Union

L 137/33

million Swedish crowns from the Nyköping Regional
Government. These arrangements were declared illegal,
on the basis of failure to comply with rules relating to
public contracts, by a Swedish court
in September
2003 (76).

the

and of

contract,

a parallel

(176) The Commission considers that it is appropriate to take
account of the presence or absence of public money
within the contracting airport or within the framework
of
granting or
non-granting of an advantage to the airline company in
question following the granting of funds by the public
authorities. In this regard, for example, significant funds
granted following the undisputed compensation paid for
public service tasks and then reinvested in a business
contract with an airline would, especially if there was
no separation in the accounts and because of the risk of
over-compensation or
compensation, be
considered as potential aid.

abuse of

(177) On this basis,

that

the Commission considers

the
‘public/private airport' dichotomy is largely artificial, as
a private airport can thus receive various types of
public finance that enables it to grant ‘advantages' to
airlines. The Commission cannot therefore refer to the
‘examples' of private airports mentioned by the parties.
It will therefore study the private investor actions of
BSCA in relation to the restrictions applied to Charleroi
airport, and not in relation to other airports whose
situation and methods of operation and finance are
quite different.

assessment based on a later date in order to understand
the economic rationality of BSCA's actions (77). It is all
the more important to refer back to the context of
BSCA's investment decision of 2001, given that from
2002 onwards BSCA's responsibilities changed and the
concession conditions under which it operated were
altered. Its current cost and income structure is not the
one that existed when the decision to invest was taken
in 2001 (78). For this reason, the Commission cannot
base its assessment on the 2002 business plan or on the
2003 study by Deloitte & Touche to analyse BSCA's
action as a prudent investor.

(179) Ryanair has suggested that

the present moment

the Commission should
apply the principle of private investor in a market
economy on the basis not of the present moment, but
of the duration of the contract (15 years), or even on
the BSCA concession (50 years).
the duration of
Although an analysis of
is
effectively invalid, the Commission cannot take 50 years
as a reference period when the contract lasts for 15
years and no other element can justify such a period.
The Commission notes in addition that BSCA compiled
its
requested
and
for a ten-year
validations
period. The Commission will therefore base its analysis
on the period 2001-2010 as the subject of the main
studies of BSCA and its advisers. It notes however that a
number of working statements relating to the business
plan provided for BSCA run for a total period of 15
in accordance with the
years,
ending
contractual period;
therefore have to
it does not
extrapolate these projections to obtain information for a
longer period. It is not in fact claiming to substitute its

projections
from outside consultants

in 2015,

principal

financial

(c) Application of the principle over time

(178) Determining whether BSCA has acted as a private
investor in a market economy on the basis of its current
results, that is, on the basis of analyses that post-date
the investment decision taken in 2001, is not possible.
To find out whether the company has acted like a
prudent private investor in a market economy, it will be
necessary, in accordance with court case law, to place
oneself back in the context of the period during which
the
taken. The
support measures were
financial
in effect, refrain from making any
Commission must,

(76) See http://www.nyköping.se/templates_new/Page_end.asp?id=5911.

(77) CoJ

I-4397:

‘Stardust Marine'

in the context of

in Case
Judgment of 16 May 2002,
C-482/99, France v Commission, ECR, p.
‘In order to
examine whether or not the State has adopted the conduct of a
prudent investor operating in a market economy, it is necessary to
place oneself
the period during which the
financial support measures were taken in order to assess the
economic rationality of the State's conduct, and thus to refrain
from any assessment based on a later situation.' (Ground 71). See
also the Commission Communication to the Member States on the
application of Articles 92 and 93 of the EEC Treaty and of Article
5 of Commission Directive 80/723/EEC to public undertakings in
the manufacturing sector (OJ C 307, 13.11.1993, p. 3) where the
Commission notes
the
Commission to use its knowledge of facts after the event to decide
that the provision of public resources constituted State aid, for the
sole reason that the rate of return finally obtained is too low. Only
projects for which the Commission considers that there were no
objective reasons or good faith for
reasonably expecting an
appropriate rate of return in a comparable private business at the
moment when the decision to invest/finance was taken can be
treated as State aid (point 28).

the question for

is out of

that

it

(78) See Points 60, 61 and 62 of the decision to initiate the procedure,
relating to the changes made to the 1991 concession on 29 March
and 15 April 2002, that is, after the date of signature of the
agreements with Ryanair in November 2001.

L 137/34

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Official Journal of the European Union

30.4.2004

the

establishing

judgment for that of the investor, whether in relation to
the period chosen for
financial
projections or
to the basic hypotheses accepted for
putting together these projections. As it has had the
opportunity of explaining in the past, the Commission
investment decision
understands
presupposes a considerable element of discretion (79).
The Commission will in particular be using the data for
15 years in order to understand the overall economy of
the contract at the time, the discounted cash flows and
the internal return on the operation.

that any business

(180) The Commission will check whether BSCA has in fact
acted as a private investor in a market economy by
referring to the elements provided in the minutes of the
meetings of the company's Board of Directors, analysing
the validity of the business plan compiled in 2001, and
taking account of BSCA's conditions of operation, tasks
and obligations under Walloon regulations and the
concession documents in force at that time.

Analysis of BSCA actions

(181) The Commission notes that the Board of Directors of
BSCA examined the terms of the contract with Ryanair
in considerable detail during at least four meetings (15
and 29 June, 10 and 31 July 2001). On several
occasions it heard reports from persons acquainted with
the negotiations (the legal adviser
the Walloon
minister responsible for airport operations and the two
negotiators who were both members of the Board of
Directors and members of the two Walloon ministers'
private offices).

for

(182) The members of

the Board of Directors

took the
decision to conclude an agreement with Ryanair on 31
July 2001, assessing its financial consequences for BSCA.
Although the financial elements were presented to them

requests

for additional

(79) See point 29 of the abovementioned Commission communication
on undertakings in the manufacturing sector, as well as its point
27 where it states that the Commission does not claim, and never
has claimed, to substitute its judgement for that of the investor.
All
resources clearly lead the public
undertakings and public authorities to evaluate the risk and the
probable result of
just as private businesses and
private capital providers also would. For its part, the Commission
this risk analysis, public
knows that
undertakings must, in the same way as private ones would, apply
profitability criteria, which because of the nature of the problem
suggests a significant scope for discretion for the investor. Within
this significant scope, the exercise of the investor's freedom to
evaluate the situation must not be considered as involving State
aid.

to carry out

the project,

in order

at a relatively late stage (80), on 31 July 2001, they were
able to rely on financial projections that
they also
discussed. BSCA also made an undertaking based on a
clearly and coherently expressed strategy in a note with
guidelines submitted to the directors.

(183) As a private investor would have done, BSCA compiled
a business plan for the period 2001-2010 showing the
profits and costs linked to the setting-up of Ryanair.
This plan,
the most important aspects of which are
shown in Table 3, was examined by the Commission,
which was able to verify that unless specified otherwise
in recitals 185 and following, it clearly represented the
full range of costs and revenue linked to the increase in
BSCA's activity. Forecasts of revenue, based on expected
passenger volumes and operating costs linked to the
‘change of scale' caused by the arrival of Ryanair and to
the opening of a new terminal
in 2005, were also
compiled.
It should be noted that the BSCA auditor,
who examined the 2001 business plan in detail,
the hypotheses
‘generally speaking,
remarked that
accepted for the compilation of the business plan are
prudent, especially in terms of revenue from the car
park and also in terms of general expenses, if one makes
a comparison with what was actually spent at the end
of June'.

(184) Although the Board of Directors of BSCA discussed the
terms of the contract with Ryanair, and evaluated its
long-term economic consequences on BSCA through
the compilation of the 2001-2010 business plan and
committed the company on the basis of a strategy that
seems clear and coherent, the Commission definitively
concludes that BSCA did not however behave as a
private investor in a market economy. When it made its
it did not carry out an analysis
decision to invest,
consistent with all
the contract
the hypotheses of
envisaged with Ryanair and Ryanair alone. Neither did it
take account of a number of parameters likely to call
into question any potential for long-term profitability. In
doing this, it took risks that a private investor acting in
a market economy would not have taken.

(185) These risks also relate to data essential to the business
plan and to other parameters concerning relations
between BSCA and the Walloon Region. The first set of
Commission's
parameters

from the

obtained

(80) On 30 May 2001,

the Board of Directors wished ‘to be in
possession of a financial projection relating to future operations
with Ryanair as soon as possible'. On 10 July 2001, a director
indicated to the Board that the directors knew only a few of the
elements needed for assessing the contract in financial terms, and
stressed the importance of this given that the directors had been
made responsible. The business plan was not submitted to them or
discussed until 31 July 2001.

30.4.2004

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Official Journal of the European Union

L 137/35

examination of the business plan shows that hypotheses
that are favourable, or in some cases independent of the
action taken in collaboration with Ryanair, were taken
into account by BSCA in the compilation of its business
plan. The second set related principally to the costs of
fire and maintenance services and to the environment
fund, which were not properly understood. By doing
this, BSCA overestimated its future profit by a total of
EUR 33-56 million over
the period 2001-2011,
according to the hypotheses chosen. A private investor
would never have taken such a risk, as this total is, in
the best possible scenario, practically equal to the profits
forecast by BSCA over a period of 10 years (EUR 35
million).

BSCA's financial position before signing the contract with
Ryanair

(186) The Commission deems

years,

preceding

important

BSCA exercised

to view the
it
planned contract with Ryanair in the context of BSCA's
prior activity and its financial position at the time. In
prudent
the
in
management without particular risk. Consequently,
the period 1997 to 1999 its activity was well below that
which the contract should make possible. Traffic at the
airport was 210 000 to 235 000 passengers a year
representing a total revenue of EUR 5,9 to 6,9 million a
year. This activity produced a positive net result, which
was weak but nevertheless stable, amounting to about
EUR 136 000 in 1997, EUR 12 000 in 1998 and EUR
168 000 in 1999. The situation continued in 2000, the
last financial year closed before the contract was signed
with Ryanair. In that year, 255 000 passengers transited
through the airport, revenue was EUR 7,3 million and
net profit about EUR 117 000.

(187)

From a
financial viewpoint, BSCA's position was
healthy, with virtually no financial debt and with equity
capital that remained broadly positive throughout the
period, varying between EUR 4,3 and 4,6 million with a
total balance to be financed ranging in that period
between EUR 6,3 and 9,5 million a year.

Business hypotheses used in the business plan

(188) The Commission considers the following hypotheses
adopted in the business plan as incorrect because they
forecast,
additional profitability following the
arrival of regular airlines, which the contract concluded
with Ryanair cannot automatically or even indirectly
generate, and, second, containment of marketing costs
contractually agreed with Ryanair.

first,

( a ) A d d i t i o n a l m a r g i n s r e s u l t i n g f r o m t h e

i n c r e a s e i n t r a f f i c f r o m r e g u l a r a i r l i n e s

(189) The business plan presented by BSCA covers all

its
activities, whether or not generated by the contract with
Ryanair. The Commission does not
this
objectionable as such because, for instance, in 2001, the
first year of the plan, 360 000 departing passengers of
the total of 384 400, i.e. nearly 94 %, were carried by
Ryanair. Accordingly, it is reasonable to regard virtually
all of the costs and business income of the plan as
linked with this activity.

consider

(190) However, the airport currently receives a small number
of other passengers coming from regular airlines other
than low-cost airlines (16 600 in 2001) and charter
companies (7 800 in the same year), i.e. about 25 000
in total. While the business plan indicates a virtually
stable number of charter passengers,
forecasts, as
shown in Tables 3 and 4, a significant rise in passengers
from regular airlines, with 20 000 departing passengers
in 2002 and 25 000 in 2003. However, this upward
trend has to date not materialised, on the contrary
because BSCA's annual management report for 2002
indicates a total number of only 25 800 passengers, of
whom 12 900 were departing passengers, coming from
airlines other than Ryanair, whether charter or regular
airlines.

it

(191) The business plan forecasts a steady rise in traffic from
regular airlines, with a threshold of 40 000 departing
passengers in 2004, 60 000 in 2005, 150 000 in 2006
and 300 000 and up from 2010.

(192) However, the business plan does not provide any precise
justification. Reference has been made to the note on
strategic guidelines submitted to the meeting of
the
BSCA Board of Directors of 31 July 2001. This note
does indicate possibilities for developing the airport
beyond Ryanair, focusing on other low-cost airlines such
as Easyjet and Virgin, the latter being presented as a
mixed airline halfway between low-cost airlines and
conventional
airlines
The
mentioned would come from North Africa or from the
countries of Eastern Europe acceding to the European
Union. Nevertheless, it is pointed out in the same note
that Charleroi airport is of
to regional
airlines and that ‘only saturation at Zaventem could lead
them to review their position, which should not be
hoped for before 2005-2010 (or even later if Sabena
were to substantially reduce its activities).'

little interest

airlines.

regular

other

L 137/36

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Official Journal of the European Union

30.4.2004

(193)

In the same note, BSCA also points out that Ryanair,
because of its importance at the airport, ‘will always be
given priority in planning flights'. It specifies that ‘this is
why airlines should be attracted for the off-peak hours
so as to optimise the work of handling and check-in
teams. In order to bring this about, there should be no
hesitation to grant major reductions in the rates charged
for these services which for BSCA constitute a fixed
cost.'

(194) However, the hypotheses of the business plan connect
this traffic with a high variable cost margin of EUR 23
per departing passenger in 2002-2003, also expected to
rise, reaching EUR 27 in 2007, nearly EUR 30 in 2011
and over EUR 32 in 2015. This margin includes revenue
from handling charges of EUR […] to EUR […] a year
per passenger, airport charges from EUR […] to EUR
[…], revenue from car park charges for passengers'
vehicles (about EUR […]) and a margin on fuel supplied
to these aircraft (about EUR […]).

(195)

In view of the above, the Commission considers that
planning for such a significant increase in traffic from
regular airlines and linking it with such a high margin
per passenger was not based on any degree of certainty
when the business plan was drawn up in seeking to
justify the contract with Ryanair. This additional traffic,
apart
also completely
unconnected with the contract and could not serve to
show its profitability in an analysis which a prudent and
well-informed investor would have made of it.

from this uncertainty, was

(196) Moreover,

the

that

considers

Commission

the business plan.

a
well-informed investor would not have taken the risk of
anticipating such a high margin for ground-handling
services even though the passenger volume substantially
exceeds the annual number of two million a year at this
stage of
the
mandatory
implementation of Directive 96/67/EC,
referred to above, could not make it possible to
anticipate such commercial activity and profitability
except by taking the risk of knowingly disregarding the
requirements
of
implementing this Directive, in particular with increased
competition in a domain that would prove so profitable.

In this connection,

consequences

likely

and

the

(198) Moreover, with regard to costs,

for

cost

instance,

in labour

these increases

in
volumes handled (100 000 passengers more each year
i.e. a total of 500 000)
between 2006 and 2010,
for
generate,
rise
a
handling/ticketing services of only 2,5 % a year,
i.e. a
simple salary increase. According to these hypotheses,
the staff in place in 2006, or even in 2002, would be
able to cope with 1,5 to 2 times more passengers in
the extra workload indicated in
2010.
connection with these new airlines,
the propounded
argument of better use of staff during off-peak hours
seems inadequate to justify a price for this service that
is 12 times higher on average.

In view of

(199) Similarly, the increase in costs relating to other items of
expenditure bears no relation to these specific traffic
increases. For
instance, according to the hypotheses
adduced in the plan, miscellaneous goods and services,
car park charges and wages and salaries have been
indexed to take account of the increase in factor costs,
except for specific years such as 2005 for which other
fluctuations have been taken into account, upward and
downward, to include the opening of the new terminal.

(200) Finally, the Commission notes that a number of these
traffic increases are based on implementation of a major
investment programme including the construction of a
new terminal in 2005, lengthening of the runway, work
on aircraft parking areas, acquisition of new land, etc.
This programme had been budgeted at BEF 3,75 billion,
in Sowaer's financial plan
i.e. about EUR 93 million,
which was accepted by the Walloon Government on 23
May 2001. These
ever
materialise, would therefore ensue from various sources
other than the signing of
the contract with Ryanair
alone. For this purpose, new public investment would
be essential to be able to receive the new passengers.

increases,

traffic

they

if

( b ) F a i l u r e t o t a k e a c c o u n t o f t h e

p r o m o t i o n a l c o s t o f E U R 4 p e r
p a s s e n g e r f o r l o w - c o s t a i r l i n e s e x c e p t
f o r R y a n a i r ' s f i r s t 7 0 0 0 0 0 p a s s e n g e r s

(197) Similarly, a private investor would not have signed a
contract for which the 15-year term and the expected
volumes it should generate would mean either that he
could not comply with it because of
the need for
accounting transparency of ground handling services or
that the market would effectively be closed to other
operators.

low-cost

(201) The business plan includes the marketing contribution
of EUR 4 per departing passenger only for the 700 000
first
Ryanair.
Nevertheless, between 2004 and 2010 the number of
low-cost passengers expected rises to 1 150 000 Ryanair
passengers. From 2013 it would exceed 1 250 000
the BSCA
passengers. Furthermore,

the minutes of

passengers

allocated

to

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Official Journal of the European Union

L 137/37

Board of Directors meeting of 31 July 2001 indicates
the objective of 2 000 000 Ryanair passengers (i.e. 1
million departing passengers). The strategic information
note presented at the meeting, mentioned in recital 192,
states that it would be ‘illusory to hope that another
airline would establish a base at Gosselies'.

contract. In discounted flows at the same rate of 6,33 %,
the NPV would be slightly positive at EUR 2,7 million.

(202) Consequently, it seems unrealistic to assume that these
passengers would not come from flights operated by
Ryanair. This means that these costs ought to be taken
into account for all Ryanair passengers within the limit
of the 26 contractual flight rotations (81) which would
have a negative impact on the result ranging from EUR
200 000 in 2004,
to EUR
1 800 000 in 2010, for 450 000 passengers, totalling
EUR 6 620 000 for the total envisaged in the plan in
2001-2010. This level would rise beyond 2010, reaching
550 000
The marketing
contribution thus omitted would therefore amount to
EUR 7 320 000 for the period 2001-2015.

for 50 000 passengers,

from 2013.

passengers

(203) By taking account of

the impact which these two
favourable business hypotheses have on the business
plan (i.e. the inclusion of the margin from new regular
passengers and the failure to take account of all
marketing costs for all potential Ryanair passengers), the
Commission notes that the level of profit expected by
BSCA for 2001-2010, namely EUR 35,6 million
accumulated operating result, is reduced, respectively, by
EUR 26,9 and EUR 6,6 million, making EUR 33,5
million,
in other words, virtually the full amount of
expected profit. The accumulated operating result would
reach a low point at the end of 2005, with about -EUR
5,4 million accumulated losses to be financed. The
accumulated loss would continue until 2009 inclusive
and the result would become positive, by EUR 2,1
million, only in 2010. In terms of net result, discounted
at 6,33 %,
for 2001-2010 would be a
negative net present value (NPV) of about EUR 776 000.

the results

(205) The Commission specifies that this rate of 6,33 % (82) is
the reference rate adopted by the Commission for the
period from 1 January to 1 December 2001 and,
the rate used in the negotiation and
accordingly,
conclusion by BSCA of the contract with Ryanair. In its
calculations submitted to the Commission, BSCA itself
used a rate of 4,27 %, being the rate of the 10-year state
loan (OLO for 10 years). The Commission cannot accept
this rate allegedly without risk, i.e. the rate for loans of
a sovereign state, being applied to an undertaking. The
Commission's rate represents a premium of 200 basis
points on the OLO, a level which it regards as already
the risk on the air
highly favourable in view of
transport market, in particular at the end of 2001 when
the contract was signed. This risk also seems moderate
in view of the amount to be financed. If one takes as a
reference the EUR 5,4 million accumulated losses at the
it is a sum exceeding the undertaking's
end of 2005,
equity capital at the time of signing the contract,
i.e.
about EUR 4,6 million. Finally, using a rate over 10
years, including in calculating the discounted value over
is yet another situation conducive to the
15 years,
analysis of the project's profitability for BSCA because
of
term normally
rate which a longer
generates.

the higher

(206) The Commission also recalls that according to its notice
on the method for setting the reference and discount
rates (83)
the reference rate is defined as a five-year
interbank swap rate plus a risk premium of 75 basis
points,
the
Commission envisaged the use of a long-term rate, e.g.
10 years, as well as the use of a higher risk premium,
up to 400 basis points or more.

rate. Thus

and that

floor

this

is

a

(204) For

term of

from 2001-2015,

the entire 15-year

the contract with
the accumulated operating
Ryanair,
result expected by BSCA of EUR 108,6 million is
likewise overestimated on account of these two factors
to the tune of EUR 78,4 and EUR 17,3 million
respectively, making a total of EUR 95,7 million. The
accumulated operating result would therefore reach not
the
more than EUR 12,9 million for

the term of

(81) Depending on the aircraft used (B 737—200 or 800) and the
minimum aircraft load factor of 70 % likewise indicated in BSCA's
business plan, 26 flight
rotations (i.e. 26 departures) would
comprise between 850 000 and 1 250 000 departing passengers a
year. The latter figure was adopted as the ceiling of Ryanair's
activity in the analysis of
the business plan made by the
Commission and for calculating the maximum adjustment adopted
above.

(207) The Commission therefore considers that alone on the
basis of the overestimate of business revenue and the
underestimate of business costs to be linked directly
with the contract with Ryanair, a private cautious and
well-informed investor would not have signed this
contract. This conclusion follows in particular from the
discounted value (NPV) calculated in recitals 203 and
204 for the contract, which appears negative over 10
years and slightly positive over 15 years, in view of the
associated risks, the need to finance interim losses and
the undertaking's
initial position characterised by
prudent management but with mild profit taking. With

(82) For a table of rates covering several years, see the following
address on the Commission's Internet site: http://europa.eu.int/
comm/competition/state_aid/others/reference_rates.html

(83) OJ C 273, 9.9.1997, p. 3.

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investor principle,
in any case that

regard to the questions already raised concerning the
the
applicability of
the private
Commission therefore notes
the
scrutiny of the specific criteria which justified BSCA's
intervention in its contract with the Ryanair company
shows that the criterion of the private investor is not
met
is not only business
hypotheses that were adduced to improve BSCA's results
in the framework of
the contract with Ryanair; two
other hypotheses were also used, concerning relations
between BSCA and the Walloon Region.

in this case. However,

it

Costs of fire and maintenance services

(208) BSCA has not taken account of the fact that, on the
basis of the concession agreements with the Walloon
Region in force at
it was responsible for
financing the costs of fire and maintenance services. The
1991 concession agreements,
in 1999,
provided that BSCA had primary responsibility for
bearing these costs.

the time,

amended

(209) While these costs were covered by the budget of the
Walloon Region between 1991 and 1997 on the basis of
the ‘transitional' provisions of the 1991 concession and
subsequently between 1997 and 2000 on the basis of an
amendment to the 1999 concession, it had been agreed
to ‘re-examine these provisions in the framework of the
2000 budget in the light of the financial equilibrium of
the concession and the trend that was expected and
budgeted for in the following years on BSCA's profit
and loss account'. The Belgian authorities have supplied
the Walloon Region's budget decisions of 16 December
1999 and 14 December 2000 showing that the Region
bore these costs for 2000 and 2001 but made not
commitment beyond this date.

basis of the 2001 business plan, at over EUR 28 million
(EUR 28 159 047) (84). This amount is particularly high
as BSCA had, beyond the perpetuation of previous
payments, already anticipated a rise in the future level
of compensation by the Walloon Region for
this
purpose, amounting to EUR 5,6 million for the period
2002-2010.

(212) On 15 June 2001, BSCA's statutory auditor drew the
attention of the members of the Board to this legal
vacuum (‘Moreover, the statutory auditor observes that
if this has not yet been done, it is necessary to renew
the fire services agreement which has expired') and
again stressed this in his analysis of BSCA's accounts for
for
2001 (‘The results take account of a payment
operating fire and maintenance services earmarked on
the Walloon Region's budget by an amount gradually
rising over
fire and
maintenance investment for the period from 2001 to
2003. This revenue is subject to compliance with the
provisions of
and the
specifications which lapsed on 31 December 2000').

time and also a subsidy for

concession agreement

the

the

clarified

(213) A well-informed investor would not have taken the risk
to make a commitment vis-à-vis Ryanair without having
first
and
situation as
maintenance services. The amounts involved were too
high to be disregarded. The sum of EUR 28 159 047 for
2002—2010 must be related to BSCA's operating result
accumulated over this period to grasp the scope of the
risk,
fire and
maintenance costs amount to about 79 % of BSCA's
expected result on the basis of the 2001 business plan.

i.e. EUR 35 591 420. For this period,

to the

fire

(210) The letter of 5 July 2001 which BSCA sent

to the
Walloon Minister of Transport,
transmitted by the
Belgian authorities, concerning the 2002 budget for fire
any
services does not provide
and maintenance
convincing indications regarding the attitude of
the
Walloon Government as Belgium has not provided any
response on the part of
the Walloon Government
showing that it might in the course of 2001 possibly
have agreed to cover these costs for BSCA.

(214)

of

possibility

the Walloon

In this regard, the Commission does not dispute the
authorities
legitimate
continuing to bear the cost of fire and maintenance
this has not been
service. However,
anticipated in such a way
the beneficiary
undertaking, BSCA, could be assured that the Walloon
these costs even
Region would continue to cover
though the concession agreements, amended in 1999,
left these costs in principle to be borne by BSCA.

it notes

that

that

(211) As the provisions of the concession were not reviewed
before the spring of 2002, BSCA was in a ‘legal vacuum'
with regard to the heading ‘fire and maintenance
services' at
the time when it made its commitment
towards Ryanair in 2001. The financial consequences of
this ‘legal vacuum' for BSCA can be quantified, on the

(84) The EUR 28 159 047 correspond, in the business plan mentioned
above, to the sum of the ‘fire and maintenance services' subsidies
for 2002-2010 as the Commission takes account of the fact that
the Walloon Region had in its budgetary decision of December
2000 undertaken to finance the costs of 2001 and that BSCA
could count on this sum. However, it had no assurance beyond
2001.

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(215) While maintaining its position on the fundamental
attitude which a well-informed investor would have had,
the Commission can nevertheless give consideration to
the fact that a part of these costs are fixed costs and
would have had to be borne in any case, even if doubt
remains as to whether they would have been borne by
BSCA or the Walloon Region. Examining this point, the
Commission
the
fact
corresponding cost is not fixed but has increased on
account of the activity:

concluded

that

has

in

— the corresponding fire and maintenance subsidy was
EUR […] million in 1997, EUR […] million in 1998
if one takes this
and EUR […] million in 1999;
original sum of EUR 1,6 million a year as a fixed
cost for BSCA, or for the Walloon Region, only the
amount in excess,
i.e. the difference between this
amount and the data indicated in the business plan,
could be regarded as additional cost connected with
the development of
the activity following the
signing of the contract with Ryanair;

— accordingly, EUR 1,6 million a year would be
deducted for each of the nine years of the period
2002-2010,
i.e. EUR 14,4 million, from the EUR
28,1 million mentioned in recital 211, which would
however leave an extra cost, connected with the
Ryanair contract and for which BSCA had no
certainty at all, amounting to about EUR 13,7
millions. The same calculation made for 2002-2015
would represent a EUR 22,2 million risk for BSCA.

financial plan transmitted to BSCA on 1 August 2001,
after which it had been indexed by 2 % a year. This
ceiling is in fact specified in a note appended to the
BSCA company auditor's conclusions in 2001, recalling
the hypothesis adopted: the environment fund ‘would
have a ceiling of BEF 75 million indexed from 2003 (no
agreement signed to date)'. The approval of Sowaer's
financial plan by the Walloon Government on 23 May
2001 (‘[it] agrees on … the financial plan') cannot as
such be regarded as an actual change to legislation as
the company concerned, Sowaer, had not yet been made
responsible for collecting this payment, which would be
the case only in 2002. According to the Commission's
calculation, the effect of this ceiling in relation to the
the Walloon
amount provided for in the Decree of
Government is tantamount to savings of nearly BEF 9
millions (EUR 8 968 784) for the years 2001-2010. For
the period 2001-2015, the effect of the ceiling is nearly
EUR 23,4 million.

(219) A private investor operating in a market economy could
not have envisaged,
in a business plan covering ten
years, to keep a part of the tax due under the law in an
environment fund. He would not have appropriated the
sum of nearly EUR 9 million for the period 2001-2010,
the
which is
accumulated operating result over the same period (EUR
35 591 420), without first obtaining a guarantee that
this ceiling would be formalised by a legal document
and that he would thus be able to count on it.

about 25 % of

equivalent of

the

(216) Only the specific relationship between BSCA and the
Walloon Region could enable BSCA to anticipate these
points; a well-informed investor would not have taken
such risks without formal guarantee.

(220)

Environment fund

(217) Apart

from the question of

fire and maintenance
services, a well-informed investor in BSCA's position
would not have underestimated a second parameter laid
down by law, namely that of
the amounts to be
transferred to the environment fund, i.e. 35 % of airport
tax.

(218) BSCA's business plan for 2001 indicates the payment of
35 % of airport tax to this Fund for 2001 and 2002.
However, between 2003 and 2010 there is a ceiling
indicated in the business plan, and the amount no
longer
tax. Belgium has
to 35 % of
explained that the ceiling for BSCA's contribution to the
Fund had been fixed at BEF 75 million (EUR 1,86
this could be checked in Sowaer's
million) and that

corresponds

i.e. after

is only since the amendments were made to the
It
concession contract
signing the
in 2002,
contract with Ryanair, that BSCA is entitled to pay a
‘ceiling' of 35 % of airport tax to the Société Wallonne
des Aéroports. This amount with a ceiling of EUR
883 689 from 2003, indexed by 2 %, and rising to EUR
2 651 067 in 2007, indexed by 2 %, should be paid by
BSCA to Sowaer as a fee for making the infrastructure
available. It should be noted that this effective ceiling is
different from that taken into account in the business
plan and in fact alleviates the burden on BSCA to the
tune of EUR 1 million a year in the first years, after
which the burden increases, proportionally improving
the results reported by BSCA from 2003. In this respect,
contrary to what the Belgian authorities alleged in their
letter of 19 December 2003, the different impact of the
ceiling between the business plan of 2001 and that of
2002, confirmed by the facts, does generate a significant
advantage for BSCA. The figures provided by the
Belgian authorities on 27 August 2003 in fact show
that the second ceiling, recorded in the 2002 business
plan, produces
for BSCA of EUR
2 964 000 in relation to the 2001 business plan which
was therefore not based on validated data in this regard.
The Walloon Government, moreover, decided in June
2003 that the sums which BSCA had to pay into the
Fund,
i.e. about EUR 2,8 million, would be paid to
Sowaer, after deducting EUR 250 000 in costs for
managing the Fund.

an advantage

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Official Journal of the European Union

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(221) At

this

juncture of

the analysis,

the Commission
concludes
that a private investor would not have
committed himself by entering into a contract with
Ryanair for a period of 15 years, first, because of the
risk of having to pay — at least partly — the costs of
fire and maintenance services and, second, because of
the sums he would have to pay into the environment
fund. Such an investor would in fact not have accepted
running the risk of
incurring possible expenditure
amounting to EUR 22,7 million for 2001-2010,
corresponding to more than 60 % of the accumulated
operating result of
the undertaking over a 10-year
period (EUR 35,6 million), without obtaining guarantees
in this respect.

Conclusion on the validity of the business plan

a private

(222) Correction of the hypotheses adopted in the business
plan would have the following consequences. It should
be noted that this concerns a pro-forma profit and loss
account of
any
knowledge of possible advantages to be granted by the
Walloon Region not formalised by agreements) who is a
prudent investor (having used homogeneous hypotheses
regarding costs and revenue, derived solely from the
contract
the time of signing the
contract with Ryanair, but that this will in fact never be
BSCA's situation.

to be analysed) at

(i.e. without

investor

the fixed cost traditionally regarded as necessary
for operating the airport, which could thus be
excluded from the evaluation of
the contract
with Ryanair;

— EUR 9 million for capping airport charges

payable into the environment fund.

(224) For

the whole period 2001-2015 covered by the
the presented result of EUR
contract with Ryanair,
same
108,6 million
uncertainties, amounting to at least EUR 141.3 million,
of which:

encumbered with

the

is

(a) EUR 95,7 million relating purely to the business and

cost hypotheses of the business plan, namely:

— EUR 78,4 million concerning the additional
margin resulting from the volume and unit
margin hypotheses assumed for traffic increase
expected from regular airlines;

— EUR 17,3 million concerning the limitation of
particular

contributions

to

a

marketing
non-contractual level;

(223) Over the basic period 2001-2010, the presented result
of EUR 35,5 million is encumbered at
least by the
following uncertainties, amounting to more than EUR
56,2 million, of which:

(a) EUR 33,5 million relating purely to the business and

cost hypotheses of the business plan, i.e.:

— EUR 26,9 million as additional margin resulting
and unit margin hypotheses
from volume
assumed with regard to future traffic increases
from regular airlines;

— EUR 6,6 million from the
to

contributions

marketing
non-contractual level;

limitation of
certain

a

(b) EUR 45,6 million concerning

the hypotheses
resulting from the relationship between BSCA and
the Walloon authorities, namely:

— EUR 22,2 million for the continued refund of
the costs of fire and maintenance services by the
Walloon Region beyond 2001 in respect of the
part exceeding the EUR 1,6 million annually,
being the fixed cost
traditionally regarded as
necessary for operating the airport, which could
therefore be excluded from the evaluation of the
contract with Ryanair;

— EUR 23,4 million for capping airport charges

payable into the environment fund.

(b) EUR 22,7 million relating to hypotheses resulting
relationship between BSCA and the

from the
Walloon authorities, i.e.:

— EUR 13,7 million for the continued refund of
the costs of fire and maintenance services by the
Walloon Region beyond 2001 in respect of the
part exceeding EUR 1,6 million annually, being

(225) The Commission draws attention to the fact that in all
of these hypothetical cases, the accumulated operating
result of BSCA for 2001-2010 or 2001-2015 remains
negative. Consequently, there is no need to calculate the
actual value of the flow of the result thus generated in
the
order
hypothesis of obviating only the most exaggeratedly

actual profitability. Only

to determine

30.4.2004

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L 137/41

recitals 223 and 224, produces

optimistic business hypotheses, referred to in point (a)
of
an apparent
profitability over 15 years, even though it is very weak
as calculated previously.
It has already given the
Commission cause for establishing that the weakness of
the
is not
this prospective profit
behaviour which a private investor would have adopted.

representative of

(226) The Commission maintains

that

a well-informed
investor would also have taken account in his business
the risks
plan, at
least as an unknown quantity, of
the Walloon
associated with
authorities referred to in point (b) of recitals 223 and
224.

relations with

his

sought

formal guarantees

(227) Accordingly, the Commission considers that in the case
of BSCA and its contract with Ryanair the extent and
nature of the associated risks, derived from the analysis
of the business plan, with regard to expected profits
could not reflect the reasoning of a private investor
operating in a market economy. The latter would in fact
have
from the Walloon
Region regarding the continuity, or even increase, of the
fire and maintenance compensation covering a period of
10 or indeed 15 years. He would have sought similar
guarantees regarding the capping of his contribution to
the environment fund over the same period. Above all,
he would have made a careful comparison of
the
expected revenue from and costs of the contract and
would have excluded proceeds from other business
activities from his expected profits associated with the
contract with Ryanair.

tantamount

(228) With regard to the statement made by the Belgian
authorities in December 2003 that the result for 2003
expected by BSCA, and announced at a press conference
on 15 November 2003,
to a EUR
is
1 500 000 profit — the data for which remain to be
substantiated and should be certified by the company's
auditors — as against a planned loss of EUR 1 066 000
plan (85),
the
the 2001 business
mentioned
Commission notes
these are data
that
first of all
obtained a posteriori which cannot serve to clarify
BSCA's decision at the time when the facts took place in
July 2001. The Commission notes in particular that
various items in the accounts, placed at the Walloon
Region's discretion, improve the 2003 result compared
with that expected in the 2001 business plan:

in

— for

instance,

the
additional
environment fund via Sowaer generates additional

capping

the

of

(85) And a planned loss of EUR 1 531 000 in the 2002 business plan

after the signing of the contract with Ryanair.

cost
savings of EUR 1 030 000 between the
included in the 2001 business plan (EUR 1 934 313)
that would be borne by BSCA
and the costs
following the sub-concession contract
signed in
April 2002, indicated as EUR 901 363 in the 2002
business plan;

fire
the
granted

and maintenance
for 2003 by

subsidy
— similarly,
eventually
a Walloon
Government Decree of 6 February 2003 amounts to
EUR 4 288 000 compared with EUR 2 914 900
included in the 2001 business plan submitted to the
Commission; here, again, a profit of EUR 1 370 000
will be entered in the 2003 accounts because of this
change in hypothesis;

— all other things being equal,

by

on

the

and,

these

other

hand,

additional

the EUR 1 500 000
profit announced by BSCA for 2003 should be
savings
two
reduced
corresponding, on the one hand, to lower billing by
Sowaer
higher
compensation by the Walloon Region. These two
actions are tantamount to a total bonus of EUR
2 400 000 for BSCA in 2003. Deducting their
impact
from the result announced to quantify
BSCA's economic performance comparable to the
hypotheses of the 2001 business plan, one obtains a
loss of EUR 900 000, which is slightly less than the
EUR 1 066 000 of the business plan but does not
amount to the decisive improvement of the situation
alleged by the Belgian authorities.

(229) With regard to the confirmation requested and obtained
from Deloitte & Touche as to the conformity of the
analysis of
the
Commission cannot completely validate the statements
made by the Belgian authorities and its expert:

the 2001 and 2002 business plans,

— the Commission notes first of all that the Deloitte &
Touche document is a simple letter of half a page
dated on the same day when Sowaer requested this
i.e. 27 November 2003, which is why it
analysis,
cannot truly be considered a full analysis of
the
2001 plan;

— while this letter points to a number of significant
differences between the two business plans, e.g. the
handling charge for airlines other than Ryanair —
which is much lower in the 2002 plan than in that
of 2001 — and personnel costs, it merely states that
they affect the expected results, which were more
favourable in the 2001 business plan.

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Official Journal of the European Union

30.4.2004

— however,

recognised that

the Commission notes that

the Belgian
authorities had themselves
the
difference between the two business plans in the
level of the ground handling charge, for instance —
with a reduction of about EUR 15 to EUR 10 per
the unit charge for passengers of
passenger of
regular airlines by 2010 — would lead to a drop in
revenue of over EUR 5 million in 2001-2010. This
is
the Commission's
criticism of the margin generated by airlines other
than Ryanair in the plan;

representative of

in fact

— however, the expert says nothing on the impact of
the various hypotheses on relations between BSCA,
Sowaer and the Walloon Region referred to above,
in spite of the fact that they are quite substantial.
The Commission recalls that BSCA's auditor did
state his views on these points at the time of the
approval of the contract;

(232)

of

airlines,

In particular,
passengers

the relevance of
regular

— finally, the Commission notes that the consultant
did not express a view, either in his initial report of
February 2003 or in the additions of 15 July and 27
November 2003 transmitted to the Commission, on
the underlying business hypotheses of the business
plan.
taking into
their
account
continuous increase in the plan and unit revenue
have not been discussed by Deloitte & Touche and
have been neither confirmed nor contested. This
importance as the initial
point
report,
is
confined to covering the period up to 2005 for
which the revenue expected from regular airlines,
highly profitable, remains limited. The document of
15 July 2003 consists only of profit and loss
accounts completing the period covered up to 2010,
i.e. exactly the period in which revenue from regular
airlines becomes essential
the
business plan, excluding all comments on this point
or another business plan.

consultant's most detailed one,

for the success of

is of particular

the

financial

of 2000. These losses should therefore be contained
through a EUR 5 million capital increase to preserve the
company's
equilibrium. However, BSCA's
investment decision of 31 July 2001 was taken without
the Board of Directors having any certainty about
recapitalisation by the Société Wallonne des Aéroports.
At that date, the Board could only hope that Sowaer
would send a letter to BSCA confirming that Sowaer
had approved a financial plan in which provision was
made for a capital increase. The fact is that the Directors
‘expressed
this:
were concerned about
concern that the Board should approve a plan without
knowing whether the shareholder would follow it up';
‘[another Director] noted that
the Board was being
asked to approve this contract without having any
certainty
from
a
Sowaer') (86). This letter was sent to BSCA on 1 August
2001.

([Director C]

obtaining

increase

capital

of

In connection with the analysis of private investor
behaviour of BSCA and in response to the questions
raised by the interested party C, the Commission notes
that BSCA's recapitalisation by the Société Wallonne des
Aéroports did eventually take place in December 2002.
Belgium has explained that the BSCA recapitalisation
decision was
taken by the Société Wallonne des
the
Aéroports in accordance with the principle of
private investor operating in a market economy on the
basis of BSCA's business plan of April 2002. Deloitte &
Touche
reasonable
deemed
decision (87).

consultants

this

a

(233) However,

2001,

the Commission notes that while Sowaer's
financial plan, approved by the Walloon Government on
23 May
the
recapitalisation of
two companies managing,
respectively, Liège airport (SAB) and Charleroi airport
decision was
in which
the ways
(BSCA),
implemented was quite different.

does make
the

provision

this

for

Capital increase

(230) Moreover,

the Commission considers that a prudent
investor who found himself in BSCA's position would
not have taken the decision to commit himself vis-à-vis
Ryanair without prior assurance about the company's
recapitalisation.

(231)

It should be noted for the record that even in the most
favourable hypothesis adopted in BSCA's business plan
the establishment of Ryanair at Charleroi would entail
losses for BSCA in the first years. The aggregated
amount of these interim losses would be nearly EUR 4
million by the end of 2003-2004 and comes close to
the airline's equity capital of EUR 4,6 million at the end

(234)

In both cases, provision had been made (88)
for an
initial contribution from Sowaer of BEF 60 million
and
(about
its
EUR 1,49 million)
subsequently
participation in other capital
increases, spread over
three years and amounting to three times BEF 30

(86) Minutes of the meeting of the BSCA Board of Directors of 31 July

2001.

(87) If

to doubt

this decision had been taken in May 2001, however,
that

the
Commission would have had reasons
the
recapitalisation was in accordance with the principle of a private
investor operating in a market economy. In May 2001, neither the
Walloon Region nor Sowaer (in the process of being set up) could
a priori evaluate return on investment by recapitalising BSCA. At
the time, BSCA's Board of Directors had not really discussed the
terms of the contract with Ryanair and did not have at its disposal
the financial
forecasts relating to the contract which it only
obtained on 31 July 2001.

(88) Page 9 of Sowaer's financial plan appended to the Walloon

Government's decision.

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million (i.e. about three times EUR 0,74 million). Overall
this would give each airport a capital injection of BEF
150 million (about EUR 3,72 million),
i.e. 25 % of a
total capital increase reaching BEF 600 million with the
massive participation of other investors.

and because of the commercial hazards inherent in the
business plan, BSCA would never have committed itself
to Ryanair. Although in theory it acts as a business in
the airport industry, BSCA was not in the situation of a
company that had to calculate its risks and investment
decisions and did not make its decision according to the
effective profitability that
it could reasonable have
expected.

(235) An examination of Sowaer's accounts for 2002 shows
that this rule laid down in its financial plan approved by
the Walloon Government was not applied in the same
way to SAB and BSCA and has in fact not been
followed up for BSCA:

— for SAB, Sowaer's accounts for 2002 indicate the
the sum of EUR
acquisition of 50 shares
1 408 486
EUR
increase
capital
2 353 829,90 in cash paid up by 25 %, which is
consistent with the spirit of the financial plan;

and

for

of

a

— for BSCA, however,

the same 2002 accounts of
Sowaer indicate the acquisition of 6 143 shares for
the sum of EUR 3 808 660. BSCA's accounts for the
same period confirm this transaction, recording a
total capital increase on 3 December 2002 of EUR
3 942 million
i.e.
approximately EUR 3 809 million for Sowaer, and
the balance, namely about EUR 133 000, for the
minority shareholders. BSCA's accounts also show
that the full amount of the subscribed capital has
been paid up. Sowaer
therefore anticipated the
capital contribution to BSCA.

contribution,

cash

in

(238) The Commission concludes,

in view of the foregoing,
that the advantages granted by BSCA to Ryanair are
therefore advantages within the meaning of Article
87(1) of the Treaty, which allow it to reduce the airline's
running costs.

5.1.2. SPECIFIC CHARACTER

to be defined as State aid,

(239) Article 87(1) of the Treaty requires that a measure, in
order
‘certain
undertakings or the production of certain goods'. In the
case at issue, the Commission notes that the advantages
in question, whether those granted by BSCA or those
granted by the Walloon Region, were granted to Ryanair
only.

favour

(236) Accordingly, the Commission concludes that Sowaer's
financial plan as approved by the Walloon Government
was subsequently adapted to the actual needs of BSCA
resulting not only from its traditional activity, which it
has shown to be sound and characterised by clearly
positive equity capital, and its capital investment needs,
but especially its interim financing requirements caused
by the contract signed in the meantime with Ryanair.

(240) Ryanair and Belgium have pointed out that no other
company operated under conditions similar to those
applied to Ryanair and that there could not therefore be
discrimination between Ryanair and any other airline.
Belgium has also asserted on numerous occasions that
the measures taken in relation to Ryanair had been
publicised and that it had committed itself to providing
similar advantages to any other company generating a
volume of passengers similar
to that generated by
Ryanair.

Conclusion

(237) The analysis conducted by the Commission shows that
BSCA's financial structure is based on that of
the
Walloon Region, and that without the implicit guarantee
and assurance that the Region procures for its public
expenses,
sector
abandonment of certain income, re-capitalisation, etc.)

companies

(bearing

certain

of

(241) The Commission states that neither BSCA nor

the
Walloon Region have set up any systems based on
objective criteria that allow discrimination to be banned
between airlines
set up or wishing to set up at
Charleroi, on the basis for example of the volume of
passengers that each airline is able to provide. It also
points out that the ‘publicity' measures taken by the
Walloon Region and by BSCA had nothing of an official
nature and were not in any case likely to create rights
for other users. Therefore, any reduction in landing
charges or guarantee of compensation from the Walloon
Region was not ‘automatically' available to other users.

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Although the industry was familiar with the agreements,
the press reported the events and the Walloon Region
published a number of communiqués, the precise terms
of the contract between Ryanair and BSCA were covered
by a publicity and confidentiality clause (89). The
contracts were not available to the interested parties at
the time, as the ARACH association has testified.

(242) The Commission notes that

the arguments linked to
publicity and non-discrimination are not in any case
likely to call
into question the objective fact that the
measures granted were not offered to other companies
in a transparent way and were in fact offered only to
Ryanair. They are specific in light of Article 87(1) of the
Treaty.

5.1.3. STATE RESOURCES

(243) The Commission refers to the analysis it presented in
points 97-111 of the decision to initiate the procedure
with regard to the transfer of State resources in favour
of Ryanair. This analysis, especially with regard to the
the measures taken by BSCA to the
imputation of
Walloon Region, has not been questioned by the
interested parties or by Belgium. On the other hand, the
Belgian authorities have disputed the concept of ‘State
resources' in relation to the airport charges received by
BSCA in accordance (according to them) with the
abovementioned PreussenElektra case law.

(244) The Commission disputes this analysis and considers
that the conclusions of this Court judgment are not
applicable to the present case. In fact, as it has already
explained, the fixing of airport landing and parking fees
is a public prerogative in Belgium, delegated to the
regions by the Federal State.
is thus the Walloon
Region that has,
in its jurisdiction, fixed the fees by
decree and provided for the allocation of 35 % of the
then
fees to a fund pertaining to each airport.
decided, according to the Belgian authorities themselves,
to impose a ceiling for the fund when Sowaer's financial
plan was approved. The Walloon Region then signed an
that
agreement with Ryanair,

consequence of

the

It

It

agreement being a reduction in BSCA's resources and
those of the environment fund. It finally decided, when
the fund was effectively capped in April 2002, to apply
another, differentiated regime aimed at limiting BSCA's
costs
them slightly
afterwards. Finally, it decided to replace the funds with
Sowaer and transfer the resources of
the funds still
payable to BSCA to Sowaer.

increasing

2006

until

and

(245) All this clearly shows that we are not dealing here with
a fund that would automatically receive
resources
independently of the public authority, something that
led the Court not to conclude in the PreussenElektra
ruling that State
resources were present. On the
contrary, the Commission considers in the case at issue
that
the Walloon Region had a permanent option,
which it used on several occasions, of defining, using
and allocating the revenue from airport
in a
discretionary way between several participants such as
BSCA, the environment fund and even Ryanair, and to
exert a direct influence on their methods of operation.
It therefore considers that the airport fees are in fact
State resources.

fees

(246) The Commission concludes

that

In fact,

the advantages

to
Ryanair were granted directly by the Walloon Region in
(involving
the form of a compensation commitment
mobilisation of regional resources where necessary) and
of a reduction of landing charges (involving a loss of
profit for the State), and indirectly by mobilisation of
BSCA resources.
an
undertaking within the meaning of competition law and
its activities are economic in nature,
is a public
undertaking over which the Walloon Region exercises
both control and a dominant
influence, and these
measures are imputable to it within the meaning of the
Stardust Marine case law mentioned above. Points
97-111 of the decision to initiate the procedure remain
valid in full
formal
examination.

regard following the

although BSCA is

in this

it

5.1.4. IMPACT ON INTRA-COMMUNITY TRADE AND

COMPETITION

the other parties have received a draft of

(89) Provision 5.1 of the BSCA-Ryanair contract: ‘No party shall make
a public announcement or any other communication concerning
the matters dealt with under the present contract or its annexes
the proposed
until
disclosure or of the communication to be made and until the
parties have issued their prior written consent, unless
the
publication or production of documents is required by law or by
an international, Community or federal court, in which case the
other parties shall be informed beforehand of the steps taken by
the court'.

in point 112 of

(247) Neither the interested parties nor Belgium has opposed
the Commission's assessment
the
decision to initiate the procedure, with regard to the
impact on trade between Member States, an assessment
that
the Commission maintains. On the other hand,
Belgium and Ryanair have opposed the Commission's
assessment with regard to the impact on competition.
They have in effect maintained that the measures did

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not have a competitive impact on the relevant market
(low-cost sector) and the geographical market (routes)
concerned.

compatible with Article 87(2) and 87(3) of the Treaty
and Article 61 of the EEA Agreement.

(248) The Commission points out

that

the analysis of

the
impact on competition in the State aid sector is not the
one applied when the Commission examines an alliance
or concentration between airlines (90). Extending the
definition of the relevant geographical market, which is
governed by competition law, to the aid sector would
involve ignoring specific nature of these two separate
areas of Community economic law.

(249)

In the aid sector, the advantage granted through the
bearing by the State of operating costs normally borne
by an airline does not only distort competition on one
or more routes and on a particular market segment. The
advantage gained by the airline strengthens its economic
position on its network as a whole in relation to
these are traditional,
competing companies, whether
low-cost, charter or
In 2003,
flights operated on over 100 routes in 13
Ryanair
countries and Ryanair was in competition with a great
many airlines, the number of which is not limited to
companies that made comments in the context of the
present procedure. The Commission points out that the
supply of air transport services is a sector in which
competition in Europe has been lively since the entry
into force of the ‘third package', the third stage of air
transport liberalisation, on 1 January 1993 (91).

regional companies.

5.1.5. CONCLUSION

(250) As the criteria for State aid are met in this case, the
Commission concludes that the advantages granted to
Ryanair by the Walloon Region and by BSCA are State
aid within the meaning of Article 87(1) of the Treaty.
There is a need to examine whether these measures are

(90) See in particular the Judgment of the Court of First Instance of 15
II-2319,

June 2000 in Case T-298/97, Alzetta Mauro, ECR, p.
Grounds 80 & 81.

(91) Council Regulation (EEC) No 2407/92 of 23 July 1992 on
licensing of air carriers (OJ L 240, 24.8.1992, p. 1), Council
Regulation (EEC) No 2408/92 of 23 July 1992 on access for
Community air carriers to air routes (OJ L 240, 24.8.1992, p. 8)
(as last amended by Council and Parliament Regulation (EC) No
1882/2003) and Council Regulation (EEC) No 2409 of 23 July
1992 on fares and rates for air services (OJ L 240, 24.8.1992,
p. 15).

5.2. LEGAL BASIS OF THE ASSESSMENT

(251) The Commission explained in its decision to initiate the
it doubted whether the aid could be
the exemptions
in the Treaty and that no exemption

procedure that
declared compatible on the basis of
provided for
seemed applicable in this case.

(252) None of the provisions of Article 87(2) of the Treaty
can be applied since the aid in question is not of a
social nature, nor is it
intended to make good any
damage caused by natural disasters or other exceptional
events. Nor does
it constitute aid granted to the
economy of certain areas in Eastern Germany.

(253) Article 87(3) of the Treaty draws up a list of types of
aid that can be declared compatible with the common
market.

(254) Points (a) and (c) of

is

aim of

to reconcile the aim of

the said paragraph allow for
exemptions in favour of aid intended for promoting or
In its
facilitating the development of certain areas.
guidelines on State aid for the regions (92), the criteria
required to be fulfilled in order for aid to be granted
could be declared compatible. The
these
the regional
guidelines
development with respect
for competition by fixing
limits for the granting of regional aid to businesses.
These limits are designed so as to provide real help for
regional development in the long term, especially in the
poorest regions, by ensuring that aid given to businesses
does not exceed the amount strictly necessary and
proportionate
the development. The
guidelines should prevent regions or states from being
sucked into an ‘aid spiral' under cover of regional
development, or into a ‘race for subsidies' granted to
businesses in order to attract them into a territory at
any cost at
the expense of competing businesses.
Unlimited competition between regions in the granting
the
of
long-term development of the European regions, and
would be in contradiction with the structural policy of
the Community.

to business would not promote

subsidies

ensuring

for

(92) OJ L 74, 10.3.1998, p. 9.

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Official Journal of the European Union

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(255) The Commission does not deny that aid granted to
Ryanair could have a regional socio-economic impact in
Wallonia, as could any aid granted by the public
authorities with the aim of encouraging a business's
economic activity. However, this aid is not in line with
the rules that the Commission has now been applying
for several years.

however, the Commission excludes the presence of a
purely regional purpose connected to an investment: we
are looking at aid for the development of airborne
activities.
the
above-mentioned aid cannot be declared compatible
with the common market because of its effect on the
development of certain regions.

concludes

therefore

that

It

(256) First of all, most of

the aid granted to Ryanair

is
operating aid within the meaning of the guidelines and
not aid to initial investments in fixed capital (93). This
type of operating aid is in principle prohibited, except
in the poorest regions of Europe under exceptional
conditions (94). Although
circumstances
Hainaut
the transitional aid
under objective 1, this involves only the possibility of
applying Community funding such as the structural
funds (95).

is normally eligible for

strict

and

(257) Within the State aid framework, however, the town of
Charleroi, on which Gosselies,
the place of BSCA's
establishment, depends, is eligible for regional aid under
Article 87(3)(c) of the Treaty, which allows only initial
investment aid (96). This clearly excludes operating aid,
which is provided for only under Article 87(3)(a) of the
Treaty. Moreover,
is
individual and ad hoc aid, outside of any scheme, and
the Commission normally pursues a policy of strict
limitation in relation to such aid (97), even though,
in
principle,
the
Court's Hytasa (98) judgment to consider that ad hoc aid
In this case,
might be compatible as regional aid.

it would be possible on the basis of

aid granted to Ryanair

the

(93) In the guidelines on State aid for the regions, operating aid means
aid intended to reduce the undertaking's current expenditure
(point 4.15), while initial investment aid relates to an investment
in fixed capital relating to the creation of a new establishment, the
extension of an existing establishment, or the commencement of
an activity that involves a fundamental change in the product or
procedure provided by an existing establishment (point 4.4).
(94) See point 4.15 and following of the guidelines on State aid for the

regions.

(95) Commission Decision 1999/502/EC of 1 July 1999 drawing up the
list of regions covered by Objective 1 of the Structural Funds for
the period 2000-2006 (OJ L 194, 27.7.1999, p. 53).

(96) See State Aid 799/1999 — Belgium: Regional aid maps for

Belgium.

(97) See guidelines on State aid for the regions which indicate that
individual ad hoc aid granted to a single undertaking or aid
limited to one sector of activity may have a significant effect on
competition in the market concerned, while its effect on regional
development is likely to be too limited […]. In consequence, the
exemptions in question will in principle only be granted in favour
of multi-sector aid schemes open to everyone in all the sectors
concerned in a given region.

(98) Court Judgment of 14 September 1994 in joined cases C-278,

(258) Subparagraphs (b) and (d) of Article 87(3) of the Treaty
are not applicable as the aid is not intended to promote
a major project of common European interest or to
remedy a serious disturbance in the economy of a
Member State or to promote culture or conservation of
national heritage.

(259) The exemption provided for in Article 87(3)(c) of the
Treaty on aid intended to facilitate the development of
certain economic activities, can be applied. In the case
at issue, reference should be made to the rules laid
down by the Commission for assessing State aid with a
horizontal aim,
in conjunction with the guidelines in
the aviation sector. The Commission notes that the aim
research and development (99),
of
environmental protection (100), rescue and restructuring
of companies (101), small and medium businesses (102)
or capital investment (103).

aid is not

the

(260) Ryanair has argued that

the aid intended for pilot
training had to be examined on the basis of Regulation
(EC) No 68/2001, considering that this aid was similar
to that for ‘general' training. Belgium has not pleaded
this basis of compatibility. The Commission notes that
the single flat-rate contribution of EUR 768 000 for
participation in recruitment and training of pilots and
crews assigned to the new destinations served by the
airport was not granted in accordance with the
conditions laid down in Regulation (EC) No 68/2001:
the costs borne are not limited to acceptable costs as

(99) Community
development
13.2.1998, p. 2) and extended (OJ C 111, 8.5.2002, p. 3).

Framework
and
(OJ C 45, 17.2.1996, p. 5), modified (OJ C 48,

State Aid

research

for

on

(100) Community

Framework on State Aid

for

environmental

protection (OJ C 37, 3.2.2001, p. 3).

(101) Community Guidelines on State Aid for

and
restructuring of companies in difficulty (OJ C 288, 9.10.1999,
p. 2) and the guidelines in the aviation sector.

rescue

the

(102) Community Regulation (EC) No 70/2001 dated 12 January 2001
concerning application of Articles 87 and 88 of the EC State Aid
Treaty for small/medium businesses (OJ L 10, 13.1.2001, p. 33).
(103) Commission Communication — State Aid and capital investment

C-279 and C-280/92, Spain v Commission, ECR, p. I-4103.

(OJ C 235, 21.8.2001, p. 3).

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provided for in Article 4(7) of the said Regulation (104)
as they include the recruitment of pilots; as a single
fixed contribution is involved, the costs are not backed
up by supporting documentation, or transparent, or
broken down into categories, and the intensity of the
aid in relation to admissible costs is not defined. This
aid is not
compatible on the basis of
Regulation (EC) No 68/2001. Neither is it compatible on
the basis of Commission Regulation (EC) No 2204/2002
of 12 December 2002 on the application of Articles 87
for
EC Treaty
and
88
employment (105).

therefore

State

the

aid

to

of

(261) Ryanair has also quoted Commission Regulation (EC)
No 69/2001 of 12 January 2001 on the application of
Articles 87 and 88 of the EC Treaty to de minimis
aid (106) for the EUR 4 000 relating to office equipment.
The Commission points out that this Regulation does
not apply to aid granted to businesses in the transport
sector; as Ryanair is an air transport business, it is not
eligible to receive this exemption.

(262) The exemption in Article 87(3)(c) of the Treaty cannot
the existing
therefore be applied on the basis of
the
horizontal aim frameworks or on the basis of
aviation sector guidelines established some ten years ago
in 1994 (107). The Commission considers however,
in
view of economic trends in the air transport and airport
sectors, triggered by the complete opening-up of air
in 1997, that the
transport services at European level
exemption in Article 87(3)(c) of the Treaty must also be

trainers and persons

(104) These costs are staff costs relating to trainers, travelling expenses
involved in the training, ongoing
for
expenses (materials and supplies), depreciation on instruments
and equipment
the
training project
the cost of consultancy services
relating to training activities, and staff costs of participants in the
training project, within certain limits.

in proportion to their exclusive use for
in question,

(105) OJ L 337, 13.12.2002, p. 3. Job creation aid does not fall within
the scope of this regulation when aid is granted in the transport
sector (Article 1). The only aid covered by the regulation in the
transport sector is aid for recruiting disadvantaged and disabled
workers and aid intended to cover additional costs connected
with the employment of disadvantaged workers. The aid measure
mentioned does not have this aim, nor does it satisfy the other
criteria in the regulation.
(106) OJ L 10, 13.1.2001, p. 30.
(107) See point 115 fourth indent of

the decision to initiate the

procedure.

considered, in view of the role played by this aid in the
development of regional airports (108).

5.3. EVALUATION OF COMPATIBILITY OF THE AID IN THE
LIGHT OF ARTICLE 87(3)(C) OF THE TREATY

5.3.1. REDUCTIONS IN AIRPORT CHARGES AND

COMPENSATION GUARANTEES GRANTED BY THE
WALLOON REGION IN THE EVENT OF ALTERATION
OF THEIR LEVEL OR OF AIRPORT OPENING TIMES

infrastructure (109),

(263) A number of interested parties are concerned at the
presence of discriminatory discounts applied to airport
charges. Although for small airports the airport tax total
need not necessarily reflect the full cost of using the
airport
including the
discounts, most be established according to objective
criteria, preferably after consultation with the user
companies, taking care to ensure transparency and user
equality, and according to rules from which they can
benefit (110). The small airports should also be able to
keep the room for manoeuvre necessary for adapting
both charges and opening hours for the airlines.

the charges,

(264) The Commission notes

there are no current
that
Community rules that govern airport fee tariff policy.

(108) The Commission has already had an opportunity in the past to
apply Article 87(3)(c) directly in order to take account of the
economic development of certain sectors, by defining the
conditions applicable to the granting of aid in individual
decisions. See for example the Commission Communication sent
to the Member States and other interested parties on the subject
of State aid, No 376/01 (Italy), Aid scheme in favour of
installations with cables (OJ C 172, 18.7.2002, p. 2), points
44-49. In the same way, Advocate General Jacobs points out, in
point 38 of his conclusions of 18 September 2003 (not yet
published in Recueil) in Case C-91/01, Italy v Commission, that
‘the Commission's power of assessment cannot be limited
definitively by the adoption of such texts'
(note: guidelines or
other forms of ‘soft law').

(109) Reflecting all the costs of the small airports at tax level means
imposing a charge that is often very heavy on a small number of
users, thus deterring them from setting up at secondary airports.
The abovementioned Commission Proposal on airport fees, which
suggested that the fees reflect the real cost of the airport activity,
also took account of the specific nature of the small airports,
which cannot do without government aid (see point 32).
In
addition,
the Commission notes that some Member States in
Europe apply a system of financial equalisation between airports,
in which the largest airports often subsidise the smallest.
Requiring that the small airports' fees reflect their full total costs
would cause unnecessary disruption to their method of
organisation.

(110) On the problem of airport

taxes in Europe, see for example
‘Airport charges in Europe', Airport Council International Europe,
8 May 2003.

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The Member States are therefore free to decide on
airport fee levels by defining a public tariff adapted to
suit individual circumstances; the Walloon Region could
have done this, and could still do it in future. They
cannot however set up discriminatory practices, either
directly or indirectly, for example through selection of
aircraft used. Neither can they deviate from the clearly
established rules that they themselves fixed beforehand.

under

stimulate

numbers,

passenger

(265) The Commission points out that it is not opposed to the
granting of reductions to airlines to encourage them to
launch new routes or increase flight frequency in order
to
certain
conditions. In its ‘Manchester' decision, it decided that
limited duration discounts, made available and granted
without exercising discrimination between airport users,
were not within the scope of Article 87 of the Treaty as
they did not
It
explained on that occasion that a reduction or system of
reductions
to a
specific business was likely to fall within the scope of
Article 87 of the Treaty and would therefore constitute
aid.

lead to distortion of competition.

that granted preferential

treatment

had

case,

the Walloon Region

(266) As has already pointed out, the Commission believes
the rules drawn up in the
that on the basis of
the
Manchester
opportunity of granting discounts to Ryanair provided
they were granted without discrimination and on a
limited time basis. Belgium did not make use of this
possibility, which is however provided for
in the
Walloon Region decree that regulates these charges, and
chose to grant assistance to one company only and
therefore
in a discriminatory and non-transparent
manner, and for a period of 15 years, which does not
constitute
envisaged in the
Manchester decision. The payment of such aid in favour
of Ryanair only, in conflict with the national legal basis,
was neither necessary nor in proportion to the airport
development aim sought, when other legal resources
the Commission
these circumstances,
existed. Under
considers that the reductions already granted to Ryanair
on airport
compensation
guarantees from the Walloon Region, are not likely to
be considered as aid compatible with the common
market.

limited period as

charges,

future

like

the

a

5.3.2. REDUCTION OF GROUND HANDLING TARIFFS

GRANTED BY BSCA

(267) Ground handling activities constitute a commercial
activity, which in some airports is open to competition

the

terms of Directive 96/67/EC. As

the
under
Commission stressed in its decision to initiate the
procedure,
reductions on ground handling charges,
granted by an airport manager to an airline, do not
create a shock (111). However, they may have a shocking
effect when the service provider company operates at a
loss over a long term and these losses are potentially
covered by public funds paid to the manager,
for
example in his capacity as airport authority or provider
of a service of general economic interest (112). For
BSCA, the services received in relation to compensation
for fire and maintenance costs could, for example, fall
within this category.

(268) When an airport provides an airline with such services
at a loss, it must be able to prove that these losses are
justified and have been offset by anticipated revenue
from other commercial activities. These losses must not
in any circumstances be offset by revenue collected by
the airport as an airport authority or a manager of a
service of general economic interest. This suggests that
the tasks required to be performed by an airport as an
airport authority, general economic interest
service
manager or commercial service provider, are properly
defined, as are the financial flows relating to them.

(269) With regard to Charleroi Airport,

the specific tariff
granted to Ryanair for ground handling services is not
supported in any way by a clear analysis of the costs
that it generates for BSCA. On the contrary, the partial
elements produced by the business plan analysis seems
to indicate that the ground handling activities do not
cover its costs.

(111) Point 85 of the decision to initiate the procedure: ‘With regard to
ground handling tariffs, the Commission believes that economies
of scale could be applied when an airport user makes significant
use of a company's assistance services. It comes as no great shock
that the tariff applied to some companies will be lower than the
general tariff, insofar as the service requested by these companies
will be less than for other clients'.

(112) Directive 96/67/EC expressly envisaged the risk of cross-subsidies,
by requiring separation in accounts between ground handling
activities and other airport activities. Its Article 4 stipulates:
‘1.
The airport manager, user or service provider that provides
ground handling services must apply strict separation in accounts
according to current business practice, between activities linked to
the supply of these services and their other activities.
2.
by an independent auditor nominated by the Member State.
The State shall also check that there has been no financial flow
between the activity of the manager as an airport authority and its
ground handling activities'.

The reality of this separation in accounts must be checked

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(270) A comparison of

apart

from personnel

the labour cost of handling and
ticketing services and revenue from ground-handling
services as specified in the business plan provides an
approximative margin on the services.
is a rough
It
incorporate other service
comparison as it does not
specific
costs
services, maintenance of equipment, etc.); on the other
hand,
it does take into account personnel engaged in
registering and receiving passengers. Nevertheless, it can
be concluded from the comparison that this margin is
negative until 2006 (between EUR 650 000 and EUR
1 370 000, depending on the year), with a per-passenger
labour cost falling from EUR 4,42 to EUR 2,73, still
well above the amount of EUR 1 and subsequently EUR
1,13 billed to Ryanair.

(consumables,

to

the

50 000

approximately

(271) The activity would produce a profit only from 2007
thanks
additional
passengers each year (i.e. 300 000 in 2010) from regular
airlines, for whom handling and ticketing services would
be billed at about EUR 14 per passenger on average.
According to the business plan, the 1 150 000 low-cost
passengers would in 2010 generate a total revenue for
such services of EUR 1,5 million and the 300 000
regular passengers alone EUR 4,5 million.

(272) Without

the margin thus

this additional contribution expected from
regular airlines,
incorporated in the business plan and
starting at EUR 100 000 from 2003 rising to attain
about EUR 1 700 000 in 2007 and close to EUR 4
calculated for
million in 2010,
ground-handling services would still remain negative.
One may well wonder whether a regular airline would
accept to pay at Charleroi a price comparable to the
one it would have to pay at a major airport, knowing
moreover that
it pays 12 times more than another
airline operating at Charleroi. According to Belgium, the
relevant companies are in particular airlines operating
flights to and from Africa involving very large volumes
luggage to be handled and accordingly a heavy
of
burden in terms of ground handling.

(273) Similarly, the information at the Commission's disposal
suggests that ground handling, apart from refuelling, for
a Boeing 737 — on the basis of 20 daily flight rotations
with 100 to 200 seats, which are all elements consistent
with Ryanair's operations at Charleroi — would amount
to EUR 800 to EUR 1 200 per aircraft at a regional
airport, a figure which is already 20 % lower than that
at a larger airport. This would entail a cost per
passenger of EUR 6 to EUR 8, which is
in fact
consistent with BSCA practice for other airlines. There is
therefore a very clear presumption of blatant dumping
by BSCA with regard to ground-handling services taken
in isolation.

(274)

(275)

the

principles

considered in its

In addition, the ground handling activity is wide open
to competition in the main airports, and Charleroi
should follow this trend swiftly if its success continues;
indeed, Community regulations provide for liberalisation
measures for airports handling more than two million
passengers per year, the hypothesis of the business plan
from 2006 to 2007.
In this regard, the Commission
points out that Directive 96/67/EC aims to guarantee
fair and effective competition (113) and that the rules
laid down for
airport
the
smooth operation of
of
observe
infrastructures must
objectivity, transparency and non-discrimination (114). In
response to a reference for a preliminary ruling, the
Court
Judgment of 16 October
2003 (115) that with regard to the payment collected in
return for access to airport facilities, Directive 96/67/EC
‘does not prevent the fee from being determined in such
a way that the managing body of the airport is able not
only to cover the costs associated with the provision
installations, but also to
and maintenance of airport
confirmed
make a profit'. The Belgian authorities
themselves
the
that
2003
19 December
two-million-passenger threshold should be reached by
the end of 2004 or during 2005. This, especially in the
involve
light of Article 4 of Directive 96/67/EC, will
strict separation in accounts aimed at guaranteeing
non-compensation of competitive activity through any
other activity at
the airport. Once the threshold is
reached, it will be possible for one or more independent
operators to offer their services, and it is clear that the
current tariff, in the region of EUR 1 per passenger for
a period of 15 years, would make effective opening to
competition unrealisable.

on

is,

the

that

before

meantime,

In
the
two-million-passenger threshold is reached, the airport
can of course compensate its various sources of profits
and losses between purely commercial activities. Such
would be the case,
for example, between a loss on
‘handling' activities and a surplus on passenger car
set-off between types of commercial
parking. This
the
activity
impossible
will
two-million-passenger
by
threshold,
Directive 96/67/EC, is reached; it is already prohibited
between commercial activities and activities of general
economic interest. The Commission is also anxious to
actual
point out
liberalisation
is
ongoing (116).

action to bring about
handling

provided

become

services

ground

once

that

for

its

of

(113) (16) of Directive 96/67/EC.
(114) (25) of Directive 96/67/EC.
(115) Court judgment of 16 October 2003 in Case C-363/01, Flughafen
Hannover-Langenhagen GmbH vs. Deutsche Lufthansa AG (not
yet published in ECR).

(116) In this regard, the Commission points out the referrals made by
the Court of Justice against Italy on 19 December 2002 and 12
September 2003 respectively, on the grounds that these Member
States had transposed Directive 96/67/EC in an inappropriate
leading to direct effects that hindered the arrival of new
way,
operators at principal airports in those countries.

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(276) The tasks to be carried out by BSCA as an airport
authority, manager of a service of general economic
interest or commercial services provider, have not been
clearly distinguished at Charleroi, and neither have the
cash
these
circumstances, it is impossible to exclude the possibility
of cross-subsidisation between the financing of ground
handling
other
non-commercial activities and therefore the presence of
aid in this regard.

financing

services

relating

flows

tasks.

these

and

the

of

In

to

(277) On the contrary, there does not appear to be a need for
public funding for this purpose. The recent liberalisation
of the assistance sector and the need to allow it to be
effectively implemented mean that when reductions
granted on ground handling services are deemed to
the
constitute State
Commission believes that this aid is not likely to be
declared compatible with the common market. In this
likely to
respect
it does not appear necessary or
encourage the development of an airport
structure
within a liberalised context.

aid in favour of an airline,

5.3.3. OTHER ALLOCATIONS INTENDED TO PROMOTE AIR
SERVICES LEAVING FROM REGIONAL AIRPORTS

(278) Aid measures that allow the development and better
infrastructures that are
operation of regional airport
currently under-used and represent a cost to the local
community may be of interest at European Community
level and form part of
the objectives of common
transport policy.

(279) Operational aid measures intended to help the launch of
new airlines or strengthen certain frequencies may be a
necessary tool for the development of small regional
airports. The measures may indeed persuade
the
interested companies to take the risk of investing in new
routes. However, in order to declare such aid compatible
on the basis of Article 87(3)(c) of the Treaty, it should
be determined whether this aid is necessary and in
proportion to the objective sought, and whether
it
affects
is contrary to the
common interest.

trade to an extent

that

(280) Generally speaking, operating aid is rarely likely to be
declared compatible with the common market as it
usually distorts conditions of competition in the areas
where it
is granted, without however being capable,
because of its very nature, of reaching any of the aims
laid down by the exemption provisions in the Treaty. In

fact, as it does not involve any technical or structural
alteration to the business
its
commercial development, it only allows the business to
offer artificially favourable conditions to its clients and
to increase its profit margin without justification.

and favours only

(281) There are however a number of exceptions to this
principle and the Commission has in the past declared
this type of aid compatible, provided certain conditions
are net. The Commission has for example approved
operational aid in the maritime sector, for the launching
of short-distance routes between two or more French
ports or between French and Community ports (117). A
French scheme was aimed at overcoming the financial
difficulties inherent in the launching of new routes by
granting degressive aid over a maximum of three years,
limited to 30 % of eligible operational expenditure and
capped at absolute value. After initiating the formal
examination procedure,
the Commission declared it
compatible on the basis of Article 87(3)(c) of the Treaty,
short-distance
considering that
maritime transport formed part of the objectives of the
Community transport policy. In its communication on
the development of short-distance maritime transport,
the Commission emphasises the role of
this type of
transport in encouraging a sustainable and safe form of
mobility, in strengthening cohesion within the European
Union, and improving the efficiency of transport in an
inter-modal
the
It
short-distance maritime transport should be promoted
on all levels, that is, Community, national and regional.

the development of

recognises

approach.

that

(282)

It is therefore crucial in this case to verify whether the
criteria allowing the possible compatibility of this aid,
other
taxes and ground
handling tariffs, can be met.

than reductions on airport

5.3.3.1. Aim of the measure and presence of

Community interest

(283) The first condition for granting aid is that it fulfils its
aim, that is, that it forms part of a coherent airport
development policy characterised by a demonstrated
willingness to develop the profitability of infrastructures
that are not always profitable.

(117) Commission Decision 2002/610/EC of 30 January 2002 on the
aid regime that France plans to implement in favour of the launch
of short-distance sea transport routes (OJ L 196, 25.7.2002,
p. 31).

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(284) The promotion of regional development, tourism, local
economy or
therefore be the
consequence of this coherent policy intended first and
foremost
to develop airport activity on a long-term
basis.

image will

regional

service,

(285) While State aid for large airports or even medium-sized
airports can only be justified exceptionally and with
considerable difficulty, aid may on the other hand prove
necessary for small airports. Without public aid the
small airports, which have not reached the break-even
point, could not survive. In order to continue to provide
a
a need the
finance,
recognised, most notably in its
Commission has
proposal relating to airport fees (118), where it states
that
these small
airports, which play a role of fundamental importance
the Union,
in the economic and social cohesion of
requires significant and regular maintenance from the
State or local authorities, or financial support of the
largest airports in a few cases.

the smooth operation of most of

they need public

(286) There is no current definition of what constitutes a large
airport, medium-sized airport or small airport. Five
categories were proposed for European airports by the
Committee of the Regions in its outlook opinion of 2
July 2003 on regional airport capacities (119):

— Category A represents the major airport nodes (over
is, some

25 million passengers, 4 airports),
30 % of all air traffic in Europe.

that

— Category B represents the national airports (10-25
million passengers, 16 airports), that is, some 35 %
of all air traffic in Europe.

— Category C contains 15 airports

(5-10 million
passengers), that is, some 14 % of all air traffic in
Europe.

— Category D contains 57 airports

(1-5 million
passengers), that is, some 17 % of all air traffic in
Europe.

— Category E contains 67 airports

(200 000 to
1 million passengers, that is, some 4 % of all air
traffic in Europe.

According to the Committee of the Regions, regional
airports generally fall into categories D and E, but some
category C airports can also be considered as regional
airports.

(287) Regional airports could also provide a solution to one
problem of transport policy: that of saturation of major
airport capacities.

(288) The Commission,

in its White paper on European
transport policy for the 2010: Time to decide (120),
stated that faced with the increase in air traffic, airport
operations should be re-examined in order to optimise
use of existing capacities.

for

(289) The development of regional airports is all the more
interesting because, as the Commission explains,
the
current air
transport structure is leading airlines to
concentrate their activities on the large airports that
they use as hubs
intra-Community and
their
international activities. The congestion is concentrated
on the major airport hubs, with consequences in terms
of pollution and air
traffic management. Although
congestion in the skies is already the subject of a
specific plan of action, congestion on the ground is still
not being given the required level of attention or
commitment. However, almost half of the fifty European
airports have reached or are close to reaching saturation
point in terms of ground capacity.

(290) The opinion of

the Committee of

the Regions,
mentioned in (286) above
and requested by the
Commission for the development of a policy on airport
capacities in Europe, explains that while

‘the regional airports are characterised by a capacity
surplus in terms of terminal surface areas and use of
runways,
the airport platforms and national airports
often suffer from a lack of capacity for expansion.
However, for as long as the major airlines hold on to
their continental platform strategy of “hub and spokes”,
this obvious paradox will not find a solution. There are
indications that some airlines are now examining the
additional role plated by “point-to-point” traffic.

Regional airports still have the potential for developing
“point-to-point” traffic. We have noticed it recently in
low-cost airlines, but this sector is not the only one that
could benefit from the routes in question. It would be a
good idea for regions and airlines to work together to
and
between
attain
continental platforms;
it would involve determining
which traffic flow could take off from a regional airport
without having to pass through an airport hub.'

“point-to-point”

balance

a

(118) COM(97) 154 final, mentioned above.
(119) CDR 393/2002, end.

(120) COM(2001) 370, end.

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(291) Although public aid,

in the form of

infrastructure
construction aid or operational aid,
is often necessary
for some small airports to survive, sustainable airport
development clearly requires development of air traffic
and an increase
volumes. As was
in passenger
mentioned in the comments by the interested parties,
small airports do not generally have the passenger
volumes necessary for them to reach critical size and
the break-even point. Only after reaching a critical size
will
commercial
companies and limit their recourse to public funds.

to act as genuine

they be able

titled ‘Employment

(295) Airports, especially regional airports, have an important
economic role and significant social impact in Europe,
as was emphasised by a study conducted in 1998 by
ACI-Europe
in
Europe' (123). The Community is already encouraging
the development of airports, especially regional airports,
by granting finance for
the development of airport
infrastructures under European regional policy and by
relying on loans granted by the European Investment
Bank.

and Prosperity

(292) There are no absolute figures with regard to the
break-even point. The Committee of
the Regions
evaluates it at 1,5 million passengers per year, while the
above-mentioned University of Cranfield study, which
forward a figure of 500 000 or
sometimes puts
1 million passengers per year, shows that
there are
variations according to the country and the way in
which the airports are organised (121).

(296)

(297)

(293) Reaching this critical size and the profitability threshold
is practically impossible for small airports insofar as the
traditional,
low-cost or charter companies have not
decided to set up there, as BSCA's experience clearly
shows. The traditional companies prefer the tested and
well-located hubs, where rapid connections are possible,
consumers are used to going and the companies have
they cannot afford to lose. Like the
time slots that
traditional
to
well-known airports, low-cost companies are not always
ready, without incentives in that direction, to run the
risk of opening routes from unknown and untested
airports.

companies, which

generally

resort

them to develop in the face of

(294) To some extent, European regional airports are suffering
as a result of years of airport and air traffic policies that
concentrated the traffic on major national cities. It is
not easy for
the
attraction offered by central airports, which in addition
to their ‘catchment area' and geographical situation,
have benefited from many years of investment in their
infrastructures and the setting-up of national companies.
Some airports can take proper advantage of this when
volumes of passengers are provided by airlines that fulfil
the public service obligations or when aid regimes of a
social nature are set up by the national authorities (122).

(121) Pages 5.33 and 6.11 of the abovementioned report.
(122) See Page 5-27 of

the abovementioned University of Cranfield
study, which considers:
‘To some extent, subsidisation of air
services within the PSO framework can be interpreted as an
indirect subsidy to an airport. With regard to some remote
they are almost exclusively
airports in Scotland and Ireland,
reliant on subsided PSO air services'.

for

the

concerned to be
infrastructures
In order
effectively used, and therefore for the public budgetary
resources often granted in this respect to be paid back,
the payment of aid to airlines by regional public
airports can under certain conditions be a necessary
means of attracting the passenger volumes that will
enable them to reach the break-even point and cease
depending on the public purse to survive.

passenger

its responsibility,

In this case, the aid constitutes part of the development
of the airport activities at Charleroi and of a known and
coherent project. In this regard, the Commission notes
that the Walloon authorities have since the late 1980s
pursued a coherent policy on airports, which has
included particular the specialisation of airports placed
the development of airport
under
infrastructures and searches for users likely to bring in
the
sustainable
volumes necessary
development. A few years ago, Charleroi airport was in
Category ‘E' of European regional airports as defined by
the Committee of the Regions (200 000 to 1 million
passengers). It is currently in the next category up and
is experiencing one of
the highest passenger growth
rates in Europe. BSCA has adopted a ‘niche' strategy
that does not look to offer the same services as those
offered by Brussels National airport, but instead looks to
specialise in clearly defined networks and in an offer of
‘basic' services.

for

5.3.3.2. The need for aid

(298) The conditions of trade could be changed by this type
level

aid with two distinct

levels. The

first

of

(123) While airports directly create 1 100 jobs
the overall

for every million
passengers processed in a year,
(including
impact
direct and induced jobs) is assessed at some 2 200 jobs or double
that total. These are economic engines, ‘strategic catalysts' that act
as a magnet for many other economic activities.

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corresponds to the impact on trade on the air transport
services market. Aid paid to an airline will create
distortion in the skies over Europe, whether or not
these companies operate out of
the same airports,
insofar as they reduce their running costs.

to a secondary airport. This

(299) The second level corresponds to a distortion of trade at
airport services market level. Aid could lead indirectly
to distortion between central and regional airports.
Subsidies could encourage a company to relocate from
one airport to another and transfer a route from a main
airport
relocation is
however unlikely in that the cost of such a transfer
could be very heavy and pose a financial hazard for an
airline. Moreover, companies are sensitive to the type of
airport services on offer, which correspond to clearly
defined commercial
and
secondary airports do not offer the same type of airport
services to airlines, as the former offer full services,
while the services offered by the latter are generally
more basic.

strategies: main airports

(distance

and there

(300) The opening of a route operating out of a regional
airport could attract passengers who initially travelled
out of a main airport. Diversion of traffic could then
follow, with a resultant diversion of income related to
airport activity. This type of distortion, however, has to
be put
in perspective. Secondary airports present
inconveniences for passengers in comparison with main
airports
from main cities, problem of
connections between main cities and secondary airports,
absence of airline
is not
connections)
therefore an automatic ‘drain'
towards the secondary
airports. In addition, it appears that when an airline sets
up at a secondary airport, the passenger traffic will not
necessarily be diverted from the main airport to the
secondary airport. On the contrary, it appears that this
could be a factor in stimulating the market for both
airports. In this regard, the appearance of Ryanair on
is
Charleroi/Brussels-Dublin
the
informative. The total
from
regular
Brussels National and Charleroi to Dublin, doubled in
volume very quickly and has continued growing for the
past seven years. According to the figures supplied by
Ryanair, the traditional companies operating out of the
main airport (Aer Lingus and Sabena until 2001) have
not lost passengers following the arrival of Ryanair; they
the competitive pressure
reduced their prices under
from the Irish company, and this stimulated the market
and created an additional demand for transport services.

route
traffic,

1997
is,

in
that

(301) Distortions on the airport services market may appear
between regional airports, and this type of distortion is

small airports
must more critical. The number of
looking to develop is significant in Europe, while the
number of airlines currently willing to run the risk of
opening new routes is relatively small. The airlines
concerned are therefore in a favourable position in
comparison with the regional airports, and could easily
place them in a competition situation. Ryanair has taken
advantage of competition between airports just a few
kilometres, as was the case in France where it played on
the possibility of rivalry between the airports at Pau and
Tarbes, about 30 kilometres apart. It can also do this
between airports located in separate Member States.

or

policy,
It

planning
is not uncommon for

(302) Regional airports are not always managed as companies,
but as public infrastructures that fulfil functions related
local
regional
transport
to
development.
the public
authorities to agree to grant aid, for example through an
airport management company. Public funds can then be
made available to companies for reasons other than
sustainable airport development, such as development
of regional activity, or improving tourist facilities or the
image of a region. These subsidies could, if not set in a
framework, reach unreasonable proportions and fail to
achieve the desired objective, namely the development
of regional airports on a long-term basis.

(303) The second condition is that the aid granted to the
airlines should apply only to the opening of new routes
or new frequencies, generating an increase in the net
volume of passengers departing from the regional
airport, so that part of the risk borne by the company
is taken on.

(304)

In principle, aid should not be paid when the route is
already being operated:
the risk being run by the
company is less, maybe even zero, and the need for aid
is not justified. Thus, when a company already operates
a route from an airport, it will not be able to benefit
from public aid.

(305) Also, aid must not be paid to an airline for a new route
that it is operating in substitution for, and following the
abandonment of, an old route that had previously
benefited from start-up aid. In fact, in this regard the
airport would not have any net positive effect
in
relation to the number of passengers arriving at its site,
all other things being equal. On the other hand, the
simple substitution of one route with another route, still
operating from Charleroi and expected to generate at

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least an equivalent number of passengers for the airport,
during the period covered by the aid, would not call
into question the continuation of payment of aid for the
complete period.

Its economic viability had
agreements were signed.
already been demonstrated: there was therefore no need
to grant operational aid for the use of this route.

(306) For the future, aid could not be granted for a route
provided by Ryanair in replacement for another route
that
it had previously served from another airport
located in the same economic attraction zone or
population centre. The Commission in fact considers it
essential that start-up aid does not create any higher bid
for a subsidy, for example through such relocations of
routes following the granting of maximum aid. Such a
practice would in fact
run contrary to the whole
objective of start-up aid, which is a development of the
airport concerned in keeping with the common interest.

(307)

In addition, aid must not be intended to assist a new
entrant to open connections that are already open and
enter into competition with an existing operator already
working on that route leaving the airport. The new
arrival must rely on its strength alone, and not on
public aid, to compete with an existing operator.

(308)

In this case, the aid granted to Ryanair was paid in
return for the risk taken by the company in basing up
to four aircraft operating at least three rotations per day
for a period of 15 years; this represents at minimum an
undertaking to operate 12 new routes or frequencies
from Charleroi. The routes opened since the signature
the agreements with BSCA in 2001 are London,
of
Milan,
Barcelona/
Gerona, Venice, Pisa, Shannon and Glasgow. As no
carrier was operating the above-mentioned routes out of
Charleroi,
the Walloon aid was not used to develop
direct competition with an existing operator leaving
from Gosselies.

Liverpool, Rome, Carcassonne,

(309) The Commission also notes that Ryanair has not, in the
meantime, closed any other routes that it was operating
the Belgian authorities should take
out of Charleroi,
account of
to occur, by
calculating the ceiling of any aid that could be allocated.

this possibility, were

it

(310) On the other hand, no necessity has been demonstrated
with regard to the Charleroi-Dublin route; this route
had already existed for almost four years when the 2001

5.3.3.3. The incentive nature of the aid

(311) Aid must have an incentive effect:

it must allow a
business to develop an activity that it would not have
embarked upon without public support. This activity,
however, must prove itself to be profitable in the long
term without aid. For this reason, aid intended for
launching new connections or for increasing frequencies
must be limited in time. Aid is used when a new route
is launched, but it cannot maintain the route artificially:
routes must be economically viable. It is also possible to
stipulate that the aid must be degressive over time in
order
the aid.
Degressive aid allows a carrier to be helped when a
route is started up and then to be encouraged to rely
fully on its own strengths later. Phased reduction can
also depend on the size of the airport so that greater
intensity of aid is reserved for initial developments at
and reduced when they
smaller-category
airports
become better known and their power
to attract
increases.

to reinforce the incentive nature of

(312) Marketing aid is paid for the 15-year contractual period
at a rate of EUR 4 per passenger, without phased
reduction, throughout the contractual period.
It does
not therefore constitute an incentive for the launch of a
new route, but a simple undertaking to bear operational
costs on a continuous basis.
Its duration should
therefore be shortened and associated with the effective
costs of the start-up period, in the light of the practice
established by the Commission in the framework of the
the
start-up aid for maritime services. Because of
similarity to public service obligation schemes,
the
Commission considers that a maximum period of five
years following the opening of each route would be
reasonable, especially for point-to-point connections
the route and the airport
within Europe.
concerned truly need to make themselves known, and if
it is also
start-up aid can be justified in that regard,
advisable
competition
overall
environment in the air transport industry.

to maintain

In fact,

the

if

(313) The Commission notes that a period of three years was
accepted in the maritime freight services industry. A
maximum period of five years can be applied in the air
transport
low-cost
especially
companies. This sector is clearly dynamic in Europe, as
witnesses the exponential growth in turnover. A report

industry,

the

for

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by the University of Cranfield (124) considers that the
low-cost companies, which currently transport some
4 % of passengers in Europe, will see their share reach
12-15 % of the market in 2010. The Commission also
notes, especially in view of the circumstances of this
case and the comments of certain interested parties,
including HRL Morrison, that a period of up to five
years may be needed before initial profitability is
reached. This limitation is laid down because of the
need to preserve the character of start-up aid for new
routes in the case in point; this would not be respected
if
longer periods or periods unlimited in time were
allowed.

(314) The airlines

themselves normally reach profitability
more quickly: in this regard the actor concerned here,
namely Ryanair, saw its turnover increase from less than
EUR 300 million in 1999 to over EUR 840 million in
2003. In the same period, its activity increased from 5,3
to 15,7 million passengers. The company's profits
followed a similar trend,
increasing from about 57 to
It has therefore been proved that
239 million euros.
low-cost
quickly;
reach profitability
Ryanair's management report for the third quarter of
the year 2003-2004, published on 28 January 2004,
shows that 73 of
the 146 routes operated by the
company have been profitable for less than 12 months.
The Commission notes that despite this, Ryanair had
managed to produce a net profit after
taxation of
19-25 %, according to the quarter in question, and 28 %
for the last year, basis year 2002, which ended on 31
March 2003.

airlines

very

that
(Hainaut)

in densely populated areas,

the town of Charleroi
that has a per

the
particularly relevant
general economic situation of the region in question
and its level of development, and the development of
the competition that
the specified aid allows to be
facilitated. In this case, the Commission takes account of
is located in a
the fact
province
capita income
significantly lower than the Community average, but is
also located in a large economic wealth and population
area, close to both Brussels and Lille and well connected
allowing movement of
by the
travellers. The Commission also notes that the initial
contract allowed subsidies
It
therefore considers it convenient, for this first decision
and in order to adapt the management of routes in
question progressively and take account of the specific
situation of the airport in relation to its geographical
location and very low incidence of departures,
to
consider the period of five years mentioned above as
permissible for the payment of start-up aid.

for a 15-year period.

road network for

(317) With regard to the

‘one-shot'

contributions,

singular nature at

and
regardless of their possible proportional nature, their
flat-rate,
the opening and their
absence of connection with the real costs borne by
to the Belgian authorities'
Ryanair does not, subject
providing other demonstrations, allow the consideration
to encourage the profitable
that
In any case,
development of
‘one-shot'
for
marketing costs, should be assessed globally in relation
in order to
to the start-up costs of each new route,
prevent
from exceeding the
the cumulative aid total
authorised threshold.

the routes thus aided.

they are such as

contributions,

contributions

and

(315)

It is therefore clear that the routes opened by Ryanair
become profitable almost immediately and very soon
enjoy a declared seat occupation coefficient of some
80 %, even though a slight fall occurs afterwards. The
company confirmed this itself in its management report
for the first six months of 2003-2004, published on 3
November 2003;
for the routes
opened in spring 2003, for example in Sweden, the
Netherlands and France, which had a seat occupation
it was
coefficient
already being planned to substitute these places served
unless there was a noticeable improvement from winter
2003 onwards.

than the anticipated figure,

it pointed out

lower

that

(316) The Commission is however aware that in this case, it is
adopting for the first time a decision relating to aid
granted to an airline for starting up a route. It believes
that the incentive and proportional nature of the aid
should be assessed according to the three separate
parameters already mentioned, which all work together
for the common interest; the general struggle against air
congestion through development of the offer, which is

(124) ‘Europe's Low Cost Airlines: An analysis of the Economics and
Operating Characteristics of Europe's Charter and Low-Cost
Scheduled Carriers': Air Transport Research Report 7, Cranfield.

5.3.3.4. Proportionality of aid

(318) A double link of proportionality must be established
between the aid and its context. Firstly, there must be a
strict link between the aim of the airport development,
which passes through net development of passenger
traffic, and the level of aid paid to the airline. The total
aid must
therefore be calculated per passenger. An
airline that cannot deliver the volume of passengers
necessary for its development to an airport will not
therefore be unduly favoured. Conversely, a company
that fulfils the objective that makes development of the
airport possible will reap the benefits. In BSCA's case,
the
embarking
passenger. There is therefore a link of proportionality
between the aid and the increase in passenger traffic
necessary for developing the airport activity. On the
other hand, aid given as ‘one-shot'
incentives is not
embarking passenger and does not
calculated per
therefore show this relation of proportionality. Its total

calculated per

‘marketing'

aids are

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if 12 routes were opened, would be in the
amount,
region of EUR 2,9 million (125). Compared with the
number of embarking passengers anticipated for these
12 routes, that is, about 600 000 per year (126), this
sum would total about EUR 4,8 per passenger over one
year and about EUR 1,3 per passenger over three years.
Its definitive proportional character therefore remains to
be demonstrated with regard to the second criterion.

(322)

incentive nature. At present, the fixed nature of this aid,
not supported by clearly defined costs, will not allow
the Commission to make a positive decision in relation
to them.

investment

saying that

In both cases,
the
it goes without
Commission excludes the possibility of cumulative aid: if
the start-up costs for a route relating to marketing or
initial
then
common expenses cannot be taken into account at both
ends of the route, regardless of where they are situated.
This would have the effect of authorising start-up aid at
a cumulative rate that could be higher than 50 %.

compatible,

(‘one-shot')

are

(323) With regard to intensity of aid, which the Commission
limits at 50 % in this case, it points out that it does not
apply to all the operating costs, net of income, for the
airlines concerned. The only costs eligible for start-up
aid at 50 % for a maximum period of five years are the
additional start-up costs that the air operator would not
have to bear once ‘cruising speed' is reached and would
require a public contribution in order to share the risk
of non-viability linked to the start-up period. They
concern,
the marketing and advertising
costs incurred at the outset for making the link known,
the start-up costs borne by Ryanair at the Charleroi site,
and exceptional discounts granted on airport charges
incurred in launching the route, in relation to the public
tariff. Conversely, aid cannot be granted in relation to
standard operation costs such as hire or depreciation of
aircraft, fuel, crew salaries or catering service costs.

for example,

(324) The Commission still considers it preferable, in assessing
functional aid, to ensure that the aid goes through a
phased reduction in order
to guarantee progressive
viability of the activity being aided. The present case is
somewhat different in that it is not directly linked to the
profitability of each airline for the carrier, Ryanair, but
to the lack of fame and attractiveness of the airport
used as a support at the end of these routes, namely
Charleroi. The phased reduction is
less
necessary as the base being aided, that is, the business
plan for each route, should itself contain reducing
incentives: for example, advertising for the opening of
an airline should be greatest in the year of opening and
reduce
in subsequent years. However,
Belgium may provide this phased reduction around the
central selected rate,
the
cumulative aid exceeding the total calculated as 50 % of
the eligible costs over five years.

in this case 50 %, without

appreciably

therefore

(319) The second proportionality must be assessed between
the aid and the costs incurred by its beneficiary. With
regard to the total of EUR 4 per passenger in relation to
marketing aid, this would indicate that some 50 % of
the said costs were borne, which appears high. In any
case,
the assessment of proportionality should be
controlled and analysed by Belgium in relation to the
incurred in
additional marketing
promoting each airline eligible for the aid over a period
of five years. Currently, the marketing costs seem to be
determined a posteriori as being the use by Promocy of
the total of EUR 8 paid at a level of 50 % by BSCA and
Ryanair respectively; this does not seem to be of such a
nature as will guarantee proportionality. In particular,
the inclusion of reduced-rate tickets in these costs, and
the repayment by Promocy to Ryanair of the difference
tariff, may constitute
in relation to the normal
expenditure that is in principle unlimited.

effectively

costs

(320) Therefore, covering 50 % of

is

In

for

costs.

already,

start-up

particular,

the start-up costs for a
period of up to five years in the rapidly developing
environment mentioned above
in the
Commission's eyes, a significant duration-and-intensity
coupling
the
Commission considers that this context would make it
possible only with difficulty to compile business plans
for the development of each route for a period in excess
of this time. The aid envisaged here should readily make
in the Commission's
the route known and represents,
this
between
opinion,
a
the
requirement
to respect
the
In addition, during
competitive
15-year contractual period, each new additional route
could benefit from this start-up aid.

suitable
and the
environment.

compromise
requirement

(321) With regard to the ‘one-shot'

incentives,

if in essence
some of the costs of Ryanair's setting up at Charleroi,
such as ground staff training, investments made on site
etc., could in theory also be eligible, while other more
general costs, with an impact largely outside the scope
of BSCA, such as pilot
to
the same proportionality or indeed have an
present

training, do not appear

(125) This total includes EUR 250 000 for hotel costs, EUR 1 920 000
(that is, EUR 160 000 for each of the twelve lines opened), EUR
768 000 for pilot training, and EUR 4 000 for office equipment.

(126) Each rotation of Ryanair brings

in approximately 100 000

passengers of 50 000 embarking passengers.

(325) The Commission also notes that before the signature of
the contract with Ryanair, Charleroi airport formed part
of Airport Category E as defined by the Committee of

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is,

it had the smallest volume of
the Regions that
activity with less than one million passengers per year
in general. In this regard, the Commission considers it
appropriate that Charleroi airport was able to grant aid
with a maximum intensity of 50 %;
the common
in development of regional airports in fact
interest
implies, in this case, a struggle against its disadvantages
such as lack of knowledge. The impact of competition
arising from aid does not
to the
Commission to be excessive in relation to this common
interest. The Commission could on the other hand
consider that an airport that already processes a larger
volume would not need to grant
the same level of
start-up aid. In fact, the opening of a new route from an
airport that it already better known and better served
appears to present less operational and viability-related
risks than in the present case of Charleroi, and these
airports
their
capable
development by paying start-up aid at a lower rate only.

therefore appear

ensuring

should

be

of

5.3.3.5. Transparency, equality of operator treatment

and non-discrimination in granting of aid

(326) The amount of aid granted to an airline for

the
It
development of air services must be transparent.
should be calculated per embarking passenger in order
to be easily identified and identifiable.

(327) The fact

that an airport

is ready to grant aid that
provides economic services in return, such as the launch
of new routes, must be publicised in order to make it
possible for the interested airlines to present themselves
and win their case. The rules and principles relating to
procurement contracts and concessions should therefore
be respected where applicable. Some airports have, for
example, used the Official Journal of the European Union,
Series S, as a means of obtaining publicity (127).

(328) Objective criteria must be developed by an airport
wishing to encourage development of air services in
terms of maximum totals and periods for aid, in order
to ensure quality of treatment between airlines.

(329) Appeal procedures must be provided at Member State
to ensure that no discrimination is

in order

level

(127) See for example OJ S 219, 14.11.2001, p. 150993, and OJ S 240,

11.12.2002, p. 191371.

exercised in the granting of aid and that no airline is
favoured unfairly at a given airport.

(330) Belgium has not yet set up a transparent system that
allows interested transport providers to open new routes
departing from Charleroi. It has not provided a system
in the
that allows equality of operator
granting of aid and the development of objective criteria
for aid, while making the maximum amount and
duration of aid known. Neither does it have an appeal
mechanism that makes it possible to make sure that no
discrimination is applied between transport operators.

treatment

5.3.3.6. Penalties and repayment mechanisms

(331) Sanction mechanisms must be implemented as and
when a carrier fails to respect the undertakings that it
has made in relation to an airport when the aid is paid.
A system for recovering aid or for seizing a guarantee
initially deposited by the transport provider will allow
the airport to ensure that the airline is honouring its
commitments.

(332) The contract concluded between Ryanair and BSCA
indeed contains a mechanism for recovering the aid if
the transport provider fails to honour its commitments.
The Commission notes in this respect that the contract
signed between Ryanair and BSCA contains a number of
provisions in its Point II-2, ‘Non-fulfilment through fault
of Ryanair', which allow the airport to protect itself at
least in part against the departure of the company from
the hub. In fact and in essence, if Ryanair reduces its
activity out of Charleroi by more than 50 % in
comparison with its previous activity during the first
five years, or if it reduces the number of aircraft based
at Charleroi to less than two, it must repay the whole of
the aid granted. This penalty will remain at 66 % of the
sums received in the sixth year and reduce progressively
by 6,66 % per
disappearing
year,
completely until ten full years have elapsed.

therefore not

(333) The Commission considers that this clause, negotiated
contractually between the parties, is well adapted to the
objective being pursued in order to ensure sustainable
development of the airport and a level of passengers
that allows profitability to be reached.
therefore
believes that this clause is an essential condition for
declaring part of the aid as proportional and therefore
compatible with the common market.

It

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5.3.3.7. Overlapping with other aid

5.4. DESCRIPTION OF MEASURES REQUIRED TO BE
UNDERTAKEN BY THE MEMBER STATE CONCERNED IN
ORDER TO MAKE THE AID COMPATIBLE

(334) The aid granted cannot in principle be combined with
other subsidies received by air carriers if it is aid of a
social nature or public service compensations recently
defined as aid. Neither may it, in accordance with the
rules of proportionality laid down above, be combined
with other aid for the same costs, including aid paid in
another state. The sum total of aid from which a new
route benefits must never exceed 50 % of start-up,
marketing and ‘one-shot' costs combined for the two
destinations
the
contributions paid for a destination may not exceed
50 % of the costs for that destination.

in question.

same way,

In the

(335)

the Commission believes

In order to preserve the incentive character of start-up
aid for air links over time as a development tool for
it
regional airports only,
necessary to ensure that such aid cannot give any
indirect advantage to large airports already largely open
to international
Specific
attention should therefore be paid to limiting eligible
costs when an airline links Charleroi (in this case) with
a major airport such as those in Category A and B as
defined by the Committee of the Regions, and/or with a
coordinated or fully coordinated airport (128).

competition.

traffic

and

(338) The Commission notes that the aid paid by BSCA to
Ryanair fulfils some of the conditions applicable to aid
intended to promote air
services operating out of
regional airports, but that others have not been fulfilled
therefore be imposed in
and that conditions must
certain cases to allow compatibility.

5.4.1. REDUCTIONS IN AIRPORT CHARGES

(339) No measure is

likely to bring about compatibility
between the common market and the airport charge
reductions already granted as such by the Walloon
Region to Ryanair. Belgium will calculate the total aid to
be recovered by taking account of the existence of the
single general reduction system provided by the Walloon
regulation in Article 7(1) and (2) of the 1998 decree, to
which Ryanair has a right throughout the period of
the specific tariff established by the
application of
contract with Ryanair.

(340)

In future the Walloon Region will, if it wishes to adapt
its rates in order to make them more attractive, have to
publish a new public tariff intended for all airlines. It
will also be able, in accordance with the practice already
accepted by the Commission, to set up limited period
reductions that are made available and granted without
discriminating between airport users.

(336)

In addition, such aid cannot be granted when access to
a route has been reserved for one carrier only under
Article 4 of Regulation (EEC) No 2408/92, and in
particular paragraph 1(d) of that article.

5.4.2. GUARANTEES GRANTED BY THE WALLOON

REGION WITH REGARD TO AIRPORT CHARGE
LEVELS AND CHARLEROI AIRPORT OPENING TIMES

(337) For its routes operating out of Charleroi, Ryanair does
not benefit from subsidies in relation to social aid or
public service compensation. Access
to the routes
operated by Ryanair out of Charleroi is not reserved for
that one carrier only.

(128) According to the definitions and the classification shown in
Council Regulation (EEC) No 95/93 of 18 January 1993 on
common rules for the allocation of slots at Community airports
(OJ L 14, 22.1.1993, p. 1). Regulation last amended by European
Parliament and Council Regulation (EC) No 1554/2003 (OJ L 221,
4.9.2003, p. 1).

(341) No measure is

likely to bring about compatibility
between the common market and the compensation
caused to Ryanair
guarantees
through the Walloon Region's use of
its regulatory
powers. Belgium shall ensure that these guarantees are
void.

financial

losses

for

5.4.3. REDUCTION IN GROUND HANDLING TARIFFS

GRANTED BY BSCA

(342)

In the absence of any proof that the funds used by
BSCA to grant the reductions are of purely commercial

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in the context of

the totals granted to Ryanair in that respect
origin,
constitute State aid. This aid,
the
forthcoming liberalisation of Charleroi airport, is likely
to distort competition and alter conditions of trade to
an extent contrary to the common interest. Therefore,
likely to bring about compatibility
no measure is
between the common market and the reductions on
ground handling service charges granted by BSCA to
Ryanair. Belgium will calculate the total aid to be
recovered by calculating the difference between the
operating costs borne by BSCA and linked to the
ground handling services provided to Ryanair and the
the
the
price
to
invoiced
two-million-passenger
in
threshold
Directive 96/67/EC has not yet been reached, Belgium
can deduct from this total any profit made by BSCA on
its other strictly commercial activities.

Insofar
provided

airline.

as
for

5.4.4. OTHER ALLOCATIONS INTENDED TO PROMOTE AIR

SERVICES OPERATING OUT OF REGIONAL
AIRPORTS

(343) The other allocations granted by BSCA, including those
in the form of a marketing contribution,
‘one-shot'
incentives and provision of office space, and in the
agreements signed between the parties and covered by
this decision, are deemed compatible with the common
market as start-up aid for new routes, subject to the
following conditions:

— All the contributions shall be limited in terms of
duration. In view of the intra-European destinations
covered,
this duration may not exceed five years
following the opening of a new route. These
contributions may not be paid if
the route in
question is opened in place of another route closed
by Ryanair within the preceding five years.
In
future, the aid will no longer be granted for a route
provided by Ryanair as a replacement for another
route previously served by it from another airport
located in the same economic attraction zone or
population area.

plan

— The ‘marketing' contributions, currently established
at EUR 4 per passenger, should be justified in a
development
and
compiled
each route
validated a priori by BSCA for
concerned. This plan shall specify the incurred costs
eligible, which must relate directly to the promotion
the route with the aim of making it viable
of
five years.
without aid after an initial period of
BSCA shall also validate a posteriori the start-up

by Ryanair

costs effectively incurred for each airline at the end
of
an
independent auditor shall assist BSCA in this task.

five-year period; where necessary,

the

— With regard to the portion of these contributions
already paid by BSCA, a similar exercise should also
be conducted to validate this aid on the same
principles.

— The ‘one-shot' contributions to the opening of the
route do not currently appear to correspond to the
same logic and should be recovered, except for the
portion that Belgium can justify as being directly
linked to the costs incurred by Ryanair at
the
Charleroi airport platform that are proportional and
incentive in nature.

— The sum total of aid from which a new route
benefits can never exceed 50 % of the cumulative
start-up, marketing and ‘one-shot' costs for the two
destination in question, including Charleroi. In the
same way, the contributions paid for a destination
may not exceed 50 % of the effective costs for that
destination. Specific attention shall be paid in these
evaluations to the routes that link Charleroi to a
major airport, such as those within Categories A
and B according to the Committee of the Regions,
and/or to a coordinated or fully coordinated airport.

— Contributions paid by BSCA that would have
exceeded the criteria thus specified at the end of the
five-year starting period must be repaid by Ryanair.

— The contributions paid where necessary for

the
Dublin-Charleroi route, under the November 2001
contracts, shall be recovered.

— Belgium shall

set up a non-discriminatory aid
regime aimed at ensuring equality of treatment for
airlines wishing to develop new airline services from
Charleroi airport, according to the objective criteria
established by the present decision.

(344)

Insofar as these conditions are not fulfilled for a portion
of the aid, whether it corresponds to a category of aid
or to an aided route, or if the terms of the balance of
the agreements concluded between Ryanair and BSCA
are substantially altered, Belgium must recover all the
corresponding aid mentioned in the previous paragraph.

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5.5. SUMMARY BY THE COMMISSION ON ITS POLICY
GUIDELINES RELATING TO THE FINANCING OF AIRPORTS
AND AIR LINKS

(345) Before formulating its conclusions,

the Commission
wishes to recall the general context and the limits, and
to give some preliminary indications to both public and
economic actors on the political consequences that it
will propose, in order to clarify further the two themes
of financing of airports and airline start-up costs.

(346) The general context of this file is the opening of the
skies over Europe, a subject on which the Commission
has been working for over 10 years. The third air
package, in force since 1993, has led to a new freedom
of
of
the
the
operation
Community licence,
to the
since April 1997, and to
intra-Community market
freedom of
service
obligations have allowed the Member States that so wish
to implement tools for developing their territory.

tariffs. As a corollary, public

to unrestricted access

introduction

through

(347) Beyond this framework, various actions aimed at this
liberalisation,
already been
some of which have
mentioned, related among other things to the allocation
of slots, especially at congested airports, liberalisation of
ground handling services and equality of access to
computerised reservation services.

(348)

traditional

airlines or

In the same way the opening of the sector, which has
naturally had a major impact on the activity and actions
of
flag carriers, has been
accompanied by a strict discipline relating to State aid.
single aid for
The application of
restructuring (‘one time — last time') has thus allowed
the most reactive ones move from a relatively protected
way of operation to a normal economic actor behaviour
pattern.

the principle of

(349) The recent developments made possible by the Open
Sky judgments (129) of the Court of
Justice will also
promote consolidation of
the European players and
their ability to face competition from third-country
airlines on a Community basis.

(129) Court

Judgments of 5 December 2002 in Cases C-466 to
C-469/98 and C-470 to C-472/98, Commission v the United
Kingdom, Denmark, Sweden, Finland, Belgium and Luxembourg
respectively. ECR, p. I-9427 to 9741.

is

in

the

rates

actors

growth

segment.

(350) There have also been other major developments on the
European air transport market in recent years; one of
emergence of new Community-size
these
companies with promotional
supported by a
low-cost structure. Ryanair is one of the main and more
The
this
successful
Commission can but welcome this and appreciate the
contribution made by these actors
to the general
reduction in prices in the air transport sector in Europe
and to the democratisation of access to this mode of
it must
transport. As
nevertheless ensure that the rules of the internal market
the rules
are complied with and,
ensuring fair competition are correctly applied,
for
example where State aid proves to be incompatible.
routes could be
Without
offered on a bargain basis only,
than as a
long-term service.

this discipline, certain air

the guardian of

in particular,

the Treaty,

rather

that

(351) Similarly, airports which were often subject to purely
territorial considerations and were often established
initially in Europe as military airfields, have in many
cases been transferred from State control to that of the
regions, to public companies, or even to the private
sector. However, the Commission is not aware of any
case of an ex nihilo creation of a private airport without
the involvement of public funds. The process of transfer
to the private sector has normally taken the form of
privatisation or a progressive opening-up of capital.

(352) Some of the financial burdens of these airports, whether
they are private or public, are however often covered by
compensations for public service relating to safety or
security tasks, or by other contributions to the costs of
activities which would not be economically viable in
themselves but which would remain necessary for the
operation of these platforms. These may concern air
traffic control, police or
fire fighting services, etc.
Similarly,
infrastructure financing and maintenance is
still mainly ensured by public funds.

(353) As mentioned above,

for

charging

the use of

there is currently no overall
Community vision of how some of these charges can be
financed by the public authorities, nor a common
airport
framework for
infrastructure. The Commission wishes, however,
to
propose such a framework soon, for example in the
form of a communication on the financing of airports,
which will
the public
allow the Member States,
authorities and public or private airport managers to
relationship in a coherent, competitive
place their
environment at European level.
the
Commission shall ensure that the practice relating to
reductions in airport fees, and a clear delimitation of the
charges that can be assumed by public funds and those

In this

regard,

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that must be borne by the airport manager from its
own resources, are incorporated into that framework. It
will thus show that opposing public and private airports
as regards fixing of airport charges is an inaccurate
simplification of a much more complex reality.

HAS ADOPTED THIS DECISION:

Article 1

their business statutes.

(354) The airports were also required to develop their offer,
that is, the air links that they offered, whether it was to
use the existing public infrastructures better or to fulfil
the requirements of
In this
regard, secondary or regional airports such as Charleroi
have faced a different equation from that faced by the
major European hubs
such as London, Paris or
Frankfurt. Like other intermediate airports, they do not
have any large reference airline that concentrates its
operations on that airport in order to offer a maximum
of correspondences to its passengers and profit from the
large-scale savings that the structure would allow them.
A regional airport such as Charleroi bas, in addition, to
counterbalance its lack of
in
relation to the larger airports.

image and awareness

(355) For Ryanair, the Commission notes that unlike other
low-cost companies,
it offers the choice of serving
secondary airports almost exclusively. This option is
quite specific to it and does not necessarily represent
the
low-cost
competitors
companies, which often serve the central airports or
well-established regional airports.

the other

trends of

its

(356)

In this regard, the Commission notes, as it puts into
practice in the present decision, that such increased use
of the secondary airports is an asset in the fight against
air traffic congestion at the major European hubs. A
greater number of access points for
intra-European
flights is thus a favourable element in this matter, but
the points can only develop with an initial public
and
incentive.
proportionality in relation to finance offered to airports,
together with the presence of a common interest in
relation to State aid granted to airlines, should allow
airport activity to develop in accordance with the rules
the decision accepts the
of
principle of start-up costs for the first time in the air
transport industry, while ensuring that the usual rules of
State aid are complied with.

non-discrimination

In this spirit,

Transparency,

the treaty.

The aid measures implemented by Belgium in the contract of 6
November 2001 concluded between the Walloon Region and
Ryanair, in the form of a reduction in airport landing charges
that goes beyond the official tariff set in Article 3 of the
Walloon Government Decree of 16 July 1998 laying down
charges to be levied for the use of airports in the Walloon
Region, and the general discounts provided for in Article 7(1)
and (2) of the said Decree, are incompatible with the common
market within the meaning of Article 87(1) of the Treaty.

Article 2

The aid measures
implemented by Belgium through the
contract of 2 November 2001 concluded between Brussels
South Charleroi Airport (BSCA) and Ryanair, in the form of
discounts on ground handling services in comparison with the
official airport
tariff, are incompatible with the common
market within the meaning of Article 87(1) of the Treaty.

price

Belgium shall determine the total aid recoverable by calculating
the difference between the operating costs borne by BSCA and
linked to the ground handling services provided to Ryanair and
the
invoiced
the
as
two-million-passenger
in Directive
96/67/EC remains unattained, Belgium may deduct from this
total any profits
strictly
commercial activities.

to
threshold provided for

realised by BSCA on its other

airline.

long

the

So

Article 3

Belgium shall ensure that the compensation guarantees granted
in the contract of 6 November 2001 by the Walloon Region in
the event of losses suffered by Ryanair through the exercise by
its regulator powers are void. The
the Walloon Region of
Walloon Region shall have with Ryanair, as with other airline
companies, all the necessary freedom in fixing airport charges,
airport opening hours or other provisions of a regulatory
nature.

6. CONCLUSIONS

Article 4

(357) The Commission notes that Belgium has unlawfully
provided aid for the benefit of the airline Ryanair in
violation of Article 88(3) of the Treaty. However, for the
contribution that this aid can make to the launching of
new air
sustainable
services
development of a regional airport, a portion of this aid
may be declared compatible with the common market,
subject to the conditions set out in sections 338 to 344.

transport

and

the

The other types of aid granted by BSCA, including marketing
contributions, one-shot
incentives and provision of office
space, are declared compatible with the common market as
start-up aid for new routes, subject to the following conditions:

1) The contributions must relate to the opening of a new
route and be limited in time. In view of the intra-European
destinations covered, the time period must not exceed five

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30.4.2004

years following the opening of a route. The contributions
may not be paid for a route opened as a replacement for
another route closed by Ryanair in the preceding five
years. In future, aid may not be granted for a route that
Ryanair has provided in replacement for another route that
served previously from another airport located in the same
economic or population catchment area.

2) The marketing contributions, currently set at EUR 4 per
passenger, must be
justified in a development plan
compiled by Ryanair and validated by BSCA for each route
concerned. The plan shall specify the costs incurred and
eligible, which must relate directly to the promotion of the
route with the aim of making it viable without aid after an
initial period of five years. At the end of the five-year
period, BSCA shall a posteriori validate the start-up costs
incurred by each airline, and BSCA shall where necessary
enlist the help of an independent auditor in the task.

3) With regard to the portion of contributions already paid
by BSCA, a similar exercise must be carried out to validate
this aid on the same principles.

4) The one-shot contributions paid as a lump sum when
Ryanair set up at Charleroi, or whenever a route was
opened, must be recovered, except for any portion that
Belgium can justify as being directly linked to the costs
that were incurred by Ryanair at the Charleroi airport hub
and are proportional and incentive in nature.

7) The

contributions paid, where
Dublin-Charleroi
route
contracts examined herein shall be recovered.

applicable,
the November

under

for

the
2001

8) Belgium shall set up a non-discriminatory aid scheme
for airlines
intended to ensure equality of
wishing to develop new air
services departing from
Charleroi airport in accordance with the objective criteria
laid down in the present Decision.

treatment

Article 5

Belgium shall take all the necessary measures to recover
1.
from the beneficiary the aid mentioned in Articles 1 and 2 and
unlawfully made available to it. The aid mentioned in Article 1
may however remain partly unrecovered, for the portion that
does not exceed the ceiling, in compliance with the conditions
laid down in Article 4. The recovery shall be effected
immediately in accordance with the procedures of national
law, insofar as they allow immediate and effective enforcement
of the present Decision. The aid to be recovered shall include
interest running from the date at which it was made available
to the beneficiary to the date of recovery. The interest shall be
calculated on the basis of
rate used for
calculating the subsidy equivalent for regional aid. It shall be
calculated on a compound basis.

the reference

the

a portion of

If the conditions laid down in Article 4 are not complied
2.
with for
that portion
corresponds to a category of aid or an aided route, or if the
terms for balancing the agreements concluded between Ryanair
and BSCA are substantially altered, Belgium shall be required
to recover all the corresponding aid referred to in the said
article.

aid, whether

5) The sum total of aid from which a new route benefits must
never exceed 50 % of start-up, marketing and one-shot
costs aggregated for
the two destinations in question,
In the same way, the contributions
including Charleroi.
granted for a destination must not exceed 50 % of the
actual costs for that destination. Specific attention shall be
paid in these evaluations to routes that link Charleroi to a
major airport, such as those included in Categories A and
B as defined in the Committee of the Regions' outlook
opinion of 2 July 2003 on the capacity of regional airports
and identified in the present Decision, and/or
to a
coordinated or
fully coordinated airport within the
meaning of Regulation (EEC) No 95/93.

Article 6

Belgium shall inform the Commission within two months of
the date of notification of this Decision of the measures taken
to comply with it.

Article 7

This decision is addressed to the Kingdom of Belgium.

Done at Brussels, 12 February 2004.

6) The contributions paid by BSCA that at the end of the
five-year start-up period exceed the criteria laid down must
be repaid by Ryanair.

For the Commission

Loyola DE PALACIO

Vice-President of Commission