(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 aid measures to the airline Ryanair Ltd (hereinafter ‘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 provided information on this subject to the Commission.

(2)

In a letter dated 11 December 2002 (3) (hereinafter ‘opening decision’), the Commission informed Belgium of its decision to initiate the procedure provided for in Article 108(2) TFEU (hereinafter ‘formal investigation procedure’) in respect of these measures. Belgium submitted its comments on 14 February 2003.

(3)

The opening decision was published in the Official Journal of the European Union (4). The Commission invited interested parties to submit their comments on the measures in question within one month of the publication date.

(4)

The Commission received comments from interested parties. It forwarded the comments to Belgium by letters dated 19 March and 22 April 2003. Belgium was given the opportunity to respond to them. The Commission received Belgium's observations by letters dated 16 and 27 May 2003.

(5)

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 on 27 August 2003, as requested by the Commission.

(6)

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

(7)

On 12 February 2004 the Commission adopted a partly negative final decision (5) (hereinafter ‘2004 decision’).

(8)

This decision was annulled by judgment of the General Court of 17 December 2008 (6) (hereinafter ‘2008 judgment’), obliging the Commission to take a new final decision on the measures in question. The General Court found that the Commission's failure to examine together the measures granted to Ryanair by the Walloon Region (hereinafter ‘Region’) and by the Charleroi airport manager, the public sector company Brussels South Charleroi Airport (hereinafter ‘BSCA’), and to check whether, taken together, these two entities had acted as rational operators in a market economy, was vitiated by an error in law. The 2008 judgment had the effect of reopening the formal investigation procedure, which had been closed by the 2004 decision.

(9)

In a letter dated 23 July 2010, the Commission gave Belgium, and the parties having submitted comments in the formal investigation procedure initiated on 11 December 2002, the opportunity to submit further comments in the formal investigation procedure reopened following the 2008 judgment. At the request of the Commission made on 20 April 2011, the Belgian authorities sent further information in letters dated 14 July and 21 September 2011.

(10)

In a letter dated 21 March 2012, the Commission informed Belgium of its decision to extend the formal investigation procedure to other measures (hereinafter ‘2012 extension decision’).

(11)

The 2012 extension decision was published in the Official Journal of the European Union (7). The Commission invited interested parties to submit their comments on the measures in question.

(12)

Belgium submitted its comments on 22 May 2012. The comments of 22 May 2012 did not contain the summary table in Annex I to the 2012 extension decision. This was submitted on 5 June 2012.

(13)

On 9 August 2012 the Commission requested further information on, inter alia, the costs incurred by the Société Wallonne des Aéroports (hereinafter ‘SOWAER’) due to its investments in Charleroi airport and its work for BSCA. On 3 September 2012 the Belgian authorities submitted SOWAER's annual accounts for the years 2001 to 2004. They provided further information on 9 October and 18 October 2012.

(14)

On 26 October 2012, following a meeting, the Commission requested further information. Belgium provided this information on 9 November 2012.

(15)

The Commission received comments from the following interested parties:

(16)

The Commission forwarded these comments to Belgium on 2 July and 29 October 2012, 3 May 2013, 22 January and 24 February 2014. Belgium was given the opportunity to respond to them. The Commission received Belgium's observations by letters dated 17 July 2012, 14 December 2012 and 5 June 2013.

(17)

On 14 January 2014 the Commission requested further information from Belgium, particularly with regard to applying the market economy operator test to the measures granted to BSCA. Belgium responded in letters sent on 7 and 24 February 2014. However, as these responses were incomplete, the Commission sent a reminder to Belgium on 10 March 2014, indicating the missing responses and asking Belgium to answer accordingly. Further information was submitted by Belgium on 24 March 2014.

(18)

On 7 February 2014 the Commission requested further information from Belgium, particularly with regard to the measures granted to Ryanair. On 18 and 24 March 2014 Belgium provided some answers to the questions asked.

(19)

Also on 7 February 2014, a meeting was held at Charleroi airport between representatives of the Walloon Region, SOWAER and BSCA, on the one hand, and the Commission services on the other.

(20)

On 25 February and 11 March 2014, the Commission asked Belgium for further information, including clarifications on the information provided by Belgium on 7 and 24 February 2014 concerning the measures granted by the Region and SOWAER to BSCA. Belgium responded in letters sent on 25 March and 4 April 2014 (annexes sent on 9 April 2014).

(21)

On 17 and 19 March 2014, following the adoption of the Guidelines on State aid to airports and airlines (hereinafter ‘aviation guidelines’ (8)), the Commission called on Belgium and the interested parties to submit their comments on the application of the aviation guidelines to this case. In addition, on 15 April 2014 a notice was published inviting Member States and interested parties to submit their comments, including in this case, on the entry into force of the EU Guidelines on State aid to airports and airlines. The Commission received comments from the Brussels Airport Company, Brussels Airlines, the Board of Airline Representatives, Air France, and the Association for Transport and Environment. It forwarded these comments to Belgium on 26 May 2014. The latter submitted its comments on 26 June 2014.

(22)

A further meeting was held on 11 April 2014 between the Commission services on the one hand and Belgium, BSCA and SOWAER on the other hand. Following this meeting, Belgium submitted documents together with a note dated 5 May 2014 on the public service tasks entrusted to BSCA.

(23)

On 5 May 2014 the Commission sent a further request for information to Belgium, to which the latter responded on 13 May 2014.

(24)

In a letter of 7 May 2014, Belgium accepted that, in this case and given the undertaking made by the Commission services to provide it as soon as possible with a Dutch translation of the decision, the Commission could exceptionally notify the decision in French under Article 297 TFEU. Belgium accepted that only the French version of the decision would be authentic and that the decision would take effect on its notification in French.

(25)

On 2 July 2014 Brussels Airlines submitted an updated version of the comments that it had submitted on 25 September 2013 following the publication of the draft guidelines on State aid to airports and airlines. These comments were forwarded to Belgium on 4 July 2014 and the latter submitted its comments on 18 July 2014.

(26)

Following the institutional reform law of 8 August 1980, the Belgian regions were given the necessary powers to equip and operate public airports and aerodromes situated within their territory, except for Brussels National Airport, over which the Belgian Federal State retained such powers.

(27)

According to Belgium (9), the Walloon Government therefore decided to take advantage of the economic potential offered by such transport infrastructure and gradually make the necessary investments. On 2 May 1989 the Walloon Government ratified a Ministry of Transport note according to which ‘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.’

(28)

In 1991 the Region set up BSCA to manage Brussels South Charleroi Airport (hereinafter ‘Charleroi airport’).

(29)

Under an agreement dated 9 July 1991 (hereinafter ‘Region/BSCA agreement’), the Region granted BSCA for a period of 50 years:

(30)

The Region/BSCA agreement — including the schedule of conditions annexed to the agreement (hereinafter ‘schedule of conditions’) — determines how the costs are shared between the Region and BSCA:

(31)

As regards fees, the agreement (16) provides that:

(32)

Under Amendment No 2 to the schedule of conditions, payment of the ‘fire and maintenance services cost’ by the Region was extended until 1 January 2000.

(33)

The Region also paid the fire and maintenance services cost for the years 2000 (17) and 2001 (18).

(34)

As regards the year 2002, Belgium states that, although the Region had always planned to continue granting compensation for these costs, the creation of SOWAER and the introduction of a new legal framework led to a delay in formalising the extension of this compensation. According to Belgium, the continuation of this payment was confirmed in a letter of 5 July 2001 sent by BSCA to the Walloon transport and facilities administration, detailing the main lines of BSCA's 2002 budget covering the costs of these services, following a telephone conversation during which the payment of these services by the Region for 2002 had apparently been confirmed.

(35)

At the end of the 1990s, a number of studies on the options for developing Charleroi airport were carried out by external consultants. Thus the Region asked Tractebel to conduct a strategic development study on Charleroi airport. This study was completed in April 2000 (19). At the same time, a study carried out by Roland Berger International Management Consultant in July 2000 examined the development of an airport strategy for Wallonia (20). Finally, as part of the negotiations with the Region at the beginning of 2001 with a view to possibly participating in the capital of BSCA, Grands Travaux de Marseille ordered a study into the airport's development potential (21).

(36)

According to Belgium, even before these studies and due to technical constraints associated with the existing infrastructure (22), it was clear that a new terminal needed to be built in the northern part of the site. Land had already been compulsorily purchased by the intercommunal body Igretec, which was responsible for creating the ‘Aéropôle’ airport business park. The Region itself compulsorily purchased further land during the 1990s, and in 1999 Igretec transferred to the Region the land that it had purchased. It was on this land that the new passenger terminal, which is now operational, was built.

(37)

During a session on 20 July 2000, the Region approved the outlines of a framework agreement on a multiannual investment programme for Charleroi airport, referring in particular to the ‘concept of a new passenger terminal’, with a total budget of EUR 113,74 million.

Table 1

Infrastructure investment planned by the framework agreement of 20 July 2000

(38)

On 8 November 2000 the Region adopted a decision implementing its decision of 20 July 2000, amending the assumptions of the multiannual investment programme and increasing the total investment cost to EUR 121 million. However, according to the note attached to this decision, ‘investments in the new terminal and its associated infrastructure will only be made as and when specific needs arise. The funding of these investments must be examined as the work is carried out’. The note sets out the calculation, at this stage, of the costs of a new terminal: ‘if actually required by the airport …, the construction of the new terminal and its associated infrastructure could result in an investment in the order of MBEF 1 514’, i.e. approximately EUR 37,5 million, without, however, the implementation timetable of this sum being detailed (see Table 9). The arrangements for financing the Charleroi airport investment programme were also not detailed at this stage (23).

Table 2

Infrastructure investment planned by the note attached to the decision of 8 November 2000

(39)

On 1 July 2001 the Region formed a company under its exclusive control, the Société Wallonne des Aéroports (hereinafter ‘SOWAER’), to develop the Region's airport infrastructure, place this infrastructure at the disposal of the airport management companies in question, and keep it operational by covering the costs of major repairs and maintenance.

(40)

Beforehand, in a decision of 23 May 2001 concerning the ‘establishment of a financial mechanism and [the] creation of a specialised company’, the Region had approved the articles of association and financial plan of SOWAER for the years 2001 to 2004 (24), including a total investment amount for Charleroi airport of MBEF 3 753, i.e. approximately EUR 93 million, of which EUR 28 million was intended for the new terminal (see Table 3).

Table 3

Infrastructure investment planned by the SOWAER financial plan approved by the Region on 23 May 2001

(41)

A more detailed financial plan containing the latest versions of the Liège and Charleroi investment programmes was presented to SOWAER's board of directors in March 2002 (25). This plan was subsequently updated at regular intervals (around once a year).

(42)

The SOWAER financial plan approved on 23 May 2001 also capped the contribution to the environment fund at BEF 75 million (EUR 1,86 million) for the year 2002. This financial plan also included the balance of the environment fund within SOWAER's revenue, given its delegated tasks.

(43)

On 15 April 2002 SOWAER, which on 29 March 2002 had taken over the property concession granted to BSCA in 1991, concluded a property sub-concession agreement with BSCA (hereinafter ‘2002 SOWAER/BSCA agreement’) under which:

(44)

Almost at the same time (29 March 2002), the Region and BSCA concluded an amendment to the Region/BSCA agreement. Under this Amendment No 3 to the Region/BSCA agreement (26), the Region undertook to pay BSCA:

(45)

On 3 April 2003 the Walloon Government officially noted a revision to the investment programme. This revision specifically amended the capacity of the new terminal in line with the level decided in the initial version of the investment programme. Instead of a capacity of two million passengers, it was now planned to build a terminal with a capacity of three million passengers, together with a larger car park than the one originally planned. This revision involved an additional investment of EUR 33 million.

(46)

The 2002 SOWAER/BSCA agreement was replaced on 4 April 2006 by a new agreement (hereinafter ‘2006 SOWAER/BSCA agreement’). The latter still contained most of the provisions of the 2002 SOWAER/BSCA agreement, but clarified the content of certain services provided by SOWAER to BSCA in addition to the services defined by the 2002 SOWAER/BSCA agreement. It also amended the terms for calculating the concession fees payable by BSCA to SOWAER.

(47)

The Region/BSCA agreement was amended at the same time through Amendment No 5 of 10 March 2006. Article 3.2.2 of the Region/BSCA agreement subsequently provided that:

(48)

The Amendment also stipulated that the amount of the financial compensation had to be revised before July 2009.

(49)

The Region/BSCA agreement was amended again on 15 January 2008 (Amendment No 6). Under this amendment:

(50)

Having previously had very few regular users, on 1 May 1997 Charleroi airport welcomed Ryanair, which initially operated one route between Dublin and Charleroi. In April 2001 Ryanair opened its first continental base at Charleroi, initially with two aircraft and some new destinations (Shannon, Glasgow, Pisa, Venice and Carcassonne).

(51)

From 2000 to 2013, traffic at Charleroi increased from around 200 000 passengers to nearly 7 million.

Table 4

Annual traffic statistics for Charleroi airport

(52)

Ryanair has always accounted for over [70-80] (*1) % of the traffic at Charleroi airport.

(53)

The share ownership of BSCA has been remodelled on numerous occasions since 2001. At the end of 2000, BSCA was over 80 % owned by Sambrinvest (31) and, to a lesser extent, by Cockerill Sambre, Igretec (32) and a few other shareholders.

(54)

The first alteration stemmed from a decision of the Walloon Government of 8 February 2001. Through this decision, the government ordered Sogepa (33), a company controlled by the Region, to purchase 2 680 shares in BSCA (i.e. 43,79 % of the capital) held by Sambrinvest, the own shares held by BSCA, and the shares that the ‘private shareholders’ wanted to sell. In the same decision, the government also ordered the minister responsible for airport management to ‘prepare a shareholder agreement binding SOWAER, Sambrinvest and possibly Igretec, which will arrange between them the coordination of powers within BSCA, both in the general meeting and on the board of directors and the executive committee.’

(55)

The Region also decided to increase the capital of BSCA at the same time: the principle of such a recapitalisation appeared in May 2001 in a Walloon Government decision (34). This capital increase, totalling EUR 3 941 300, was carried out on 3 December 2002. SOWAER contributed the cash sum of EUR 3 808 660 in return for 49,23 % of the shares in BSCA.

Table 5

Change in the composition of the BSCA share ownership  (35)

(56)

From 2002 to 2008, SOWAER managed around 49 % of BSCA's capital. According to the Belgian authorities, this management was carried out on behalf of the Walloon Government.

(57)

In 2009 BSCA opened its capital to a private partner. The consortium Belgian Airports (hereinafter ‘Belgian Airports’), consisting of the Italian group SAVE and the Belgian company Holding Communal S.A. (36), purchased 27,65 % of the shares in the airport manager. Belgian Airports has a right of veto over certain important decisions, including commercial agreements with Ryanair.

(58)

Two types of measure are covered by this decision:

(59)

The measures granted to BSCA that are covered by the procedure are as follows:

(60)

Under the 2002 SOWAER/BSCA agreement, SOWAER:

(61)

The investment programme has been annually revised. These revisions have included both updates connected with additional costs not anticipated in April 2002 and decisions on new investments. In particular, on 3 April 2003 the Walloon Government officially noted a revision to the investment programme approved by SOWAER's board of directors. This revision (38) specifically provided for a new terminal with a larger capacity than that originally envisaged (3 million passengers instead of 2 million) and a larger car park than originally planned. It involved an additional investment of EUR 33 million.

(62)

The investment programme was annually revised until 2009 (39). The total cost of SOWAER's investment programme for Charleroi for 2002-2010, as revised during its last update by SOWAER's board of directors in 2009, is EUR 219 103 435 (40). Although this investment programme has been referred to as the ‘investment programme for 2002-2010’, the expenditure was planned until 2017.

Table 7

Total cost of SOWAER's investment programme for Charleroi, as revised by SOWAER's board of directors in 2009

(63)

In addition to the major repairs and maintenance, under the 2006 SOWAER/BSCA agreement, SOWAER undertook to provide additional services on behalf of BSCA, including consultancy services of all kinds (legal, environmental, financial, administrative, etc.), analysis and recommendations on noise pollution associated with the airport, and creation and update of a Geographical Information System (GIS).

(64)

In return for the items described in section 3.1.1.1, BSCA pays SOWAER a concession fee.

(65)

Under the 2002 SOWAER/BSCA agreement, BSCA was to pay the Region a concession fee consisting of:

(66)

However, under the Region/BSCA concession agreement, as amended on 29 March 2002, BSCA benefited from a subsidy from the Region allowing it to ‘perform the public service tasks forming part of the operation of Charleroi airport, namely the costs associated with using the airport land, buildings and infrastructure placed at its disposal by SOWAER’. This subsidy was equal to the fixed fee, so that only the capped variable fee was actually paid by BSCA. Moreover, under the 2002 SOWAER/BSCA agreement, BSCA was exempt from paying the fixed fee if the subsidy from the Region was not received (43).

(67)

The 2002 SOWAER/BSCA agreement was revised by the 2006 SOWAER/BSCA agreement, applicable from 1 January 2006. Under this agreement (44), BSCA pays SOWAER:

(68)

At the same time, the service concession agreement between the Region and BSCA of 10 March 2006 amends the terms of the Region's subsidy intended to cover the fixed part of the fees payable by BSCA to SOWAER (47) and includes the exemption clause referred to in recital 66 above (48).

(69)

Lastly, through Amendment No 1 of 27 May 2009 to the 2006 SOWAER/BSCA agreement, BSCA and SOWAER agreed that an additional annual amount of EUR […] per additional square metre (49) would be paid by BSCA to SOWAER from 2009 with a view to the acquisition of new land by SOWAER and the correlative extension of the scope of the service agreement. These additional sums amounted to EUR 1 206 in 2010, EUR 1 230 in 2011, EUR 1 255 in 2012 and EUR 1 280 in 2013 (50).

(70)

In the light of these elements, the amounts of the fees actually paid by BSCA to SOWAER are summarised in Table 8, taking into account the compensation paid by the Region to BSCA for transfer to SOWAER.

Table 8

Fees paid by BSCA to SOWAER  (51)

(71)

Amendment No 3 of 29 March 2002 to the Region/BSCA agreement amended Article 3.2 of this agreement and provided that the Walloon Region would reimburse the costs inherent in the fire and maintenance services:

(72)

Amendment No 3 of 29 March 2002 also amended Article 25 of the schedule of conditions and provided that the concession-holder would present the concession authority with the budget for the fire and maintenance services and that it would keep a separate operating account that could at any time be analysed and checked by the concession authority.

‘This operating account shall particularly include:

(73)

Amendment No 5 of 10 March 2006 to the Region/BSCA agreement amended Article 3.2.2 of this agreement as follows: ‘The following shall be annually included in the Walloon Region's budget: … the financial compensation granted by the Walloon Region to BSCA for the costs of providing the fire protection and ground traffic and airport site safety services, in accordance with the conditions laid down by Article 25 of the schedule of conditions annexed to this agreement’.

(74)

Amendment No 5 also amended Article 25 of the schedule of conditions. The amended Article 25 provides that: ‘the ground traffic and airport site safety services include routine maintenance of the airport site, technical maintenance services for buildings, runways, surrounding areas and vehicle fleet, minor surfacing work, routine maintenance and repair of the runway and accesses, operational maintenance and servicing of the general lighting and runway lighting, mowing services, rubber removal from the runway and its markings, snow clearance and any other services ensuring the safety of ground traffic, airport site and infrastructures, except for commercial areas of the airport zone’.

(75)

Under Article 25 of the schedule of conditions, the financial compensation was capped at EUR 5 774 000 for 2006. This cap was annually indexed until 31 December 2009. The amount of the financial compensation was to be revised no later than the second half of 2009.

(76)

Moreover, Article 25.7 of the schedule of conditions, introduced by Amendment No 5 of 10 March 2006, provides that the amount of the compensation may not exceed the actual costs incurred by BSCA and that any overcompensation of the costs will result in budgetary compensation through the budget entry for the following year.

(77)

Amendment No 6 of 15 January 2008 to the Region/BSCA agreement amended Article 25.1 of the schedule of conditions and added flight tracking and recording, provisional flight planning, marshalling and security to the services already being provided by BSCA (56).

(78)

Flight tracking and recording involve adding information on flights (number of passengers, aircraft registration, name of pilot, type of aircraft, nature of flight, origin, weight of aircraft, etc.) to the database of the Walloon administration. Flight planning involves communications, flight plans, slots, radio announcements and management of aircraft parking stands. Flight tracking and recording and flight planning are provided by the ‘navigation office’.

(79)

Marshalling consists of two tasks, namely marshalling on stand, which is carried out by the area coordinator when an aircraft arrives, and follow me marshalling, which involves guiding the aircraft with a vehicle. This service is used only for pilots who are unfamiliar with the airport (business aviation) or for Category D large aircraft. At Charleroi airport, the number of such operations is very limited (maximum of 100 per year).

(80)

The security services are defined by Article 25.2 of the schedule of conditions, as amended by Amendment No 6 of 15 January 2008, as: ‘screening, remote surveillance, security rounds and patrols, access control and issue of visitor badges’. BSCA delegates the security services to the public limited company BSCA Security. BSCA Security's tasks are defined by reference to the Decree of 23 June 1997 on the creation of airports in the Walloon region (57). BSCA Security is 51 % owned by the Region and 49 % by BSCA.

(81)

The terms of the financial compensation are set out as follows by Article 25.1 of the amended schedule of conditions:

(82)

Article 25.7 of the schedule of conditions has been amended and provides that the amount of the compensation may not exceed the actual costs incurred by BSCA, after deducting any fees collected from users to cover these services.

(83)

Table 9 summarises the subsidies paid by the Region to BSCA and BSCA Security, excluding the ‘public task’ subsidy compensating the annual fixed fee.

Table 9

Subsidies paid by the Region to BSCA or BSCA Security  (59) from 2001 to 2013 (excluding the ‘public task’ subsidy compensating the annual fixed fee)

(84)

In the context of its development projects, and particularly the negotiation of the 2001 agreements with Ryanair, a strategy note submitted to the BSCA's board of directors on 31 July 2001 indicated that ‘over the next three years, BSCA is expected to accumulate 164 million in losses. Its capital as at 31 December 2003 is therefore expected to fall to 23 million francs, i.e. less than 20 % of the current capital of 153 million [Belgian] francs. That is why a capital increase of EUR 5 million should be planned in order to avoid the company finding itself in a precarious situation.’

(85)

In fact, in its decision of 23 May 2001 on the SOWAER financial plan, the Region had already confirmed the principle of successive capital injections in the companies managing the Walloon airports (60). At that time the SOWAER financial plan suggested ‘a capital investment in BSCA in the amount of +/– BEF 60 million … followed by, spread over three years, three times 30 million (capital of 600 million with SOWAER holding 25 %, i.e. 150 million)’, i.e. a capital injection of EUR 3,718 million spread over three years.

(86)

In the end, the capital increase was implemented in one go on 3 December 2002. The subscribed capital was fully paid up: SOWAER therefore contributed the cash sum of EUR 3,809 million in return for 49,23 % of the shares in BSCA (61).

(87)

The term ‘2001 agreements’ shall mean all the following:

(88)

On 6 November 2001 the Region concluded an agreement with Ryanair. This agreement provided for a landing fee of EUR 1 per departing passenger for Ryanair, i.e. a reduction in the order of 50 % in the landing fee compared with the amount set and published by the Walloon Government, which involved a different calculation method (64) (at the time, the airport charges payable by airlines were determined using a fee structure decided and published by the Walloon Government and not BSCA). In addition, the Region undertook to compensate Ryanair for the losses that the airline might directly incur due to a possible change in the level of airport charges or opening hours during the years 2001 to 2016, except where these changes were dictated by the European Union, the Federal State, the International Civil Aviation Organisation or other requirements of international law.

(89)

Under the 2001 contract between BSCA and Ryanair, BSCA set a price for ground handling services for Ryanair of EUR 1 per passenger (65), i.e. 10 % of the price published in 2001 by BSCA for other users.

(90)

BSCA also undertook to contribute, both financially and by providing various services, to the costs associated with opening the Ryanair base at Charleroi (66). This contribution amounted to:

(91)

At the same time BSCA had to place at Ryanair's disposal, free of charge, 100 square metres of office space and 100 square metres of engineering store, and also guarantee a non-exclusive right of access to a training room. BSCA also had to use its good offices to ensure that Ryanair paid nothing or very little for the use of an aircraft maintenance hangar.

(92)

In addition, under the 2001 contract, Ryanair and BSCA formed a joint business promotion company called Société de Promotion de Brussels South Charleroi Airport (hereinafter ‘Promocy’). Promocy's company object was to develop Charleroi and its region through the commercial operation of the airport (67) (for example, Promocy financed part of the cost of Ryanair's promotional tickets). BSCA and Ryanair were to contribute in equal proportions to Promocy's operation (68). As a result, BSCA and Ryanair took equal shares in Promocy's capital, which totalled EUR 62 500. In addition, BSCA and Ryanair each paid a contribution of EUR 4 per departing passenger from Charleroi airport carried by Ryanair.

(93)

The fees per departing passenger applicable to Ryanair's operations under the 2001 contract and the contributions to the financing of Promocy are summarised in Table 10.

Table 10

Fees applicable to Ryanair under the 2001 contract  (69)

(94)

In return, Ryanair undertook vis-à-vis BSCA to base a number of aircraft at Charleroi (between two and four) and to operate at least three rotations per day and per aircraft departing Charleroi over the 15-year period (2001-2016) covered by the contract. The Irish company thus assured the airport manager of passenger traffic allowing it to anticipate income, either through airport charges or through non-aviation activities. Under the contract, if Ryanair ceased its operations at Charleroi in the first five years of the contract, the company would be required to reimburse to BSCA the contribution to the costs associated with opening Ryanair's base and the marketing contribution. Beyond the fifth year of the contract, the reimbursement would be calculated on a sliding scale (70).

(95)

According to Belgium, under its national law, the 2004 decision effectively rendered the 2001 agreements null and void. The Region therefore decided to adopt a ministerial order on 11 June 2004 that reduced, on a promotional basis, the landing fees for aircraft at Charleroi airport. This order entered into retroactive force on 13 February 2004. It stipulated that, on a promotional basis and for all airlines, the landing fee for an aircraft on a scheduled route was EUR 1 per passenger (i.e. the fee paid by Ryanair under the 2001 agreements). This general reduction was valid only for a period of 36 months from the entry into force of the ministerial order.

(96)

In a letter of 24 June 2004 (71), BSCA undertook towards Ryanair to continue applying the terms of the 2001 agreements until 31 March 2006 and guaranteed, in particular, that the company would pay a total cost for using the airport's services of EUR 5 per departing passenger, corresponding to the level that would have resulted from applying the 2001 agreements if they had continued to be applied in 2005 and 2006 (see Table 10). This provisional commercial framework was dependent on a limit of 2 million passengers per year not being exceeded in terms of all the airport's activities (72). However, despite this limit being slightly exceeded in 2004 (73), the conditions offered to Ryanair were not altered in 2004 and 2005.

(97)

By Decree of 3 February 2005, the Region delegated responsibility for setting airport charges to airport managers, including BSCA (74).

(98)

From 1 April 2006, the general landing fee payable to BSCA was increased to EUR 2 per departing passenger. This fee of EUR 2 was indexed. In addition, a system of annual discounts according to the number of departing passengers was applied in accordance with Table 11.

Table 11

Discounts on landing fees applicable to all airlines operating at Charleroi airport from 1 April 2006  (75)

(99)

On 9 December 2005 BSCA proposed to Ryanair, which accepted this, a new commercial agreement dated 9 December 2005 (hereinafter ‘2005 amendment’) for the period from 1 April 2006 to 31 December 2015.

(100)

Under the 2005 amendment:

Table 12

Fees applicable to Ryanair under the 2005 amendment  (76)

(101)

The Commission notes that the amounts per passenger paid by Ryanair in accordance with Table 12 are, except for […], identical to those stipulated by the 2001 contract (77) (see Table 10).

(102)

Lastly, the 2005 contract stipulated that, for a period of at least six months after the new terminal's entry into use, Ryanair would base four aircraft at Charleroi with a minimum of [25-32] daily rotations. If it failed to do so, Ryanair would pay a [10-25] % surcharge.

(103)

On 1 January 2009 BSCA introduced an additional fee per passenger, payable by all airlines operating at Charleroi airport, in relation to Passengers with Reduced Mobility (hereinafter ‘PRM fee’). Amendment No 7 to the Region/BSCA agreement authorises BSCA to set such a fee, which, according to Belgium, is in line with Union law (78). The PRM fee was set at 19,5 euro cents per departing passenger in 2009 (79).

(104)

An amendment to the contract between BSCA and Ryanair was concluded on 6 December 2010 (hereinafter ‘2010 amendment’), following an exchange of letters between BSCA and Ryanair. It provides for:

(105)

On 31 March 2010 BSCA sold its 50 % holding in Promocy (81) to Ryanair. BSCA sold the shares at their book value for a total amount of EUR 31 100 (i.e. EUR 100 per share). All the risks and obligations were transferred to the sole shareholder, namely Ryanair.

(106)

According to Belgium, at the time of this sale, Promocy's cash resources totalled EUR 261 073 (balance of the assets, having deducted the capital and statutory reserve) (82). BSCA therefore sold half of Promocy's capital for a price well below half the value of the cash resources.

(107)

BAC considers that all the measures granted to BSCA, as described in the 2012 extension decision, constitute State aid that cannot be declared compatible with the internal market.

(108)

According to BAC, none of the investments described in the 2012 extension decision was the object of a legally binding decision before 12 December 2000.

(109)

BAC considers that none of the infrastructure investments related to the exercise of public power, as they are all essential elements for the economic activities of the operator, including works to improve the operation of the airport such as landing systems or runway extensions, or to facilitate its economic development such as car parks, access roads or maintenance hangars.

(110)

BAC submits that none of the measures granted to BSCA as described in the 2012 extension decision is in line with the market economy investor principle (hereinafter ‘MEIP’). Based on industry practice, the return on investment that the Region/SOWAER receives is far below what a private investor would expect (83).

(111)

According to BAC, any investment aid granted to BSCA was not limited to the minimum necessary. This is because BSCA's payment for the concession and infrastructure remained constant between 2002 and 2010, apart from a step up in 2007, while passenger numbers and revenues increased over the same period. This resulted in an increase in the average net value of the infrastructure for BSCA, whereas average net payments decreased.

(112)

With reference to the services provided by SOWAER to BSCA and the services reimbursed by the Region to BSCA, BAC submits that, apart from public services such as police and customs, the Belgian State does not pay for any other activities at Brussels airport. BAC bears the cost of fire services, safety and maintenance itself. The flight tracking, recording and planning services provided by Belgocontrol are paid for directly by the airlines using Brussels airport. At Charleroi airport, airlines do not have to pay for these services. As such, the services reimbursed by the Region to BSCA do not relate to the exercise of public power.

(113)

BAC considers that these services do not constitute services of general economic interest as they are inherent in the operation of an airport and in the essential aspects of the economic activities of an airport and do not meet the Altmark criteria.

(114)

BAC considers that the payments made to reimburse BSCA for these services are not in accordance with the MEIP and constitute operating aid. As the payments made by BSCA to the Region for the use of the infrastructure are less than what a private investor would find acceptable, such an investor would not agree to additional payments being made for services without a corresponding return.

(115)

BAC points out that operating aid can be declared compatible only under exceptional circumstances and under strict conditions in disadvantaged regions. None of these conditions is met in the case of Charleroi airport and the aid cannot be regarded as compatible with the internal market.

(116)

BAC doubts whether the BSCA capital increase of 3 December 2002 complied with the MEIP. BAC further points out that, when assessing whether the capital increase would have been made by a private investor, other aid measures from which BSCA benefits should not be taken into account.

(117)

BAC submits that the aid measures have allowed Charleroi airport to strengthen its competitive position in relation to other airports and other means of transport such as high-speed rail, as they enable BSCA to apply low airport charges. This creates a significant disparity between the fees at Brussels airport and at Charleroi airport, particularly due to differences between the passenger fees and safety fees. The airport charges collected by BSCA are below market price in comparison with Brussels airport and other comparable airports in the Charleroi airport catchment area, such as Eindhoven, Lille and Cologne/Bonn airports.

(118)

According to BAC, this difference has resulted in a loss of 2,5 million passengers over the 2004-2011 period. The growth of Charleroi airport is not purely the result of additional traffic that Brussels airport has failed to generate, as proven by the fact that the average annual growth of a reference sample of European airports was 20,5 % between 2005 and 2011, whereas traffic at Brussels airport remained constant. In addition, the increase in destinations and frequencies at Charleroi airport has led to a corresponding loss of destinations or reduction in frequencies at Brussels airport.

(119)

BAC considers that both the investment aid and the operating aid received by BSCA are State aid that cannot be regarded as compatible with the internal market. In its opinion, the entry into force of the aviation guidelines further supports this conclusion.

(120)

BAC believes that the investment aid received by BSCA constitutes State aid that must be regarded as incompatible with the internal market because it is not proportional to objectives of common interest (Brussels airport was not congested) and is not limited to the minimum necessary.

(121)

According to BAC, the opening decision basically focused on the different treatment in the financing of these activities between Charleroi airport and other undertakings within the same Member State, and other airports such as Brussels airport. In that regard, BAC considers that the reimbursement by the Region to BSCA of the costs of these services constitutes State aid and discrimination between BAC and BSCA within the Belgian State, because BAC had to bear these costs alone.

(122)

Point 137 of the Guidelines on State aid to airports and airlines (84) (hereinafter ‘aviation guidelines’) provides that a number of conditions must be met in order for past operating aid to be regarded as compatible with the internal market. According to BAC, the operating aid received by BSCA does not meet these conditions.

(123)

Although Charleroi airport and Brussels airport are in competition in the same catchment area, the aid granted to BSCA has led, in BAC's opinion, to a duplication of airport capacity available in Belgium. The capacity of Charleroi airport has therefore been increased, even though the capacity of Brussels airport was not saturated. Accordingly, the total number of passengers using Charleroi and Brussels airports was 25,4 million in 2012, i.e. still less than the maximum capacity of Brussels airport alone.

(124)

BAC points out that the annual traffic at Charleroi airport exceeded 1 million passengers in 2001-2002 and 3 million passengers in 2008-2009. In view of the categories laid down by the aviation guidelines, BSCA should have been able to cover the majority, if not all, of the costs incurred at Charleroi airport during the period covered by the Commission investigation.

(125)

According to BAC, no operating aid should have been granted to BSCA since the aviation guidelines entered into force given that the annual passenger traffic has significantly exceeded the threshold of 3 million since 2009.

(126)

According to BAC, the amounts paid by BSCA for the following services could have been more appropriate: the amount for the airport infrastructure to be placed at its disposal and the amount for the services provided by SOWAER. This is also true of the reimbursement by the Region for certain services. In BAC's opinion, the State aid granted to BSCA was not limited to the minimum necessary and less distortive policy instruments were available to the Region and SOWAER.

(127)

Firstly, BAC points out that, contrary to the recommendation in point 131 of the aviation guidelines, the BSCA business plan did not study the effect of the development of its activities on traffic at Brussels airport.

(128)

Moreover, BAC draws the Commission's attention to the fact that the case in question cannot be compared with that of Groningen airport, in which the Commission regarded the operating aid as compatible with the internal market. In that case, the Commission recognised the need to relieve congestion at Schiphol airport and the fact that the airports were far enough apart. These two elements are not relevant in the present case.

(129)

This aid, which has enabled BSCA to artificially reduce the amount of its airport charges, has had the following negative effects on BAC: a significant fall in its use by passengers and a reduction in the frequency and even the loss of certain routes also served by Charleroi airport.

(130)

In terms of the fall in the volume of passengers at Brussels airport, BAC points out that its origin essentially lies in the absorption of its customers by BSCA. Therefore, according to BAC, although the majority of European airports saw passenger numbers increase between 2005 and 2013, these numbers stagnated at Brussels airport, whilst at the same time the volume of passengers at Charleroi airport rose.

(131)

BAC considers that the absorption of its customers also explains the loss of routes at Brussels airport and the reduced frequency of certain flights. In particular, it sees a correspondence between the flights lost from Brussels airport following the introduction of equivalent flights at Charleroi airport.

(132)

BAC recommends that the Commission states, in its future decision on this aid and in accordance with the thresholds laid down by the new aviation guidelines, (i) that no more operating aid or investment aid can be granted to BSCA from the entry into force of the aviation guidelines, and (ii) that the services at Charleroi airport are charged at a level sufficient to cover the marginal costs generated.

(133)

Brussels Airlines submits that fire, maintenance, safety and security services, and services associated with landing, take-off and infrastructure do not fall within its public service tasks but form part of the economic activity of managing an airport and should not be subsidised in a discriminatory manner. They cannot be regarded as services of general economic interest. Brussels Airlines submits that other industries in the Region finance their own fire services, as does Brussels airport. As the Region covers the safety and security costs at Charleroi airport, BSCA does not recover these costs from airlines, whereas no compensation has been given to Brussels airport for these costs. Passengers departing from Brussels airport are also subject to the Belgian Civil Aviation Authority fee, whereas passengers departing from Charleroi airport are not.

(134)

Brussels Airlines does not believe that the Region/SOWAER were behaving as a private operator in a market economy when giving support to BSCA. BSCA's profitability appears inflated due to subsidies, grants and compensatory measures, without which it would have a consistently negative profit margin. Brussels Airlines also questions whether the combined profitability of BSCA and SOWAER reflects market-driven practices. Brussels Airlines submits that the Region is not acting as a private investor given that such an investor would not invest in a structurally loss-making company.

(135)

Between 2004 and 2012, whilst the number of short-haul passengers using Charleroi airport tripled, the number using Brussels airport stagnated, given that this figure was the same in 2012 as in 2004. Brussels Airlines adds that the number of passengers that it carried fell from […] million to […] million. Given these findings and the fact that, when viewed as a whole, airport passenger numbers increased by 34 %, Brussels Airlines concludes that Charleroi airport benefited from all the growth. Brussels Airlines notes that from 2004 to 2007 other European airports experienced strong growth (over 20 %), but the growth at Charleroi airport is not explained solely by the increase in traffic, but also by the fact that a large number of passengers who previously used Brussels airport appeared to choose Charleroi airport instead. Brussels Airlines puts this loss at […] million passengers per year to the benefit of Charleroi airport, i.e. a loss of revenue estimated at over EUR […] million per year.

(136)

According to Brussels Airlines, the Commission does not have any legal basis for authorising operating aid that (i) was granted prior to the entry into force of the aviation guidelines and (ii) was incompatible with the internal market at the time when it was granted. Retroactive application of the aviation guidelines would be contrary to the general principles of law and, in particular, as in this case, where the conditions for authorising operating aid are comparatively less strict than in the past.

(137)

Firstly, the principles of legal certainty and non-retroactivity of European legislation rule out the possibility of a Union regulation taking effect before its publication, save in exceptional circumstances. In this particular case, Brussels Airlines submits that no exceptional circumstances exist.

(138)

Secondly, the Commission notice on the determination of the applicable rules for the assessment of unlawful State aid indicates that the Commission shall always assess the compatibility of unlawful State aid with the common market in accordance with the substantive criteria set out in any instrument in force at the time when the aid was granted. Therefore, in the opinion of Brussels Airlines, the Commission cannot depart from its own rules without contravening the general principles of law (equal treatment, legitimate expectations). Brussels Airlines submits that there is consequently no legitimate reason not to apply this notice in the present case.

(139)

Lastly, operating aid is by nature incompatible with the internal market. According to Brussels Airlines, this principle was clearly set out in the 2005 aviation guidelines.

(140)

Brussels Airlines considers that the Commission's approach in this case is all the more unacceptable because:

(141)

Consequently, Brussels Airlines submits that the Region and BSCA were perfectly well aware of the regulations in force on State aid. The prohibition of this aid does not therefore infringe the principle of legitimate expectations. On the contrary, it would be particularly unfair to retroactively justify their unlawful behaviour to the detriment of third parties, and especially to the detriment of those who have complied with the rules. The balance of interests at stake clearly means that this aid must be prohibited.

(142)

According to Brussels Airlines, by retroactively applying the aviation guidelines to past operating aid that is clearly incompatible, the Commission is implicitly acknowledging this incompatibility.

(143)

Brussels Airlines draws the Commission's attention to the fact that the positive effects expected of State aid policies, such as the development and accessibility of the regions, are uncertain.

(144)

The phenomenon of regional airports absorbing traffic from established airports has several other negative consequences according to Brussels Airlines:

(145)

In addition, Brussels Airlines points out that the operating aid was granted to Charleroi airport even though (i) this airport is located in the same catchment area as Brussels airport and (ii) the latter still had available capacity. Consequently, according to Brussels Airlines, a business plan based on cargo and passenger traffic forecasts should have identified the potential impact of this airport's development on traffic at Brussels airport. Brussels Airlines stresses that such an assessment was never made. In any event, if such an assessment had been made, it would have shown that an increase in traffic at Charleroi airport would be to the detriment of traffic at Brussels airport. Brussels Airlines states that, in its view, this was in fact the outcome: an increase in market share for Charleroi airport correlated to a drop in market share for Brussels airport and to a reduction in the frequency and/or to the withdrawal of several Brussels Airlines routes. Brussels Airlines therefore reasserts that the operating aid granted to BSCA did not contribute to the achievement of an objective of common interest. In fact, on the contrary, these measures resulted in the misuse and wastage of resources.

(146)

Brussels Airlines points out that, in order to benefit from operating aid, the aviation guidelines require the annual traffic of an airport not to exceed 3 million passengers. Brussels Airlines stresses that this threshold was exceeded in 2009. Moreover, Brussels Airlines notes that the operating aid granted to BSCA did not evolve between 2002 and 2008 although, in theory, BSCA should have been capable of covering an increasing proportion of its operating costs. In addition, from 2009 Charleroi airport should have been able to cover its operating costs and was not eligible to receive further operating aid.

(147)

According to Brussels Airlines, even if it were proven that Charleroi airport still needed the operating aid in 2008, it was in fact clear that the public financing of BSCA through State aid was an inappropriate policy given that Charleroi airport was not profitable. Moreover, Brussels Airlines points out that the measures in question were all inappropriate because the Region did not, to its knowledge, previously attempt to compare its aid measures with measures that were less likely to hinder competition.

(148)

Brussels Airlines notes that Charleroi airport is located in the same catchment area as Brussels airport and that the latter still had available capacity during the period in question. Moreover, Brussels Airlines points out that, while the number of passengers has increased at Charleroi airport, the number at Brussels airport has stagnated and even declined in recent years, despite the fact that air traffic has risen on the whole in all European countries.

(149)

BAR submits that terminal charges (fees), safety costs and certain security costs, and firefighting costs at Brussels airport are borne by its users, while at regional airports these are borne by the airport or regional authorities. In BAR's opinion this constitutes a substantial advantage for regional airports.

(150)

BAR briefly notes the nature of the aid in question: operating aid received by BSCA and paid by the Region, ‘in all likelihood transferred to Ryanair, at least in part’.

(151)

BAR complains that the Commission, by announcing that it wanted to apply the principles set out in the aviation guidelines ‘to all cases concerning operating aid … to airports even if the aid was granted before 4 April 2014’, infringed the principle of legal certainty and adopted an opposite approach to the one recommended in 2002 in its notice on the determination of the applicable rules for the assessment of unlawful State aid, given that, according to BAR, said notice states that aid must be assessed ‘in accordance with the texts in force at the time when the aid was granted’. Moreover, BAR considers that this change in Commission policy also infringes the principle that reasons must be given, because the Commission does not explain why developments in the aviation sector would have an impact on the assessment of past operating aid, or why only the latter type of aid is covered and not also past start-up or investment aid. In this respect, BAR points out that, if the Commission were to find that aid granted in the past was compatible with the internal market even though the opposite had been found previously, this would infringe not only the general principles referred to above, but also the principles of sound administration and legitimate expectations.

(152)

According to BAR, the aid measures in question, including those granted in the past to BSCA, are not compatible with the internal market, even when assessed in the light of the provisions of the aviation guidelines, for the following reasons:

(153)

According to BAR, if BSCA considers that aid for the provision of certain public services at the airport must be authorised, then these services must be compared to the same services provided at Brussels airport. However, BAR points out that certain services provided at Charleroi airport are regarded as public services whereas they are not at Brussels airport.

(154)

BAR stresses that the collection of airport charges must not lead to a situation of discrimination between users. In particular, BAR refers to the reductions enjoyed by Ryanair on the airport charges and not enjoyed by other airlines established at this airport, and to the fact that the airport charges at Brussels airport are much higher.

(155)

BAR notes that, since Brussels airport was privatised, its services are no longer expressly regarded as public services. These services constitute ‘regulated activities’ for which the charges paid by airport users or passengers are controlled according to a formula.

(156)

In addition, BAR draws the Commission's attention to the question of cross-subsidisation given that Ryanair operates at both Charleroi airport and Brussels airport. If such cross-subsidisation were found to exist, this would clearly represent a distortion of competition.

(157)

The AEA submits that subsidies to regional airports are acceptable only if they benefit all airport users without discrimination and do not create distortions between airports within the same catchment area. The AEA acknowledges that airports may adapt their infrastructure to meet the needs of specific users as long as principles of transparency, cost-relatedness and non-discrimination are observed.

(158)

Air France asks the Commission not to approve what, in its view, is operating aid distorting competition between airlines and between airports. Air France believes that the Commission should comprehensively compare the fees charged at Charleroi airport and those charged at airports in the same catchment area, in particular Brussels airport.

(159)

Air France also questions the retroactive application of the aviation guidelines to cases involving operating aid for airports, even where this aid was paid prior to the publication of said guidelines, for a number of reasons:

(160)

Air France claims that the new aviation guidelines will have the effect of favouring new operators to the detriment of incumbent operators. By allowing a new airline to pay only the incremental cost associated with its activity, they will discriminate against incumbent operators at the airport, who will be subject to higher fees.

(161)

Lastly, Air France notes that, although the condition of non-discriminatory accessibility to the infrastructure of an airport may seem easy to fulfil in theory, the situation is quite different in practice, with certain operating models being consciously disadvantaged.

(162)

BSCA calls on the Commission to close its investigation due to the absence of any State aid granted to itself or its trading partners.

(163)

As a preliminary remark, BSCA considers that the time that has passed since the start of the case may have created legitimate expectations for BSCA and its users. BSCA notes that the Commission was previously informed, during its initial investigation that led to the 2004 decision, about the mechanism introduced by the Region and BSCA in 1991 under the concession agreement and its subsequent amendments. BSCA therefore objects to the extension of the scope of the measures examined by the Commission.

(164)

BSCA draws the Commission's attention to the importance of regional airports in terms of economic and social development, regional accessibility and tourism. It considers that the liberalisation of air transport has created a new category of passenger taking city trips and short-haul flights for family reasons, together with new low-cost business models meeting this new demand. BSCA therefore takes the view that competition between Charleroi airport and Brussels airport is only very limited. In this respect, BSCA stresses the limited impact on Brussels airport of the launch in the past of a route between Dublin and Charleroi airport (85). BSCA explains its success by the dynamic policy implemented by the Walloon authorities in recent years and also by the flexibility of its infrastructure and the drive of the airport teams.

(165)

In terms of services of general interest, BSCA notes that since 1991 it has received compensation for services of general interest, as defined by Article 25 of the schedule of conditions concluded with the Walloon public authorities. BSCA disputes the analysis made by the Commission in its 2012 extension decision, refuting the non-economic nature of these activities. The airport manager considers that this represents, firstly, a reversal of position by the Commission in relation to its established decision-making practice and, secondly, a lack of understanding of the international and European regulations on transport safety and security. BSCA reminds the Commission that these services of general interest, which were previously provided by the administration, were transferred with the intention of ensuring sound management and flexibility. The compensation paid by the Walloon authorities is therefore capped and cost-based and does not create any advantage for BSCA. An audit system has been established in order to prevent any overcompensation.

(166)

With regard to the capital increase, BSCA notes that the Commission did not question this during the initial investigation and takes the view that this complies with the market economy private investor principle. The airport manager adds that this increase was decided on the basis of a credible and realistic business plan and that it was justified by its needs due to the considerable development of its activities. In this respect, BSCA stresses that the Commission noted even in 2004 that the expected results for 2003 were higher than those taken into account in the 2001 business plan. Likewise, the number of passengers passing through Charleroi airport and the operating income in 2011 exceeded the estimates in this same business plan. Lastly, in BSCA's opinion, the development of its activities in partnership with Ryanair enabled SOWAER to profit from the good results achieved by BSCA, given that it made a substantial capital gain when it sold some of its shares in 2009.

(167)

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

(168)

SAS points out that the deregulation of European airspace has led to increased competition among the traditional airlines and has also allowed the creation of new airlines, which have developed new business concepts. It is of fundamental importance that this competition complies with a regulatory framework applied transparently and without discrimination.

(169)

KLM explains that low-cost airlines and traditional airlines offer different products and that each one has its own ‘raison d'être’ at both commercial and operational level. Low-cost airlines generally avoid large airports, where the logistics can be complicated and usage costs high. Instead they choose regional platforms allowing 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 airport go well beyond what is permitted under Article 107(1) TFEU, and the consideration offered by Ryanair, consisting of basing a number of aircraft at Charleroi airport, changes nothing in this state of affairs.

(170)

Air France considers that the reduction in the fees charged to Ryanair and its absorption by the Region and BSCA create a disadvantage for Ryanair's competitors who provide links on the intra-Community market. The reduction in the landing fee allows Ryanair to reduce its operating costs and in fact makes it more competitive than its competitors, not only for the flights that it operates into or out of Charleroi airport but also throughout the Ryanair network. The compensation commitment made by the Region is also regarded as an advantage guaranteeing stability of operating conditions to Ryanair, given that ‘practical experience of using any airport platform demonstrates that the commercial and regulatory environment is never rigid. Airport charges can therefore easily rise if the airport manager is forced to finance specific measures, possibly with the aim of accommodating other carriers wishing to establish themselves at Charleroi airport. In addition, the development of environmental measures can alter the conditions of operation of an airport’.

(171)

According to Austrian Airlines, the arrival of low-cost airlines has resulted in a subsidies race between airports and regions wanting to be served by these carriers. These developments have called into question the principle of infrastructure availability payments, even though this is one of the basic rules in the civil aviation world. The aid granted is not degressive, it is independent of the success achieved by Ryanair in the links that it serves and it benefits one airline only, which leads to discrimination. Austrian Airlines concludes that ‘cooperation’ such as that observed between Ryanair and the Region causes significant distortions of competition between airlines and is largely incompatible with the smooth operation of the internal market for aviation.

(172)

The Association is concerned that the financial aid granted to Ryanair will lead to ‘unbridled development of the airport’ within an urban site, and that in these terms ‘as both citizens and taxpayers, we are concerned about the questionable State aid granted to a private company, as this involves improper use of the Walloon Region's budgetary resources’.

(173)

Interested Party A states that it is ‘very concerned’ about the subsidies granted by the public authorities, which will affect the conditions of competition between the various modes of transport. ‘Ryanair is therefore benefiting in particular from public subsidies for the Charleroi-London link, while Eurostar, operated jointly by SNCB, British railway operators and SNCF, is not benefiting from them. Both means of transport are, however, in direct competition for the Brussels-London link. It is up to the railway operators alone to advertise the link, purchase the rolling stock and engines, pay infrastructure and tunnel tolls, etc. Equal treatment between competitors is therefore upset’.

(174)

Interested Party B points out that the advantages granted to Ryanair reduce its cost structure and enable it to charge lower fares. These practices affect the conditions of competition, whether these companies operate out of Charleroi airport or Brussels airport and whatever the route served. Competition between low-cost airlines is not merely competition that must be analysed on a route-by-route basis. For many travellers, the destinations of Venice or Barcelona are wholly exchangeable. Competition therefore applies to every route.

(175)

This company explains that the direct costs out of Brussels airport are EUR 32,14 per passenger compared with EUR 5 for Ryanair operating out of Charleroi airport (86).

(176)

Even though the ground handling services are more limited for Ryanair than for other airlines, this interested party points out that a considerable number of ground handling services are still necessary for all airlines. The fact that the ground handling market is open to competition at Brussels airport means that these fees should not normally be much higher at Brussels airport than at Charleroi airport. Ground handling fees are, generally speaking, higher at small airports than at large airports, given that companies cannot usually reach the critical size needed to make economies of scale. This interested party estimates that Ryanair saved EUR 17 million in 2003 on ground handling fees and landing fees. In its opinion, it also appears that BSCA has not taken account of Council Directive 96/67/EC (87): the airport should reach two million passengers a year quite quickly and BSCA will need to apply the Directive at this threshold and open the ground handling market to other operators.

(177)

BSCA has allegedly acted not as a private investor in a market economy but for political and social reasons, on the instructions of the 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 the investment could be undermined if Ryanair withdraws (88).

(178)

BSCA allegedly receives contributions from the Region, such as 65 % of the revenue from the airport charges and the placing at its disposal of the infrastructure free of charge, even though the Region pays a contribution to SOWAER. In principle, each payment from the Region should be limited to the compensation for the costs associated with the public service obligations imposed on BSCA, and the situation is not very clear in this regard.

(179)

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

(180)

The fact that other airport managers grant advantages to Ryanair does not prove that Charleroi airport has acted as a private investor in a market economy. The company refers to the Steinike & Weiling judgment (89).

(181)

According to BAC, BSCA has not behaved like a private investor given that the advantages granted differ in their extent from those granted by other airports (90). The fact that Ryanair receives advantages from other airports is not at all relevant, as those could also constitute State aid.

(182)

The interested party draws the Commission's attention to several factors that must be taken into account when analysing the potential profitability of BSCA and that appear to exclude medium-term profits:

(183)

BSCA benefited from a recapitalisation by the Region, totalling EUR 4 million, in December 2002.

(184)

Interested Party C believes that the advantages granted by the Region to BSCA and Ryanair harm competition and that Charleroi airport and Brussels airport operate in the same market.

(185)

Interested Party C criticises the relationship between the Region, BSCA and Ryanair and the resulting differences in charges levied on airlines at Brussels airport and Charleroi airport. Notably, (i) maintenance costs are not passed on to users but are compensated by the Region, (ii) landing fees favour Ryanair, […].

(186)

Interested Party C further submits that Ryanair does not pay for services that are part of normal airport management, such as fire services, expansion and construction of infrastructure and passenger fees.

(187)

According to Brussels Airlines, Ryanair has benefited from a selective advantage compared to other airlines.

(188)

The aid granted by the Region and SOWAER to BSCA reduces the latter's operating costs, enabling it to charge lower fees to airlines including Ryanair, in turn reducing the latter's operating costs. In particular, given that the Region covers the safety and security costs of Charleroi airport, BSCA does not recover these from the airlines, whereas Brussels airport has not benefited from any compensation in this respect. Brussels Airlines believes that the Region's comprehensive financial support programme for BSCA must be taken into account when assessing the commercial relationship between BSCA and Ryanair.

(189)

Ryanair has also benefited from direct financial measures such as start-up aid and contributions to marketing activities. Brussels Airlines questions whether this aid complies with the conditions laid down by the 2005 guidelines as also the principles of proportionality and transparency.

(190)

Brussels Airlines considers that the cumulative effect of all the measures is to make it impossible to believe that BSCA is acting as a private investor, and it invites the Commission not to examine the measures separately, but as a whole.

(191)

According to Brussels Airlines, the fees charged by BSCA to Ryanair during the period in question were much lower than those paid by other airlines at comparable airports.

(192)

Brussels Airlines uses as its benchmark the airport charges of a number of other airports located in the catchment area of Charleroi airport (Eindhoven, Lille and Cologne) or that are of a similar size (Marseille, Porto and Bologna), and concludes that the airport charges applied at Charleroi airport are not in line with those that a private investor in a market economy would apply.

(193)

Brussels Airlines also considers that Brussels airport is a good benchmark for assessing the discriminatory nature of the airport charges: both airports are located in the same catchment area and face the same economic environment. In addition, Brussels airport can pass on its fixed costs to more airlines, which invalidates the argument that the fees applied by Brussels airport are necessarily higher due to its size. A comparison reveals a major difference between the level of airport charges at Brussels airport and at Charleroi airport, even when taking into account the additional services provided at Brussels airport due to differences in airline business models.

(194)

According to Brussels Airlines, BSCA has not proven that, when the agreements in question (from 2001 and the subsequent amendments) were concluded, BSCA was in a position to cover the costs arising from those agreements, for their entire term, while making a reasonable profit in the medium term. BSCA has not therefore acted as a private investor in a market economy.

(195)

Brussels Airlines submits that BSCA's profit margin is much lower than that of other EU airports. In 2006 and 2007, the average profit margin across a range of EU airports was between 7 % and 9 %. BSCA/SOWAER's profit margins, adjusted to take account of the subsidies, were clearly negative and therefore not in line with these margins, suggesting non-market-driven practices.

(196)

Brussels Airlines questions whether economies of scale can justify the 50 % reduction granted to Ryanair on these fees. Passenger fees, passenger with reduced mobility fees and ground handling fees appear to be non-existent or extremely low, although these are costs normally borne by airlines.

(197)

According to Brussels Airlines, the investment and operating costs that have not been borne by BSCA must be taken into account when examining the aid granted to Ryanair.

(198)

Brussels Airlines doubts whether BSCA has accurately projected the airport's estimated revenues and costs over the entire term of the agreements with Ryanair.

(199)

In return for the reduced fees, Ryanair could not guarantee BSCA a level of traffic generating income equivalent and proportional to the costs of the advantages granted to Ryanair.

(200)

As a result, according to Brussels Airlines, the measures in question do not comply with the private investor in a market economy principle, are state aid and give Ryanair a selective advantage.

(201)

Brussels Airlines submits that the aid measures have an adverse impact on airlines operating from Brussels airport. The aid measures enable BSCA to charge lower fees and thereby reduce the costs of airlines operating from Charleroi airport. These airlines are able to undercut the prices of competitors operating from other airports. As a result, the European point-to-point market out of Belgium has shifted towards Charleroi airport. Only Charleroi has seen its traffic increase in this segment. The number of passengers using Brussels airport has stagnated in recent years, whereas elsewhere in Europe traffic has increased. In other words, according to Brussels Airlines, the increase in local traffic has been entirely to the benefit of Charleroi airport.

(202)

Brussels Airlines reiterates that it is based at Brussels airport and that the latter's catchment area almost entirely overlaps with that of Charleroi airport. As a result, Brussels Airlines is in direct competition with Ryanair: they operate in the same catchment area and attract the same customers. Within the EU market, Brussels Airlines and Ryanair offer the same type of service (point-to-point service) and serve the same destinations. Sixty of the destinations served by Brussels Airlines are also served by Ryanair. Out of 46 destinations, Brussels Airlines is in competition with Ryanair for 16 destinations from the same airport and for 12 destinations from an airport in the same catchment area.

(203)

The result of this situation is that Brussels Airlines has had to withdraw certain routes that are also served by Ryanair (7 since 2007) and reduce the frequency of flights on other routes (for 14 destinations). Between 2004 and 2012 Brussels Airlines' market share fell from […] % to […] %. Its market share is continuing to fall to the benefit of Charleroi airport, where the market share has risen from […] % to […] %.

(204)

According to Brussels Airlines, most of the aid granted to Ryanair does not contribute to an objective of common interest. Furthermore, the aid has been granted in such a way that it is distorting competition, which is harming common interests. Brussels Airlines therefore considers that the aid granted to Ryanair is incompatible with the internal market.

(205)

According to BSCA, the commercial framework agreed with Ryanair in no way involves aid being granted to Ryanair. The results of this partnership clearly show the profitability of the business model. Moreover, BSCA argues that it manages its activities entirely independently, without any direct or indirect intervention by the Walloon Government, particularly in the negotiation of commercial contracts with airlines.

(206)

Ryanair submits that the agreements concluded between Ryanair, BSCA and the Region do not contain any element of State aid for three reasons: the private investor in a market economy principle applies, there is no selectivity and the agreements do not distort competition.

(207)

According to TBI, the agreements concluded at Charleroi airport are similar to the arrangements entered into by TBI with Ryanair and other low-cost airlines, particularly at Stockholm Skavsta airport. Granting discounts on landing fees and ground handling fees is a common business practice to attract airlines that can bring in a significant volume of passengers. The contributions made in terms of paying hotel, staff training or marketing costs must be compared against the investment made and the risk taken by the carrier. The ‘marketing’ contributions benefit the airport as its image is improved and it sees an increase in the number of passengers. TBI offers this type of contribution, especially when an operator is establishing a new service or increasing the frequency of certain flights on a given route.

(208)

According to HRL Morrison, a private investor might adopt the approach taken by Charleroi airport. It would base its offer on certain determining factors: the volume of passengers that an airline could bring to the airport; the airline's willingness to commit to the long term through contracts; the specific needs of the airline; the schedule of aircraft movements and its dovetailing with airport activities (existing traffic); and the needs in terms of terminal and ground handling resources. It would calculate the expected benefits of the agreement with Ryanair as a whole (and not its component parts taken separately). The benefits of such a transaction should be envisaged over a period of around 20 years, with activities expected to take off after three to five years. With regard to a 15-year agreement, Morrison's shareholders would regard this as commercially acceptable if a return on the investment could be made within around five years from the agreement being signed.

(209)

According to Belgium, the investment programme was decided by the Walloon Government in July 2000 and confirmed in November 2000, i.e. before the Aéroports de Paris judgment (91) (hereinafter ‘ADP judgment’). This judgment marks the date when the TFEU rules on State aid became applicable to the financing of airports.

(210)

The framework agreement of 20 July 2000, setting out the conditions for the development of regional airports and associated environmental measures, was the agreement reached within the Walloon Government through which the Region undertook to allocate part of its budget to the development of its own infrastructure at Charleroi airport. The decision of 8 November 2000 implemented the decision of 20 July 2000 by converting said framework agreement into a multiannual investment programme. Both decisions must therefore be considered as a whole, as the second supplements and clarifies the first, particularly with regard to the concrete schedule for implementing the financial measures decided.

(211)

No third-party beneficiary was identified in these decisions, as the Region's investments were intended for itself. According to Belgium, the wording of these two decisions was therefore less formalistic than in a decision granting aid to a third party. In the case of aid granted to a third party, the Region would have adopted the investment principle and amounts in the same way, without any additional procedure, except for sending a letter notifying the government decision, which was pointless in this case.

(212)

However, according to Belgium, this lack of formalism did not mean that these decisions were not binding. Although the Region was the beneficiary of the decisions made, the adoption of a government decision creates a commitment on the part of the government. The fact that this commitment was unilateral was not peculiar to this case. In fact, any financial measure, regardless of its beneficiaries, is always decided through a unilateral administrative act of the granting authority, which controls the application, amendment or withdrawal of said act.

(213)

No formal letter granting aid was therefore sent to a beneficiary undertaking, even though the Fleuren Compost judgment (92) states that this is the act that must be regarded as the legally binding act through which the competent authority undertakes to grant the aid and that therefore marks the date of granting of the aid. In the absence of such a document, the only possible date is the date of the government decisions granting the investment (principle, amounts and schedule).

(214)

Belgium indicates that, according to the Commission, the decisions of 20 July and 8 November 2000 were substantially amended at a later date and were not therefore irrevocable, firm and definitive.

(215)

According to Belgium, a distinction must be made in this respect between decisions providing for new investments in new projects and decisions implementing investments decided previously, if necessary through certain adjustments.

(216)

In this case, Belgium cites, as evidence that the decisions of July and November 2000 were binding and irrevocable, the fact that no new financing decision was subsequently adopted. The only decisions made subsequently by Wallonia, and then by SOWAER, were for the purpose of applying and implementing the financing measures in accordance with the government decisions of July and November 2000.

(217)

The subsequent adjustments to the investment amounts were not therefore new investment decisions, but the necessary adaptation, as a result of general developments in the situation, of what had already been agreed in July and November 2000. Some of the amounts in the framework agreement and financing programme had to be subsequently reassessed, particularly due to the increased cost of raw materials, the refinement of the necessary investments as a result of technical studies, technical constraints associated with the granting of permissions and the result of organising public procurement. According to Belgium, such budgetary or technical adjustments cannot be regarded as substantial amendments.

(218)

Also, aware of the limitations when estimating such investments, the government had stipulated from the start that certain items (including the construction of a new terminal) might be reassessed ‘according to the airport's actual activity’ or insofar as they were ‘dependent on the airport's actual needs’. As the airport's actual activity and needs inevitably evolved over the life of a framework agreement and investment programme covering several years, in Belgium's opinion it was logical for the government to have calculated certain items subject to the constant change in these factors.

(219)

According to Belgium, the government's desire to calculate and set its commitments from the start, albeit subject to subsequent refinements, was evident on the adoption of the framework agreement of 20 July 2000 and on the adoption of the investment programme of 8 November 2000. The adjustments subsequently made to these decisions cannot call into question the binding nature of the commitment made on these dates by the government.

(220)

In the alternative, if certain adjustments were to be regarded as so substantial that in reality they appeared to be new investments, and not the subsequent adaptation of an investment already granted, which is not the case, only this investment, taken in isolation, could be regarded as subsequent to the decisions of 20 July and 8 November 2000.

(221)

According to Belgium, in order for the reassessment of this investment to result in its requalification as a new investment, the amendment made must apply not only to the extent, but also to the nature of the investment set. This amendment must be such as to allow it to be asserted that the project envisaged at the time of the July and November 2000 decisions could not in any way relate to the project specifically financed and implemented subsequently, regardless of legitimate developments in the general situation. Therefore, for example, an ‘additional’ investment, not justified by a subsequent change in the airport's actual needs, but decided for the purpose of providing additional infrastructures over and above those initially specified in July and November 2000, could be regarded, in relation to this addition only, as a new investment decided outside the 2000 framework agreement and investment programme.

(222)

In this case, although it appeared that certain items had been underestimated or were unfeasible within the time-limit allowed, all the investments made had in principle been stipulated by the decisions of July and November 2000. Although the amounts were subsequently amended, this was due to new factors that could not have been anticipated or accurately determined at the time of the decisions.

(223)

According to Belgium, the assessment of the decisions of 20 July 2000 and 8 November 2000 confirms the legally binding nature of the commitments contained in those decisions.

(224)

The framework agreement and investment programme were genuine decisions, which imposed a binding commitment on the government. Furthermore, the fact that this act was referred to as a ‘framework agreement’ did not prevent the Commission, in an earlier decision, from finding that this was a legally binding act and from using the date of signature of said act as the date when aid was granted (93).

(225)

According to Belgium, the framework agreement of July 2000 went well beyond an agreement in principle, as it specifically covered the charging of the investments. It determined the appropriation items and also assessed the investment costs so that the expenditure could be immediately charged to the budget.

(226)

Moreover, the government was careful to stipulate that an ‘ad hoc financial mechanism’ should be put in place. This confirms that the government was already planning to create a new public body responsible for airport infrastructure.

(227)

Confirming the implementation by SOWAER of the government decisions of July and November 2000, the SOWAER financial plan approved by the government on 23 May 2001 referred to the framework agreement of 20 July 2000, which removes any doubt about the commitments made by Wallonia.

(228)

According to Belgium, this method of working is not in fact material when compared to the principle of approving the investment programme, which is the fundamental issue in this case. The formation of SOWAER was simply a way of implementing the decisions of July and November 2000, as it is purely Wallonia's financial vehicle. Although the specific financial mechanism for implementing the investments decided by the Region may have been determined after the decisions of July and November 2000, the commitments of the Walloon authorities were real and binding on the financial mechanism ultimately chosen.

(229)

On 8 November 2000 the Walloon Government adopted a decision implementing its decision of 20 July 2000. Through this decision, it approved the ‘multiannual physical investment programme 2000-2004 for Brussels South Charleroi Airport and associated financial plan’. Each investment described in the note approved by the government was assessed and its cost precisely determined.

(230)

In conclusion, according to Belgium, the investment programme 2001-2010 for Brussels South Charleroi airport was clearly decided prior to 12 December 2000, which was the date of the ADP judgment.

(231)

In any event, according to Belgium, the infrastructure financing for Charleroi airport complies with the private investor principle.

(232)

In order to prove this, Belgium has produced a table of cash flows for the investments in the new terminal and car park between 2002 and 2036 (94). Out of these investment amounts, it has taken into account only 89,7 % of the investments for the car park and 28,1 % for the new terminal, on the basis that the other investments are for non-economic activities. Furthermore, Belgium has assumed that the public financing of services of general economic interest, and by extension the infrastructures used for these activities, are authorised by the European regulations on State aid. Belgium therefore concludes that, aside from the compensation granted by the Region to BSCA to support some of the fees associated with the infrastructures used for the services of general interest, the rate of return on the financing of these infrastructures is close to 2 %. As a result, the infrastructure has not been placed at BSCA's disposal for a price less than its value.

(233)

Belgium points out that a considerable part of the major repairs and maintenance cost relates to infrastructures used for non-economic activities.

(234)

In 1991 the principle of accounting separation in order to identify the costs covered by the compensation was laid down by Article 25 of the schedule of conditions.

(235)

According to Belgium, fire protection services are non-economic activities as they fall within the public policy remit.

(236)

According to Belgium, ground traffic safety services also fall within the public policy remit.

(237)

Belgium states that, when the Commission made its decision on 23 July 2008 on Leipzig/Halle airport, it itself recognised that operational safety services were non-economic activities (95). It is clear from the list of operational safety infrastructures provided by the German authorities and reproduced in the table in recital 58 of that decision that these infrastructures are essential for ground traffic safety, i.e.: uninterruptible power supply for aprons, transformer stations, runway lighting, apron lighting, etc. For the record, this position taken by the Commission was confirmed by the General Court in the Freistaat Sachsen judgment (96) following an action for annulment brought against the aforementioned Commission decision.

(238)

It is clear from the description given of the ground traffic and airport site safety services in Amendment No 5 to the concession agreement of 9 July 1991 and the schedule of conditions concluded on 10 March 2006 that these costs, i.e. routine maintenance of the airport site for the purposes of safety, technical maintenance services for buildings, runways, surrounding areas and vehicle fleet, minor surfacing work, routine maintenance and repair of the runway and accesses, operational maintenance and servicing of the general lighting and runway lighting, mowing services, rubber removal from the runway and its markings, and snow clearance, do relate to the operational safety services accepted by the Commission, in its decision on Leipzig/Halle airport, as non-economic activities.

(239)

According to Belgium, security services fall within the public policy remit as they are activities traditionally carried out by the State. Belgium cites European regulations and the Commission decision on Leipzig/Halle airport (97) in support of its reasoning.

(240)

According to Belgium, flight tracking and recording, provisional flight planning and marshalling services are essential parts of civil aviation safety and therefore fall within the public policy remit, given that they are fundamental components in the safety of an airport.

(241)

It is clear from the above that, in Belgium's view, all the services of general interest defined by Article 25 of the schedule of conditions and covered by compensation from the Region to BSCA are non-economic activities excluded from the scope of Article 107(1) TFEU, in accordance with the Commission's decision-making practice and European case-law.

(242)

Belgium stresses that these services were previously provided by the Walloon administration, i.e. before 1991 for the fire and maintenance services and before 2008 for the security, flight tracking and recording, provisional flight planning and marshalling services.

(243)

By providing these services, BSCA has simply taken over the obligations imposed on the public authorities under international obligations resulting from the ICAO standards or in accordance with European regulations.

(244)

According to Belgium, if the Commission were to consider that some of the aforementioned activities are economic activities, it should note that these are financed through compensation that does not constitute aid, based on the criteria set out by the Altmark judgment (98). In fact, this compensation complies with the criteria established by the Altmark judgment, which therefore allows the existence of State aid to be ruled out.

(245)

According to Belgium, the activities in question, which involve the safety and security of civil aviation and airport activities, pursue an aim of general interest. Article 25 of the schedule of conditions annexed to the concession agreement of 9 July 1991 defines the obligations incumbent on BSCA in the context of the safety and security tasks. This provision stipulates that these services are to be ‘provided by the concession-holder in the general interest’. It is clear from this provision that Wallonia has entrusted the concession-holder with the provision of these services and that it has given the latter a mandate in this respect.

(246)

The compensation parameters are defined in an objective and transparent manner by Article 25 of the schedule of conditions, which provides for a separate operating account to be kept by BSCA for the activities covered by this article.

(247)

For those costs that are not wholly attributable to a service of general interest, a proportional allocation is made based on the percentage of staff assigned to the service of general interest, on the percentage of the surface area assigned to such services or on other objective criteria that must be authorised by the Region.

(248)

Since 2006 for those items connected with the fire and maintenance services and since 2010 for the security, navigation office and marshalling services, the compensation has been capped at an amount specified in Article 25 of the schedule of conditions, subject to indexation. In any event, the compensation amount cannot exceed the costs actually incurred by BSCA for these services.

(249)

As a result, compensation parameters have been defined in advance and in detail, which therefore satisfies the second criterion of the Altmark judgment.

(250)

According to Belgium, various mechanisms have been used to avoid overcompensation:

(251)

In addition, Article 25 provides that the amount received may never exceed the costs actually incurred, and that, if overcompensation occurs, a budgetary compensation mechanism will be automatically applied to the budget for the following year. For the record, a budget is prepared in advance by BSCA and checked by the Walloon administration. The latter also carries out on-the-spot checks every year to ensure that BSCA is complying with the provisions of Article 25 of the schedule of conditions.

(252)

According to Belgium, no comparison between BSCA and a similar well-run and adequately equipped undertaking is necessary because BSCA is quite clearly a well-run and adequately equipped undertaking.

(253)

BSCA complies with the applicable international and accounting standards and all the ratios indicated in the Communication from the Commission of 20 December 2011 on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest prove that this company is efficiently managed. This fact also enabled BSCA to attract private investors in 2009 during its partial privatisation.

(254)

The fact that BSCA is a well-run and adequately equipped undertaking can mainly be seen from the constant progress made in its financial results since 2000. Whereas in 2000 BSCA recorded a turnover of EUR 7 578 000, in 2010 this figure had reached EUR 81 387 000. It is also evident that, if BSCA were not a well-run and adequately equipped undertaking, Charleroi airport would not have seen the remarkable progress made in its passenger volume between 1997 and 2011 (from 211 065 passengers to 5 901 007 passengers).

(255)

Lastly, it is clear from the financing mechanism put in place that, by definition, the compensation paid to BSCA is less than the market price of all the services entrusted to it, insofar as this compensation was capped in 2006 for the fire and ground traffic and airport site safety services and in 2010 for the security services.

(256)

According to Belgium, the Commission never expressed any reservations about BSCA's capital increase until the 2012 extension decision. On the contrary, it explicitly recognised that this operation was carried out in accordance with the private investor principle (see recital 132 of the 2004 decision).

(257)

The most recent figures prove that BSCA has generated profits allowing EUR 6 505 595 to be distributed among its public and private shareholders in 2010 alone. The results for the last five years are given in the following table.

(258)

The capital increase carried out by SOWAER presents an internal rate of return (IRR) of 26,09 %, which is similar to the estimate made by Deloitte & Touche in 2003, thus confirming the credibility of this analysis. Given the above, it must be accepted that this investment would undoubtedly have been made by a private investor.

(259)

The Commission's assessment of the capital increase, according to which ‘these doubts are reinforced by the finding that BSCA has not borne the cost of the infrastructures placed at its disposal or the various services provided by SOWAER’, is also marred by an error of law. The Commission should individually apply, to each form of intervention, the necessary criteria for assessing their respective regularity and determining, for each intervention, whether aid exists and, if so, whether or not this aid is compatible with the internal market. The philosophy of a capital increase in BSCA in fact differs from the objective of providing airport infrastructure, particularly given the context at the time. The Commission cannot therefore group both types of intervention together in order to determine the overall profitability.

(260)

In reply to BAC's comments on the fees paid by BSCA for the use of the infrastructure, Belgium indicates that some of the fees mentioned by BAC are not relevant to Charleroi, in particular:

(261)

Furthermore, according to Belgium and contrary to BAC's assertion, a fee for the centralised infrastructure is charged by BSCA, as infrastructure manager, to the ground handling companies, including BSCA as handler. This fee is included in the contract between BSCA and Ryanair.

(262)

The fee imposed by the federal administration of EUR 0,18 per departing passenger is the responsibility of the Federal State and not BSCA.

(263)

The PRM fee is based on the actual costs incurred by BSCA. In this respect, according to Belgium, the size of the infrastructure at Charleroi airport simply needs to be compared with that at Brussels airport to realise that the management of this service provided to passengers with reduced mobility involves lower costs at Charleroi than at Brussels, if only in terms of the distance to be covered in order to reach the aircraft or leave the terminal.

(264)

In addition, Belgium confirms that it is correct that BSCA does not currently impose any security fee. This task falling within the public policy remit is the subject of compensation from Wallonia, but this compensation has been capped under the concession agreement between BSCA and Wallonia and any costs above this cap are payable by BSCA. However, BSCA is under no obligation to pass on these costs to passengers through a fee.

(265)

With regard to the aircraft parking fees, according to Belgium, the figure given in the table provided by BAC is incorrect as it indicates that there are no parking fees at Charleroi airport, which is wrong because the charges published on the BSCA website clearly indicate the existence of such fees set at EUR 1,98 per day (24 hours) and per tonne.

(266)

Several of the third parties having submitted comments, in particular Brussels Airlines and BAC, have remarked on the financing of the services of general interest provided by BSCA to Wallonia. They question whether some of the services provided by BSCA, namely safety, security, fire protection, and ground traffic and airport site safety services, can be regarded as activities excluded from the scope of Article 107(1) TFEU.

(267)

Brussels Airlines and BAC assert that, at Brussels airport, the cost of these various services is not borne by the competent public authorities, in this case the Federal State, from which they seem to deduce that Charleroi airport is receiving State aid.

(268)

In this respect, it should be noted that Belgian airports do not all come under the same public authority, as regional airports come under the region in which they are situated, whilst Brussels airport is the responsibility of the Federal State (99). The responsibility of each authority for the airports entrusted to it was clearly set out when the management of airports (excluding Brussels airport) was regionalised through the cooperation agreement between the Belgian State, acting for the Société nationale des voies aériennes (S.N.V.A.) (100), and the regions (101). This agreement unequivocally states that ‘from the date when said Act enters into force, the regions shall be completely responsible for the activities transferred to them. From that date, they shall be authorised to adopt all appropriate measures, for which they shall therefore assume complete responsibility’.

(269)

Charleroi airport is therefore governed by the regulations of Wallonia, whilst Brussels airport is regulated by the Federal State. In this case, under its regulatory power, the Region has chosen to finance part of the cost of certain services. The fact that identical services are, in one case, borne by a public authority and, in another case, borne by the operator does not, however, have any impact on their qualification as economic or non-economic activities.

(270)

In the Flemish Region, for that matter, some of the services in question are directly provided by the regional administration and are therefore borne directly by the region. This is particularly the case with all the costs of airport safety and security services at Anvers and Ostend airports, regardless of the volume of traffic at these airports.

(271)

With specific regard to the fire protection services, Brussels Airlines asserts that other undertakings based in Wallonia and subject to the Seveso Directive (102) must bear the cost of their fire protection service, such as Total, which is based in Feluy, and that, at Brussels Airport, these services are not financed by the Flemish Region/Federal State.

(272)

According to Belgium, this comparison with undertakings subject to obligations under the Seveso Directive is irrelevant as it is clear from the wording of that Directive that Member States are required to ensure that undertakings falling within its scope (103) themselves take measures to prevent fire. By contrast, the obligation to organise fire protection services at airports is imposed directly on Member States by an international convention adopted by the International Civil Aviation Organisation.

(273)

Furthermore, both the European Commission and the General Court have confirmed that fire protection services are public authority activities that may be excluded from the scope of Article 107(1) TFEU.

(274)

Brussels Airlines also questions the qualification as non-economic activities of the maintenance services that correspond in this case to ground traffic and airport site safety. In this respect, Brussels Airlines simply stresses that such services form part of the management of an airport and are therefore economic activities.

(275)

The fact that the management of an airport constitutes an economic activity is already well-established. However, certain activities are excluded from the scope of Article 107(1) TFEU because they fall within the public policy remit or they are by nature non-economic, even if, as highlighted by Brussels Airlines, they are essential to the management of an airport. It is therefore clear, for example, that the management of an airport (economic activity) implies providing a customs service to check the identity of passengers, although it should be noted that such a service is one of the tasks traditionally reserved to the State and is therefore a non-economic activity. Consequently, the fact that ground traffic and airport site safety services are essential to the management of an airport is not sufficient to deprive them of their non-economic nature.

(276)

As noted by the Commission in its aforementioned decision on Leipzig/Halle airport: ‘in the present case certain costs fall within the public policy remit. These costs relate to security and police functions, fire and public safety measures, operational safety, German Weather Service and German Air Traffic Control’ (104). In its comments following the 2012 decision extending the formal investigation procedure, Belgium reiterated that it is clear from this same decision that ‘operational safety activities’ cover everything needed in terms of ground traffic and airport site safety, namely power supply, runway lighting, apron lighting, etc. It is precisely the maintenance of these various functions that is the issue here.

(277)

Lastly, Brussels Airlines questions the qualification of general safety and security services as ‘non-economic’. In this case, it would seem that Brussels Airlines has included flight tracking and recording, flight planning and marshalling services among safety services.

(278)

Brussels Airlines more specifically questions whether flight tracking and recording, flight planning and marshalling services are covered by Regulation (EC) No 2320/2002 of the European Parliament and of the Council (105), which means ‘the combination of measures and human and natural resources intended to safeguard civil aviation against acts of unlawful interference’.

(279)

However, the Walloon authorities have never regarded flight tracking and recording, flight planning and marshalling services as activities connected with airport security. They consider, in fact, that these activities are essential to the safety of an airport and refer, in this respect, to the explanations provided in their reply to the decision opening the formal investigation procedure.

(280)

With regard to BAC's comment that airlines operating out of Brussels airport must pay a fee for the flight tracking, recording and planning services provided by Belgocontrol, this again is an argument based on the source of financing of a service, which is not sufficient to qualify said service as non-economic.

(281)

Belgium also observes that the provision of certain services by Belgocontrol, free of charge, within regional airports was decided in the aforementioned 1989 cooperation agreement, which stipulated that ‘the regions may have recourse, free of charge, to the assistance provided by the central services of the [S.N.V.A.] in terms of applying the international standards and recommendations on civil aviation’ (106). This free provision is limited to the level of activity of the Walloon airports in 1989, with all services exceeding this level of activity being covered by Wallonia.

(282)

It is clear from both the 2005 aviation guidelines and the EU regulations on air navigation services that these services are non-economic activities, which are therefore excluded from the scope of Article 107(1) TFEU. This is actually one of the ways of regionalising the management of airports other than Brussels airport.

(283)

According to Belgium, it follows from the above that none of the comments made by Brussels Airlines and BAC calls into question the fact that fire protection, ground traffic and airport site safety, security, flight tracking and recording, flight planning and marshalling services constitute non-economic activities.

(284)

Belgium has particularly made comments on the impact on competition of the measures granted to BSCA following the comments from third parties received after the publication of the new Aviation Guidelines.

(285)

The third parties (BAC and Brussels Airlines) are of the opinion that the aid has enabled BSCA to apply ‘artificially low’ fees and that there is therefore a significant difference between the fees of BSCA and those of other airports. This practice has allegedly resulted in the reduced volume of passengers at Brussels airport.

(286)

Belgium disputes certain figures provided by Brussels Airlines. For example, as regards the comparison of the fees charged by BAC and BSCA, Belgium stresses that ‘Brussels Airlines includes fees that do not apply to airlines but to ground handling services’. The table provided by Brussels Airlines allegedly does not include similar costs charged by BSCA. The same applies to other costs imposed by the Federal State.

(287)

Belgium raises the same concerns about the tables comparing the various airports. Accordingly, in the ‘passenger charges or fee’ column for Marseille Provence airport, Brussels Airlines includes a fee of EUR 13,47, which actually corresponds, in Belgium's opinion, to a ‘security charge imposed by the State and not to a passenger fee within the meaning of airport fees’.

(288)

As regards the lack of any impact on trade, Belgium refers the Commission to its comments of 23 May 2012 and to its communication of 12 December 2012 on the differences between Brussels airport and Charleroi airport.

(289)

In terms of the negative impact on airlines based at Brussels airport, Belgium highlights a number of points:

(290)

Belgium notes that Ryanair has recently established a base at Brussels airport, which proves that the high level of fees has not prevented it from going ahead with this new development. However, Belgium reasserts that competition between Charleroi airport and Brussels airport is limited, and to very specific segments, i.e. charter and low-cost.

(291)

Moreover, Belgium disputes that only BSCA's commercial strategy in terms of its fees can explain the success of Charleroi airport. In its view, this claim ignores reality, which has seen the emergence of an entirely new low-cost market meeting a new demand. In this respect, Wallonia points out that, some years ago, 40 % of passengers at Charleroi airport were flying for the first time, which proves that they have not been ‘stolen’ from Brussels airport.

(292)

According to Belgium (107), if, somehow, the Commission were to consider that BSCA has benefited from aid, this aid should be qualified as operating aid, which can be authorised under the aviation guidelines. The conditions to be met in order for such aid to be authorised, as indicated in paragraph 137 of the aviation guidelines, are contribution to a well-defined objective of common interest, need for State intervention, appropriateness of State aid as a policy instrument, existence of incentive effect, proportionality of the aid amount and absence of negative effects on competition.

(293)

Airport development in the Walloon Region formed part of a comprehensive economic and social development strategy of the regions concerned, which was implemented in 1989. Wallonia has supplied various documents and studies confirming the pursuit of this objective.

(294)

In addition, as highlighted by the studies ordered by the Region and BSCA in 2000 and 2001, Brussels airport was at saturation point at that time and Charleroi airport was therefore in a position to contribute to the objective of tackling congestion.

(295)

Furthermore, it is clear from the various studies conducted at the request of the Region and BSCA that real demand existed for Charleroi airport in the low-cost segments. This demand has been confirmed in practice by its success, and it was therefore justified to develop Charleroi airport given the density of its catchment area, which is heavily populated and located at the centre of Europe.

(296)

The development of Charleroi airport has proven that this was not a case of financing unprofitable activities, as the airport became profitable in 2004. BSCA's business plan drawn up in 2001 forecast a return to profitability in 2005, i.e. a year later, which is testament to the prudent and reasonable nature of this plan.

(297)

According to Belgium, if the parallel development of passenger traffic at Brussels airport and Charleroi airport is examined, it can be concluded that any impact from Charleroi on Brussels has been marginal. The brake on development at Brussels airport was caused by the failure of Sabena in November 2001 and not by the concomitant development of Charleroi airport. As a reminder, a study carried out by BSCA in 2010 showed that 40 % of these passengers were flying for the first time, which proves that a significant part of the passenger volume has not been ‘stolen’ from Brussels airport. In addition, another significant part of the passenger volume consists of city trippers, who decide to take short-haul flights that they would not have taken in the absence of attractive fares. Until recently Brussels airport had seen little or no development in the low-cost segment. Accordingly, easyJet launched its first destinations from Brussels airport during 2007.

(298)

Any aid that may be identified by the Commission was certainly necessary to meet this objective of economic and regional development.

(299)

Funding the costs of the general interest tasks entrusted by the Region to BSCA was the most appropriate way of achieving the aforementioned objective of common interest. There were no other policy instruments or aid instruments that could have achieved this objective.

(300)

An incentive effect also exists because, in the absence of this funding, it would not have been possible to develop the airport's activities or achieve this volume level, which has resulted in improved mobility of European citizens and economic and regional development due to the airport's activities. Belgium refers the Commission to the number of passengers handled by BSCA over the period in question. As a reminder, during that period Charleroi airport was a category D airport with no possibility of distorting competition. The funding is also in line with the objectives of the aviation guidelines, namely ensuring the long-term profitability of regional airports.

(301)

Lastly, the aid amount is proportional. As a reminder, the compensation granted for the general interest tasks, as stipulated in Article 25 of the schedule of conditions annexed to the concession agreement between the Region and BSCA, is capped so that, if this cap is exceeded, which is the case with the part of the compensation for fire protection and ground traffic safety services, the costs must be covered by BSCA. Any aid granted in terms of the provision of services by SOWAER involves a marginal amount.

(302)

Given the limited amount of the aid in the context of this compensation for the services of general interest that may be called into question by the Commission and also the objective of these services, it must be considered that this proportionality condition is met.

(303)

As regards the absence or avoidance of negative effects on competition, the Commission must refer back to the time when the public financing was granted in order to assess this condition. It cannot be considered that, at that time, there was any undue impact on competition. As proven to the Commission, Charleroi airport has not been developed at the expense of other airports. Its activities stem from the creation of a new market in a specific segment that was not being developed at all or only to a very limited extent at Brussels airport.

(304)

For the record, two studies carried out by independent experts, Roland Berger International Management Consultant and GTM, revealed the imminent saturation of Brussels airport and the lack of any overlap in terms of customers between the two airports. At the time the airlines operating at Brussels airport had no interest in Charleroi airport, whilst Ryanair, the main user of Charleroi airport, had no plans to base itself at the main airports.

(305)

Furthermore, the Region's framework agreement of 20 July 2000, as extended by the decision of 8 November 2000, contained the objective of ‘implementing a policy allowing efficient collaboration with the managers of Brussels airport’ (108).

(306)

In addition, Charleroi airport was at a disadvantage due to the regulatory constraints on its opening hours. In 2000 the airport could open between 07:00 and 22:00. These hours were slightly altered to 06:30 and 23:00 in order to accommodate the aircraft based at the airport.

(307)

Furthermore, in 2000 Charleroi airport had a very poor image, as confirmed by the GTM and Roland Berger studies. The infrastructure was cramped, limited and little-used. The airport offered only one scheduled service and a number of charter flights in the summer. It cannot be considered that at the time Charleroi airport was in a position to compete with Brussels airport.

(308)

Lastly, Brussels airport was at an advantage in terms of infrastructure (several terminals, several runways, etc.) and accessibility due to its location close to the capital and the rail link that Charleroi airport lacked.

(309)

These comments concern the compatibility:

(310)

With regard to the compatibility of the financing of part of the costs of the services of general interest, assessed on the basis of Article 106(2) TFEU, Belgium submits that this financing complies:

(311)

According to Belgium, if the Commission considered that the criteria of the Altmark judgment were not all met, then it would be necessary to authorise the compensation of services of general interest based on the Decision of 28 November 2005 (109).

(312)

With regard to the measures granted prior to 19 December 2005, i.e. before the Decision of 28 November 2005 entered into force, their compatibility is directly based on Article 106(2) TFEU. It is clear from the Commission's decision-making practice (110) that the conditions of Article 106(2) TFEU are combined with those of the Decision of 28 November 2005 on the application of Article 86(2) of the EC Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (111). The measures granted prior to 19 December 2005 can therefore be assessed for compatibility together with those granted subsequently in accordance with Article 106(2) TFEU, using the same basic criteria as set out by the Decision of 28 November 2005.

(313)

With regard to the measures granted since 19 December 2005, they fall within the scope of the Decision of 28 November 2005 where they correspond to public service compensation granted to undertakings with an average annual turnover before tax of less than EUR 100 million during the two financial years preceding that in which the service of general economic interest was assigned, which receive annual compensation for the service in question of less than EUR 30 million (112). However, at no time has BSCA had an annual turnover in excess of EUR 100 million. Furthermore, according to Belgium, it is evident that the compensation for any services of general interest that may be qualified as economic by the Commission would be far from reaching the threshold of EUR 30 million. As a result, this compensation clearly falls within the scope of the Decision of 28 November 2005.

(314)

Based on the Decision of 28 November 2005, measures falling within its scope are compatible where they meet the following criteria.

(315)

Belgium considers that it proved the existence of public service obligations when it ‘established’ that the first criterion of the Altmark judgment was met (see Section 5.1.1.1(c)(ii)). Moreover, according to Belgium, the parameters for calculating the compensation and the methods used to prevent any overcompensation were explained when Belgium proved that the third and fourth criteria of the Altmark judgment were met.

(316)

Belgium notes that Wallonia's intervention has been capped since 2006 with regard to the fire protection and ground traffic and airport site safety services and since 2010 with regard to the security, navigation office and marshalling services. The cost accounting system put in place by BSCA enables compliance with this criterion to be proven.

(317)

According to Belgium, accounting separation is guaranteed by the application of Article 25 of the schedule of conditions, which provides that the ‘concession-holder shall keep a separate operating account for the Services. This account may be subject at any time to on-the-spot checks by the concession authority’. This is also confirmed by the document in Annex 8.

(318)

Wallonia has the right to check, at any time, BSCA's accounts for the services of general interest, under Article 25 of the schedule of conditions. Accordingly, every year the Walloon administration conducts an on-the-spot check to examine the evidence underlying the declaration of claim submitted by BSCA in order to obtain the compensation for the services of general interest.

(319)

It follows from the above that the financing of the services of general interest that may be qualified as economic by the Commission can be declared compatible with the internal market based on the Decision of 28 November 2005.

(320)

Following the 2002 opening decision and the 2012 extension decision, Belgium submitted comments aimed at proving that the measures granted to Ryanair, as examined in the present decision, do not constitute State aid.

(321)

According to the comments submitted by Belgium following the adoption of the 2012 extension decision, even if the financing of the services of general interest is regarded as constituting State aid, this benefits from the limitation period laid down by Article 15 of Council Regulation (EC) No 659/1999 (113) (hereinafter ‘Procedural Regulation’).

(322)

Under this provision, the limitation period begins on the day on which the unlawful aid is awarded to the beneficiary. In accordance with EU regulations (114) and the Commission's decision-making practice (115), the Commission must assess a measure according to the rules applicable at the moment the aid is awarded, ‘that is, the moment of the legally binding act on the basis of which the beneficiary acquires the right to receive the aid’. EU case-law confirms that the date of award of the aid corresponds to the date of the ‘legally binding act by which the competent [national] authorities undertake to grant aid’ (116). The legal act becomes binding on the date when, under national law, the State is obliged to meet its commitment based on the act in question. Prior to that, there is simply a declaration of intention (117).

(323)

It follows from the above that the date when the compensation for the services of general interest provided by BSCA was granted is 9 July 1991, i.e. the date of the concession agreement and schedule of conditions forming the legal basis of this compensation binding the Region. Since that date, notwithstanding the adoption of various provisions without any impact on the principle of compulsory reimbursement by the Region of this expenditure, Wallonia has been responsible for paying this compensation. Only a few non-economic services set out in Amendment No 6 of 15 January 2008 are apparently not covered by this limitation period. The starting point of the 10-year limitation period is therefore 9 July 1991.

(324)

No Commission measure regarding the compensation received for the services of general interest provided by BSCA, as required by Article 15 of the Procedural Regulation, interrupted the 10-year limitation period, which therefore expired in July 2001. Despite this compensation not being formalised in the agreement for the 2000-2001 period, the parties, i.e. Wallonia and BSCA, always intended to maintain this compensation for an indefinite period. This intention was confirmed by the funding of these costs for said period and was stipulated in the 2002 amendment, such that the starting point of the limitation period has not been called into question.

(325)

Only the Commission letter of 24 April 2002, which in particular contains questions on BSCA's financing and might therefore indirectly concern the funding of the costs of the services of general interest, could have interrupted the limitation period. Detailed explanations were provided by the Walloon authorities following this request, but the Commission did not at any time question the legality of this financing.

(326)

It follows from the above that, even if the compensation paid for the services of general interest is regarded as State aid, which it is not, the Commission's powers to recover the aid are limited under Article 15 of the Procedural Regulation.

(327)

Following the 2012 extension decision, Belgium submitted comments on the application of the principle of legitimate expectations to the subsidy paid by the Region for certain services associated with the airport activities.

(328)

In accordance with the case-law of the Court of Justice on State aid, the Commission is required to take into consideration on its own initiative the exceptional circumstances that provide justification, pursuant to Article 14(1) of the Procedural Regulation, for it to refrain from ordering the recovery of unlawfully granted aid where such recovery is contrary to a general principle of Community law, such as respect for the legitimate expectation of beneficiaries.

(329)

As summarised by Advocate General Philippe Léger, the infringement of this principle is recognised when the three following conditions are satisfied: ‘First of all, there must be an act or conduct on the part of the Community administration capable of having given rise to such an expectation … Next, the person concerned must not be able to foresee the change to the pattern of conduct previously adopted by the Community administration … Lastly, the Community interest which the contested measure seeks to achieve must not justify the infringement of the legitimate expectation of the party concerned’.

(330)

According to Belgium, particularly as regards the subsidy paid by the Region for certain services associated with the airport activities, the three conditions cited in the preceding recital are satisfied.

(331)

The Commission examined the subsidy paid by the Region for certain services associated with the airport activities during the first investigation and did not raise any objections in this respect in its 2004 decision. In that decision, the Commission expressly stated that it ‘does not dispute the legitimate possibility of the Walloon authorities continuing to bear the cost of the fire and maintenance services’ (118). The maintenance services provided by BSCA at that time were defined as follows: ‘the concession-holder must provide, in the context of the service concession, maintenance for the land, buildings, equipment and structures included in the concession and placed at its disposal, so that they are always suitable for the use for which they are intended’. In the same respect, in recital 352 of the same decision, the Commission stated that ‘Some of the financial burdens of these airports, whether they are private or public, are, however, often covered by public service compensation relating to safety or security tasks, or by other contributions to the costs of activities that would not be economically viable in themselves but that are necessary to the operation of these platforms. This may be the case with air traffic control, police or fire fighting services, etc.’

(332)

Belgium also stresses that the annulment by the General Court in no way related to this aspect of the 2004 decision.

(333)

It therefore concludes that the three conditions set out in recital 329 are satisfied.

(334)

Firstly, the decision made in 2004 by the Commission and the lack of censure by the General Court on this point have ‘previously created a situation which could give rise to such an expectation’. According to Belgium, BSCA has received precise assurances that the funding of the costs of the services of general interest was not likely to constitute State aid, given the lack of any complaint on this point in the 2004 decision. This legitimate expectation is further reinforced by the settled decision-making practice of the Commission on this issue, in particular the distinction between economic activities and non-economic activities, as reiterated in particular in the decision on Leipzig/Halle airport.

(335)

Secondly, BSCA was not ‘able to foresee the change to the pattern of conduct previously adopted by the Community administration’. According to Belgium, there was nothing to indicate to BSCA that the Commission was going to re-examine, in 2012, a measure on which it had not expressed any reservations in 2004, and which the General Court did not question in 2008.

(336)

Thirdly, the Community interest does not prevail over that of BSCA ‘in seeing the situation maintained that it might legitimately have assumed to be a stable one’. According to Belgium, BSCA would suffer considerable harm from a Commission decision ordering recovery of the subsidies received by BSCA in return for providing the services of general interest.

(337)

In conclusion, Belgium considers that this financial compensation, which is vital to ensure the safety and security of the airport site and activities, has been maintained and extended since the 2004 decision, particularly due to the legitimate expectation arising from the Commission's position that the financing of the services of general interest did not constitute State aid within the meaning of Article 107 TFEU. Given the legitimate expectation created by the Commission in the mind of BSCA, even if the Commission were to consider that the subsidies in question constitute State aid, it could not order their recovery, pursuant to Article 15 of the Procedural Regulation.

(338)

Under Article 107(1) TFEU, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the internal market.

(339)

A measure is therefore qualified as State aid where all the following conditions are met: (1) the beneficiary or beneficiaries is or are undertakings within the meaning of Article 107(1) TFEU; (2) the measure provides a selective advantage to its beneficiary; (3) the measure is financed by State resources and is imputable to the State; and (4) the measure distorts or threatens to distort competition and may affect trade between Member States.

(340)

In this chapter, the Commission assesses whether the measures described in Chapter 3 may constitute aid to BSCA and/or Ryanair, and then considers whether the aid identified is compatible with the internal market and whether the limitation period and principle of legitimate expectations apply.

(341)

Under Article 107(1) TFEU, in order to be regarded as State aid, a measure must favour ‘certain undertakings or the production of certain goods’.

(342)

The Court of Justice has consistently defined undertakings as any entity engaged in an economic activity, regardless of the legal status of the entity or the way in which it is financed (119). Moreover, the Court has consistently held that an economic activity is any activity consisting in offering goods and services on a given market. (120).

(343)

In its ADP judgment, the Court of First Instance concluded that the operation of an airport, which consists in providing airport facilities to airlines, is an economic activity.

(344)

In its Leipzig-Halle Airport judgment (121), the Court confirmed that the operation of an airport in return for payment constitutes an economic activity, from which the activity consisting in the construction of airport infrastructure cannot be dissociated (122). Where an airport operator engages in economic activities, regardless of its legal status or the way in which it is financed, it constitutes an undertaking within the meaning of Article 107(1) TFEU and therefore falls within the scope of the TFEU rules on State aid (123). The Court also confirmed that, unlike their effects, the regional, economic or transport policy objectives pursued by the construction or extension of airport infrastructure were not relevant when determining whether an economic activity existed.

(345)

The question of whether there is a market for given services can depend on how those services are organised in the Member State concerned (124). The State aid rules apply only where a given activity is carried out in a commercial environment. The economic nature of given services can therefore vary from one Member State to another. In addition, the qualification of a given service can alter over time depending on policy choices or economic developments.

(346)

As a result, prior to the ADP judgment, the Commission's consistent practice was to consider that the activity of developing and managing airport infrastructure did not constitute an economic activity falling within the scope of Article 107(1) TFEU (125). Following the ADP judgment, the Commission decided that, due to the gradual liberalisation of the market, this activity had become an economic activity. This is also clarified by the aviation guidelines (126) in points 28 and 29: ‘from the date of the judgment in ‘Aéroports de Paris’ (12 December 2000), the operation and construction of airport infrastructure must be considered as falling within the ambit of State aid control. Conversely, due to the uncertainty that existed prior to the judgment in ‘Aéroports de Paris’, public authorities could legitimately consider that the financing of airport infrastructure did not constitute State aid and, accordingly, that such measures did not need to be notified to the Commission. It follows that the Commission cannot now bring into question, on the basis of State aid rules, financing measures granted before the ‘Aéroports de Paris’ judgment’.

(347)

It should therefore be determined whether the measures granted to BSCA for the operation and construction of airport infrastructure were granted before or after 12 December 2000, which was the date of the ADP judgment.

(348)

In addition, even after the ADP judgment, as highlighted by points 34 and 35 of the aviation guidelines, not all the activities of an airport operator are necessarily regarded as economic in nature. The Court of Justice has therefore confirmed that activities that normally fall under State responsibility in the exercise of its official powers as a public authority are not economic in nature (127). At an airport, activities such as air traffic control, police, customs, firefighting, measures designed to protect civil aviation from acts of unlawful interference, and investment in the infrastructure and equipment needed for such activities are regarded, as a general rule, as not being economic in nature.

(349)

In conclusion, the measures granted to BSCA after 12 December 2000 must be identified and those measures granted for activities normally falling under State responsibility in the exercise of its official powers as a public authority must be excluded.

(350)

In this section, the Commission examines:

(351)

As highlighted in recital 344 et seq., the construction of airport infrastructure cannot in principle be dissociated from the economic activity of operating the airport platform.

(352)

With regard to the construction of infrastructure at Charleroi airport, which was included in the multiannual investment programme, the Belgian authorities consider, however, that this investment programme was decided prior to 12 December 2000, which was the date of the ADP judgment. Belgium's arguments, set out in Section 5.1.1.1(a)(i), essentially aim to refute the scope and accuracy of the preliminary arguments given by the Commission in the 2012 extension decision, according to which the framework agreement of 20 July 2000 and the decision of the Walloon Government of 8 November 2000 (hereinafter the ‘2000 decisions’) do not impose any commitment on the Region with regard to a third party and are not irrevocable, firm and definitive in nature.

(353)

However, the Commission takes the view, for the reasons given below, that the decision to place the infrastructure at BSCA's disposal, including new infrastructure decided and constructed under the investment programme, and to provide certain services in return for a fee did not stem from the 2000 decisions, but from the 2002 agreement between SOWAER and BSCA.

(354)

The relevant criterion for the date at which a possible aid measure is deemed to have been granted is the date of the legally binding act by which public authorities undertake to award the measure at stake to its beneficiary (128).

(355)

In the present case, the Commission takes the view that:

(356)

Prior to the 2002 SOWAER/BSCA agreement, BSCA did not benefit from any commitment on the part of the Region or SOWAER with regard to implementing the investment programme.

(357)

Belgium in fact recognises that no formal letter granting the aid was sent to BSCA. However, according to Belgium, although the Region was itself the beneficiary of the 2000 decisions, these created a commitment on the part of the Walloon Government. Belgium takes the view that the fact that this commitment was unilateral was not peculiar to this case. In its opinion, any financial measure, regardless of its beneficiaries, is always decided through a unilateral administrative act of the granting authority, which controls the application, amendment or withdrawal of said act.

(358)

The Commission notes that the 2000 decisions were not published or notified to BSCA. At any time before the 2002 SOWAER/BSCA agreement was signed, the Region could have altered the investment programme, by adopting a new unilateral decision or even totally abandoning this programme, without such a decision infringing BSCA's rights.

(359)

Furthermore, as indicated in the 2012 extension decision, this investment programme contained uncertainties about the financing mechanism and amounts. The latter could have been altered in line with changing needs. Accordingly, the new North terminal needed to be modular and its construction ‘had to be gradual and tailored to the development of the airport's actual activities and resulting operational needs’. In addition, the financing mechanism envisaged at the time — i.e. involving the Société Régionale Wallonne du Transport — was ultimately abandoned in favour of financing through SOWAER, a new instrument that received its financial resources only when it was created on 1 July 2001 and in the amount of EUR 75 000 000 only.

(360)

On the other hand, given that the investment programme was included in the 2002 SOWAER/BSCA agreement, SOWAER was under an obligation towards BSCA: it had to place the land and infrastructure at BSCA's disposal, including the infrastructure to be constructed in accordance with the investment programme, and to provide certain services, in return for a concession fee, otherwise it would fail to comply with its contractual obligations.

(361)

The Commission also takes the view that SOWAER's commitment to implement an investment programme and to provide certain services must be examined together with BSCA's commitment to pay a concession fee. It is impossible to determine whether the Region's plans to place the infrastructure at BSCA's disposal, including new infrastructure constructed in accordance with the investment programme, and to provide certain services constitute aid until the amount of the fee to be paid by BSCA in return is known.

(362)

The Commission concludes that the measure consisting in placing the infrastructure at BSCA's disposal, including new infrastructure which SOWAER undertook to construct, and in providing certain services in return for a fee was granted by the 2002 SOWAER/BSCA agreement. It therefore postdates the ADP judgment.

(363)

Moreover, it should be recalled that the investment programme included in the 2002 SOWAER/BSCA agreement was significantly amended by the decision of the Walloon Government of 3 April 2003. In this decision of 3 April 2003, the Walloon Government officially noted a revision to the investment programme (130), whereby the amount of the investment increased from EUR 93 million to almost EUR 151 million, i.e. an increase of EUR 57,8 million, including EUR 33 million for the new terminal. The Commission takes the view that this revision of the investment programme constitutes a substantial change and therefore a new measure potentially constituting new State aid granted to BSCA, in addition to the potential aid already granted through the 2002 SOWAER/BSCA agreement. Given that it stems from a decision of 3 April 2003, this measure constitutes a new measure, adopted after the ADP judgment and therefore subject to the applicable rules on State aid.

(364)

As highlighted by points 34 and 35 of the aviation guidelines, not all the activities of an airport operator are necessarily economic in nature. The Court of Justice has therefore confirmed that activities that normally fall under State responsibility in the exercise of its official powers as a public authority are not economic in nature (131). Such activities include, in particular, security, air traffic control, police and customs (132).

(365)

The Commission takes the view that investments and major repairs involving assets associated with air navigation (relating to the control tower, for example), aircraft firefighting, security (defined as combating acts of unlawful interference), police and customs may be non-economic in nature. Given that, in the present case, air navigation, aircraft firefighting, security, police and customs services are not organised according to a market logic, the Commission considers that the investments and major repairs involving assets associated with these services are not economic in nature. In particular, the fencing of the part of the airport site that is accessed through police checkpoints and the part of the site where the aircraft are located may be regarded as a non-economic activity insofar as it concerns security.

(366)

The Commission also considers as non-economic those costs associated with investments in and maintenance of buildings and equipment used for both economic activities and non-economic activities, in a proportion corresponding to their use for a non-economic activity. In particular, 7 % of the cost of investments made in the new terminal may be regarded as non-economic in nature, because 7 % of the terminal surface area is occupied by police and customs services, passenger and baggage search officials, and officials from the Walloon Public Service responsible for site safety.

(367)

However, the Commission regards as economic those investments and major repairs involving the Category III ILS (133) and runway lighting. These costs are not associated with a public policy remit, but are inherent in the commercial operation of the infrastructure, which involves placing this infrastructure at the disposal of airlines under satisfactory safety conditions. In particular, ensuring ground traffic safety (including during landings and take-offs) forms an integral part of the airport's commercial operation and is therefore economic in nature. In the recent Commission decision on Marseille airport (134), operational safety was also excluded from the scope of ‘non-economic activities’.

(368)

The Commission also takes the view that investments in fire detection in passenger car parks are economic in nature. These costs are not associated with a public policy remit, but are inherent in the commercial operation of the passenger car park.

(369)

Moreover, as highlighted by point 36 of the aviation guidelines, the Commission must check that the funding of non-economic activities is strictly limited to compensating the costs to which they give rise and may not be used for economic activities (135). Otherwise their funding cannot escape the State aid rules.

(370)

SOWAER is directly responsible for the investments and major repairs. These costs are not therefore financed through aid paid to BSCA, which the latter could use for economic activities.

(371)

Lastly, as highlighted by point 37 of the aviation guidelines, the Commission must check that the funding of non-economic activities does not lead to undue discrimination between airports. Otherwise their funding cannot escape the State aid rules.

(372)

As clarified by Belgium, SOWAER carries out the investments and major repairs without discriminating between the airports for which it is responsible, namely the airports in the Walloon region.

(373)

As highlighted by recital 26 of this decision, the Belgian regions have been given the necessary powers to equip and operate public airports situated within their territory, except for Brussels National Airport. Given this legal framework, the Commission takes the view that the relevant level for assessing the existence of discrimination in terms of the financing of the investments and services provided by SOWAER is the region, and not the Federal State. As SOWAER carries out the investments and major repairs without discriminating between the two main Walloon airports (Liège and Charleroi), the Commission concludes that there is no undue discrimination between the airports.

(374)

The financing of the non-economic activities described in recital 365 cannot therefore be qualified as State aid and is consequently excluded from the subsequent analysis.

(375)

As indicated in Section 5.1.1.1(c)(i), Belgium considers that the tasks for which the Region pays a subsidy fall within the public policy remit and do not therefore constitute an economic activity.

(376)

In order to determine whether the subsidy relates to non-economic activities and cannot therefore be qualified as State aid, the same examination as described in Section 6.1.1.1(b) must be made.

(377)

As indicated in recital 365, the Commission takes the view that, in the present case, the activities associated with aircraft fire protection and security (136) do not constitute economic activities.

(378)

As highlighted by point 36 of the aviation guidelines, even where an activity is regarded as non-economic, the Commission must check that the funding of non-economic activities is strictly limited to compensating the costs to which they give rise and may not be used for economic activities (137). Otherwise their funding cannot escape the State aid rules.

(379)

As regards fire protection, the Commission indicates that, under Article 25 of the schedule of conditions annexed to the 1991 Region/BSCA agreement, in order for the Region to fund the fire and maintenance services, BSCA must keep a separate operating account that may at any time be analysed and checked by the concession authority.

(380)

Moreover, under Article 3.2.3 of the Region/BSCA agreement, as amended by Amendment No 3 of 29 March 2002, the costs inherent in the fire and maintenance services are reimbursed in 12 instalments. The twelfth instalment is paid after the Minister receives and approves a report, based on BSCA's annual accounts, providing justification for the costs incurred and presented in the same format as required for the provisional budget, i.e. based on the headings defined by Article 25 of the schedule of conditions.

(381)

Lastly, for the period after 10 March 2006, Article 25.7 of the schedule of conditions, introduced by Amendment No 5 of 10 March 2006, provides that the amount of the compensation for the fire protection and ground traffic and airport site safety services may not exceed the actual costs incurred by BSCA and that any overcompensation of the costs will result in budgetary compensation through the budget entry for the following year.

(382)

The Commission takes the view that these provisions are sufficient to conclude that, since Amendment No 3 of 2002 to the Region/BSCA agreement, the compensation paid by the Region for the fire protection costs has been proportionate and has not been used to subsidise economic activities.

(383)

Security was added to the activities for which BSCA receives compensation through Amendment No 6 of 15 January 2008. The security tasks are defined as ‘the combination of measures and human and natural resources intended to safeguard civil aviation against acts of unlawful interference’ (138). The security services include ‘screening, remote surveillance, security rounds and patrols, access control and issue of visitor badges’ (139).

(384)

Article 25.7 of the schedule of conditions, as amended by Amendment No 6 of 15 January 2008, provides that ‘the amount of the compensation intended to cover the costs incurred in providing the services may not exceed the actual costs incurred by the concession-holder in this context, after deducting any fees collected from users to cover these services. Any overcompensation of these costs will result in budgetary compensation through the budget entry for the following year’.

(385)

The Commission takes the view that these provisions are sufficient to conclude that the compensation paid for the security costs has been proportionate and has not been used to subsidise economic activities.

(386)

As highlighted by point 37 of the aviation guidelines, the Commission must check that the funding of non-economic activities does not lead to undue discrimination between airports. Otherwise their funding cannot escape the State aid rules.

(387)

As clarified by Belgium, the non-economic activities of the two main Walloon airports (Liège and Charleroi) are funded in a non-discriminatory manner by the Region.

(388)

As highlighted by recital 26 of this decision, the Belgian regions have been given the necessary powers to equip and operate public airports situated within their territory, except for Brussels National Airport. Given this legal framework, the Commission takes the view that the relevant level for assessing the existence of discrimination in terms of the financing of certain non-economic services associated with the airport activities is the region, and not the Federal State. As the non-economic activities of the two main Walloon airports (Liège and Charleroi) are funded in a non-discriminatory manner by the Region, the Commission concludes that there is no undue discrimination between the airports.

(389)

The compensation paid for BSCA's activities associated with fire protection and security cannot therefore be qualified as State aid and is consequently excluded from the subsequent analysis.

(390)

In this section, the Commission examines whether the following services may escape the applicable State aid rules due to their non-economic nature:

(391)

As indicated in recital 71, the maintenance service is defined by Articles 12 and 19 of the schedule of conditions as ‘technical maintenance services for buildings, runways, surrounding areas, vehicle fleet, etc.’ (140), and as ‘maintenance of land, buildings and building facilities, and equipment forming part of the concession or placed at the disposal of the concession, such that they are always fit for their intended purpose’ (141).

(392)

As indicated in recitals 73 and 74, Amendment No 5 of 10 March 2006 amended Article 3.2.2 of the Region/BSCA agreement and Article 25 of the schedule of conditions. As a result of these amendments, the Region pays compensation to BSCA for the costs of the fire protection and ground traffic and airport site safety services. Article 25 of the schedule of conditions, as amended, provides that ‘the ground traffic and airport site safety services include routine maintenance of the airport site, technical maintenance services for buildings, runways, surrounding areas and vehicle fleet, minor surfacing work, routine maintenance and repair of the runway and accesses, operational maintenance and servicing of the general lighting and runway lighting, mowing services, rubber removal from the runway and its markings, snow clearance and any other services ensuring the safety of ground traffic, airport site and infrastructures, except for commercial areas of the airport zone’.

(393)

The Commission points out that the definition of ‘ground traffic and airport site safety services’, for which BSCA receives compensation from 10 March 2006, substantially overlaps with the definition of ‘maintenance services’, for which BSCA received compensation before 10 March 2006. In order to determine whether these services constitute economic services, it will examine these together.

(394)

The Commission takes the view that these services, whether they involve routine maintenance of the airport site, maintenance of buildings, runways, surrounding areas and vehicle fleet, minor surfacing work, routine maintenance and repair of the runway and accesses, operational maintenance and servicing of the general lighting and runway lighting, mowing services, rubber removal from the runway and its markings, snow clearance or any other services ensuring the safety of ground traffic, airport site and infrastructures, do not fall within the public policy remit. These services differ in particular from the security services. They are inherent in the commercial operation of the airport, which involves ensuring that the airport site, including its runways, is sufficiently well-maintained to enable the landing and take-off of aircraft under satisfactory safety conditions. No public policy remit is associated with this type of service.

(395)

According to Belgium (see recital 237), when the Commission made its decision on 23 July 2008 on Leipzig/Halle airport, it recognised that operational safety services were non-economic activities (142). It is clear from the list of operational safety infrastructures provided by the German authorities that these infrastructures are essential for ground traffic safety, i.e.: uninterruptible power supply for aprons, transformer stations, runway lighting, apron lighting, etc. According to Belgium, this position taken by the Commission was confirmed by the General Court in the judgment delivered on 24 March 2011 (143) following an action for annulment brought against the aforementioned Commission decision.

(396)

The Commission disputes that it can be concluded from recitals 182 and 183 of the decision on Leipzig/Halle airport that the Commission has in the past taken the view that tasks comparable to maintenance and traffic safety, as defined in the Region/BSCA agreement, fall within the public policy remit, for the following reasons.

(397)

Firstly, the maintenance and traffic safety costs defined in the Region/BSCA agreement are much broader than the operational safety investment costs referred to in the decision on Leipzig/Halle airport. The latter consist of the uninterruptible power supply for the aprons, transformer station, high voltage cables and runway lighting. The maintenance and traffic safety costs defined in the Region/BSCA agreement ‘include routine maintenance of the airport site, technical maintenance services for buildings, runways, surrounding areas and vehicle fleet, minor surfacing work, routine maintenance and repair of the runway and accesses, operational maintenance and servicing of the general lighting and runway lighting, mowing services, rubber removal from the runway and its markings, snow clearance and any other services ensuring the safety of ground traffic, airport site and infrastructures, except for commercial areas of the airport zone’.

(398)

Secondly, the Commission points out that, contrary to Belgium's argument, the Commission did not conclude that the operational safety tasks referred to in the Leipzig/Halle decision constitute tasks falling within the public policy remit. Recital 182 of that decision states that ‘the Commission can conclude that in the present case certain costs fall within the public policy remit’ (emphasis added). In recital 183 of the same decision, the Commission considers that ‘to the extent that they fall within the public policy remit’, the measures may not amount to State aid (emphasis added). It indicates that ‘in the present case independently [of] whether the Commission was to accept the approach advanced by the German authorities that none of the costs should be considered as State aid, the final assessment of the measure would not change’ (emphasis added). As a result, in those recitals the Commission neither confirmed nor contradicted Germany's position that certain tasks, including operational safety tasks, fell within the public policy remit, but instead indicated that it did not need to take a position, given that, assuming that the measure did constitute aid, this would be authorised.

(399)

Thirdly, the Commission points out that, in the General Court's judgment on the Commission decision on Leipzig/Halle airport, contrary to Belgium's argument, the Court did not confirm this alleged Commission position in paragraph 225 of its judgment. The Court in fact reproduced recitals 182 and 183 of the Commission decision in order to recall the latter's position and concluded that the Commission had considered that it did not have to reach a definitive conclusion on this question (namely if it were to accept the German authorities' argument that none of the costs should be considered as State aid).

(400)

The Commission therefore concludes that the ‘maintenance services’, as defined by Articles 12 and 19 of the schedule of conditions annexed to the Region/BSCA agreement, and the ‘ground traffic safety services’, as defined by Article 25 of the schedule of conditions amended by Amendment No 5 of 10 March 2006, constitute economic services. Their funding does not therefore escape the applicable State aid rules.

(401)

In this section, the Commission examines whether the following services, the provision of which was entrusted to BSCA and for which BSCA receives compensation under Amendment No 6 of 15 January 2008, may escape the applicable State aid rules due to their non-economic nature:

(402)

According to Belgium (see recital 240), flight tracking and recording, provisional flight planning and marshalling services are essential parts of civil aviation safety and therefore fall within the public policy remit, given that they are fundamental components in the safety of an airport.

(403)

The Commission takes the view that the services covered by this compensation are activities inseparable from the economic activity of the airport operator BSCA. These services cannot be included within the security services intended to combat acts of unlawful interference or within any activity falling within the public policy remit.

(404)

The Commission therefore concludes that flight tracking and recording, flight planning and marshalling constitute economic services. Their funding does not therefore escape the applicable State aid rules.

(405)

As the capital increase, which was covered by the formal investigation procedure, was subscribed by SOWAER to the benefit of BSCA in 2002, i.e. after the ADP judgment (147), it falls under the Commission's control of State aid (see recital 346).

(406)

In order to determine whether a State measure constitutes aid, it is necessary to establish whether the recipient undertaking receives an economic advantage that it would not have obtained under normal market conditions. The presence of an economic advantage can be ruled out where the measures in question constitute economic operations carried out by public bodies or undertakings under normal market conditions (148). In this case it must be determined whether, in similar circumstances, a private operator, having regard to the foreseeability of obtaining a return and leaving aside all social, regional policy and sectoral considerations, would have taken part in the same operations as the entity granting the measure (hereinafter ‘the market economy operator test’). The presence of an economic advantage can also be ruled out where the measures in question constitute financial compensation granted to the undertakings concerned in order to enable them to operate a service of general economic interest, provided that such compensation satisfies all the conditions set out in the Altmark judgment (149). The Commission will now proceed to analyse the measures concerned in turn, in the light of the conditions of the Altmark judgment and the market economy operator test.

(407)

It is firstly necessary to examine Belgium's argument, set out in Section 5.1.1.1(c)(ii), according to which the subsidy for certain services associated with the airport activities — assuming that some of these services are economic in nature — allegedly does not constitute an advantage for BSCA under the Altmark judgment (150).

(408)

As established in Section 6.1.1, the Commission considers that some of the services for which the subsidy is paid are not economic in nature (for example, firefighting and security services) and will exclude from its analysis the part of the subsidy compensating for the costs of those services.

(409)

However, the Commission considers that other services for which the subsidy is paid are economic in nature, such as maintenance and repair of infrastructures operated commercially, and even marshalling.

(410)

The Commission takes the view that Belgium is committing a manifest error of assessment in qualifying these services as services of general economic interest. As recalled by paragraph 47 of the Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (151), generally speaking, a ‘particular public service task’ implies the supply of services which, if it were considering its own commercial interest, an undertaking would not assume or would not assume to the same extent or under the same conditions. In paragraph 50 of said Communication, the Commission also considers that the services to be classified as services of general economic interest must be addressed to citizens or be in the interest of society as a whole. In the present case, the economic services identified are not supplied in the interest of citizens, but only to enable BSCA to provide an airport service. They are indissociable from the economic activity of operating the airport.

(411)

Furthermore, BSCA was not chosen in a procedure meeting the requirements of the fourth Altmark condition.

(412)

In addition, Belgium has not provided any evidence that the amount of the subsidy was determined on the basis of an analysis of the costs that a typical undertaking, well run and adequately equipped, would have incurred in order to meet the necessary public service requirements. Belgium's arguments are actually insufficient for the following reasons:

(413)

In conclusion, at least the first and fourth conditions of the Altmark judgment are not satisfied. The Commission cannot therefore rule out, under the Altmark judgment, that the Region's subsidy for the services associated with the airport activities constitutes an advantage.

(414)

As regards identifying the entity granting the measure, the Commission considers that the actions of (i) the Region, as owner of the airport zone land, on the one hand, and (ii) SOWAER, a company under the exclusive control of the Region, as concession-holder of the airport zone land, owner of the infrastructures built on the airport zone land, and holder of the tasks delegated by the Region, on the other hand, must be assessed together where they involve the same activity and the same airport. Under these circumstances, SOWAER appears to be an intermediary of the Region in this context. Consequently, in order to determine whether or not the measures defined in Section 3.1 give BSCA an economic advantage, the Commission will consider that the entity granting the measure is the group consisting of the Region and SOWAER (hereinafter ‘Region-SOWAER’).

(415)

As a result, the Commission considers that it must examine together the commitments of the Region-SOWAER where they alter the economics of the concession (provision of the infrastructures, including development of the investment programme and funding of the major repairs, concession fee, subsidy for certain services associated with the airport activities where these services are economic in nature) and where they are virtually simultaneous and linked.

(416)

The Commission will therefore apply the market economy operator test to the following four sets of measures, considered in turn:

(417)

The Commission will also apply the market economy operator test to BSCA's capital increase subscribed by SOWAER in December 2002.

(418)

If any of these measures constitutes an advantage, the Commission will examine whether that advantage is selective.

(419)

As highlighted by point 51 of the aviation guidelines, the analysis of conformity with the market economy operator test should be based on sound ex ante profitability prospects for the entity granting the financing (152).

(420)

The Commission notes that the Region did not supply any business plan proving the expected return for the Region and/or SOWAER from the scheduled investments when the binding decisions were made on each investment. The absence of a business plan suggests that the Region and/or SOWAER were not acting according to a market economy operator logic when they adopted the measures granted to BSCA.

(421)

The Commission also notes that the reports supplied in support of the Walloon Government's decisions justify the need for these investments through the positive impact of the airport's development on the economy and employment situation in Charleroi and its region (153). However, the Commission points out that it is settled case-law that regional development considerations cannot be taken into account when applying the market economy operator test (154).

(422)

Despite no business plan being supplied by the Region and/or SOWAER, the Commission has examined whether, for the group consisting of the Region-SOWAER, the net present value of each set of measures identified in recital 416 is positive. If the net present value of a measure is positive, this means that the measure in question is profitable for the operator concerned.

(423)

The net present value has been calculated by totalling the discounted cash flows (revenue minus expenditure), aggregated for the Region-SOWAER, expected from each set of measures at the time when it was granted.

(424)

The discount rate used to calculate the net present value has been determined by establishing the cost of capital for the entity having granted the measure at the time when it was granted. The cost of capital for an entity depends on its financing structure, particularly in terms of equity and debt. In the present case, most of the expenditure associated with the project undertaken by the Region-SOWAER group is covered by the investments funded by SOWAER. That is why the Commission has decided to calculate the cost of capital for the entity granting the measure by using the cost of capital given by the structure of SOWAER's balance sheet, which is the financing structure chosen by the Region-SOWAER group, and its conditions of access to capital markets.

(425)

Under the 2002 agreements, the Region-SOWAER decided to place the land and infrastructure of Charleroi airport at BSCA's disposal, in return for a concession fee, while undertaking to develop this infrastructure in accordance with the investment programme annexed to the 2002 SOWAER/BSCA agreement, and to carry out the major repairs and maintenance as well as pay BSCA a subsidy for certain services associated with the airport activities.

(426)

The counterfactual scenario would have consisted in the Region-SOWAER not signing the 2002 agreements and therefore not committing to further significant investments or granting the ‘fire-maintenance’ subsidy. The Commission has assumed that, in this counterfactual scenario without any aid, the airport would probably have continued to operate, but to a much lesser extent, given the need for the investments stipulated by the 2002 agreements in order to significantly increase traffic at the airport. This counterfactual scenario would have led to a slightly positive net present value, which is impossible to estimate with any degree of reliability, particularly as it would be very difficult to estimate the expected traffic in the absence of the 2002 agreements and the concession fees obtained from BSCA by the Region-SOWAER. In its net present value calculations, the Commission has therefore assumed that the net present value of the counterfactual scenario is zero. If, on the basis of this assumption, the net present value of the 2002 agreements is negative, this would definitely be the case if the net present value of the counterfactual scenario were assumed to be positive. This assumption is therefore favourable to the Region-SOWAER and to BSCA.

(427)

In order to calculate the net present value of the 2002 agreements for the Region-SOWAER, the Commission has determined the costs and revenue of the Region-SOWAER that could have been anticipated due to these agreements, by including:

(428)

These figures are based on the forecasts available to the Region and SOWAER in 2002, particularly with regard to traffic and costs. The Commission has not therefore taken account of any cost drifts in the investment programme that could not have been anticipated at the time of the decision to commit to the programme in April 2002 (for example, increase in building costs and cost drifts associated with soil stability problems that were unknown when the investment programme was prepared).

(429)

In calculating the net present value, the Commission has also not taken account of the value of the land and infrastructure, either when calculating the scenario in which the 2002 agreements were adopted or when calculating the counterfactual scenario. The net present value calculation is therefore based on the future cash flows expected in 2002.

(430)

Lastly, the Commission has not taken account of any capital gains or dividends received by SOWAER from its holding in BSCA's capital. The Court of Justice has in fact stated that (156), ‘in order to determine whether a State measure constitutes aid, it is necessary to establish whether the recipient undertaking receives an economic advantage which it would not have obtained under normal market conditions. In examining that question, it is for the national court to determine what is normal remuneration for the services in question’. The Commission takes the view that, in the present case, the provision of infrastructure at a price below market price constitutes an advantage for BSCA, even if SOWAER expects to recover its loss through the growth in its capital or the dividends that it will receive. The Commission also notes the effects on competition of an approach in which any capital gains and dividends are taken into account. In extreme cases, this scenario would result in the acceptance that a public authority could demand a zero concession fee from an airport in which it was a shareholder (as said authority could expect dividends and/or an increase in the value of its shares), without this constituting aid. This would enable the airport in question to offer very low charges to airlines, thus distorting competition, particularly in relation to private airports.

(431)

The following table indicates the cost of the economic investments taken into account by the Commission in calculating the net present value of the 2002 measure.

In order to produce this table, the Commission started with the investment programme planned for Charleroi airport, which was annexed to the SOWAER/BSCA agreement of 15 April 2002. Although annexed to the SOWAER/BSCA agreement of 15 April 2002, this programme does not identify the investments remaining to be made on the date of 15 April 2002, but all the investments that should have been made from 1 January 2001 or that remained to be made. In order to identify the investments remaining to be made on the date of 15 April 2002, the Commission transferred to 2002 the investments planned in 2001 and 2002 (157) and then deducted from this sum those investments already made on 15 April 2002  (158).

Table 13

Cost of the investments remaining to be made as at 15 April 2002