IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 01 Jan 2011 | Removal date: open ended
Still in force

Financial grant

On 19 December 2011, Germany notified the EC about an additional state aid due to an increase in the budget for the reconstruction of Kassel Calden Aiport.
 
The Commission already approved state aid for this project in the past: NN14/2007 , N112/2008 and N335/2010, all based on lower estimated total construction costs.
 
The 2011 state aid proposal amounts to EUR 271 million, split between the "Land" Hessen EUR 233 million, the "Landkreis" Kassel EUR 15.5 million, city of Kassel EUR 15.5 million and the municipality of Calden EUR 7.0 million.
 
The beneficiary of the EUR 271 million direct grant is the "Flughafen GmbH Kassel" (FGK) owned by the Land Hessen (68%), the city of Kassel (13 %) , the Landkreis Kassel (13%) and the municipality of Calden (6%).
 
Construction costs are completely covered by the grant. They account for EUR 271 million. In the previous approvals by the EC these costs were estimated at EUR 151 million in 2008 and EUR 225 million in 2010. 
 
The German authorities argue that the application of article 107(1) TFEU for state aid definitions is not appropriate because the activities are covered under the public policy remit. The EC did not concur with the German reasoning and investigation whether an application under article 107(3) TFEU would allow for a violation of article 107(1) TFEU.
 
The EC states that: "With regards to airports, any economic advantage which FGK receives from public financings to finance its development would strengthen its position vis-ŕ-vis its competitors on the European market of providers of airport services' (par. 48 , Letter from the EC to Germany - Brussels 25.07.2012). "With regard to airlines, the Commission notes that financial support for an airport, as in the present case, may be passed on to airlines in the form of lower landing fees. This in turn may distort competition between airlines serving airports in the same catchment area. Therefore, the Commission concludes that the measures have the potential to distort competition at the level of airlines"(par. 49, Letter from the EC to Germany - Brussels 25.07.2012).
 
In its previous decisions (NN 14/2007 and N 112/2008), the Commission has considered that although there will be an impact on competition and trade at Community level, it will be limited. Since the increase in budget does not increase the capacity of the airport in relation to the capacity envisaged by the approved measures, the same reasoning as in the previous decision still applies to the new notification(par. 69-70, Letter from the EC to Germany - Brussels 25.07.2012)
 
The Commission finally "decided not to raise any objections to the investment of the shareholders of FGK on the grounds that it is aid compatible with the common market under article 107(3) (c) TFEU. (para 77, Letter from the EC to Germany - Brussels 25.07.2012).
 
As to potential distortions at the airport level, affected trading partners can not be found. The EC argues that only the German airports of Paderborn-Lippstadt, Hannover and Erfurt are in the "catchment area", so these regions and their infrastructure are potentially affected by the state aid (para. 63, Letter from the EC to Germany - Brussels 25.07.2012). With respect to distortions at the airline level, the EC mentions that lower landing fees are trade distorting and a strong difference in this fee levels could actually enlarge the current "catchment area".
 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.

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