Probe into aid for Leipzig-Halle airport
By Sophie Mosca | Wednesday 15 June 2011
The European Commission opened, on 15 June, an in-depth investigation to check whether aid granted to the Leipzig-Halle airport in Germany to finance new infrastructure projects is in line with the Union’s state aid rules. It notes that “Germany has not demonstrated that the public funding, which covers 100% of the total investment costs, is justified and proportionate” and that the airport should contribute to the financing of the projects, in particular considering its “good economic prospects”. A statement by the Commission reads: “100% public funding of the investments seems to be excessive and may trigger a windfall profit for the airport that would distort competition”.
The loans granted since 2006 by different public shareholders and the capital injection of €255 million are being used to improve the airport’s infrastructures (noise reduction, de-icing and extension of runways, security, etc). The beneficiary of the subsidies is the airport operator, Flughafen Leipzig-Halle GmbH. The Commission points out that the capital injection was not preceded by a business plan or assessment of the long-term prospects for profitability, and it “has doubts that the shareholder loans were granted at market rates”.
Germany, which notified the aid in April 2010, considers that the construction of infrastructure at Leipzig-Halle airport is not economically viable and that no private investor would finance such infrastructure required for reasons of safety and security. It consequently argues that it does not constitute an economic activity within the meaning of state aid rules, but rather a general interest mission.
This interpretation conflicts with a judgement by the EU General Court of 23 March 2011 concerning this same airport. The ruling confirmed the Commission’s approach that the operation of an airport is an economic activity, and that the construction of airport infrastructures is inseparable from this activity. Loans granted for that purpose therefore constitute state aid (Cases T-443/08 and T-455/08).
For the EU executive, the subsidies in question in this new case may give considerable advantages to Leipzig-Halle airport, which “may distort competition” because it “is in competition with cargo airports not only from Germany but also from other member states, such as Vatry (France) and Brussels (Belgium)”. It points out that the Leipzig airport serves around 2.7 million passengers, that since the construction of the Southern runway in 2008 it is the European hub of DHL Express, and that some 524,000 tonnes of freight were transported to and from the airport in 2009. The Commission thus questions Berlin’s assessment that the infrastructure activity at the airport is not economically viable.