No aid in two contracts between Lübeck Airport and Ryanair

Lübeck Airport is a small regional airport about 70km from Hamburg. Until October 2009, Infratil Ld, a New Zealand-based infrastructure investment company, owned 90% of Lübeck Airport. The City of Lübeck bought back Infratil's 90% shareholding in the airport.

In January 2009 and June 2010, the European Commission received two complaints from Schutzgemeinschaft gegen Fluglärm Lübeck und Umgebung alleging unlawful State aid by the German authorities in favour of Flughafen Lübeck GmbH ("FLG"), the operator of Lübeck Airport, and Infratil Limited ("Infratil"), the majority shareholder in FLG.

On 17 October 2010, the Commission received further information from Air Berlin, including press articles about the complaints against Ryanair.

First, the Commission had to examine whether the purchase price and agreements concluded in 2009 gave Infratil an undue economic advantage over its competitors under the Market Economy Investor Principle ("MEIP").

Moreover, the Commission had concerns that the 2006 schedule of airport charges and underlying discounts, the de-icing charges and individual agreements with Ryanair gave airlines using the airport an undue economic advantage over their competitors. The 2006 schedule of charges (which provided exemptions from the payment of landing charges for certain passenger aircraft and new business, and provided discounts to new carriers based on passenger volume) applied to all airlines using the airport, except Ryanair in the case of an individual agreement with FLG.

In March 2010, Ryanair and FLG signed a side letter to the original agreement, under which Ryanair paid a fee per aircraft turnaround which covered all airport charges, a passenger fee per arriving passenger and a security fee per departing passenger. In return, FLG paid or credited Ryanair for each passenger arriving at the airport an amount in respect of marketing services and an additional fee per arriving passenger for the duration of the March 2010 agreement. On 31 October 2010, Ryanair and FLG signed a second side letter extending the terms of the original agreement for a medium-term period.

In 2012, the European Commission opened an in-depth investigation into these agreements. Regarding the 2006 airport charges and underlying discounts, the Commission noted that the airport charges at Hamburg Airport were substantially higher than those at Lübeck Airport, raising doubts about whether airlines using Lübeck Airport paid a market price. The Commission also noted that the level of the 2006 airport charges and non-aviation revenue seemed to contribute to negative financial results for FLG since 2006. With no business plan provided by the German authorities, the Commission had taken the preliminary view that the 2006 schedule of airport charges involved State aid that could not be considered to be compatible with the internal market. The Commission applied the same preliminary position to the 2010 agreements between Ryanair and FLG.

The City of Lübeck challenged this decision before the General Court of the EU, and. In a 2014 landmark judgment1 the General Court held that, to determine the selectivity criteria ,general tariffs set by an airport have to be assessed at the level of the airport. In this case, the airport charges applied to all airlines on a non-discriminatory basis. As they do not favour any airline, they are not selective and do not constitute State aid. Therefore, they do not have to comply with the MEIP.

The Commission decision to open the in-depth investigation into the 2006 schedule of charges was annulled. The EU Court of Justice confirmed this annulment in December 20162.

Following that judgment, the European Commission had to review its preliminary analysis of Lübeck Airport's charges.

In February 2017, the Commission adopted a formal decision on different measures concerning the financing and privatization of Lübeck Airport and a 2000 agreement between Lübeck Airport and Ryanair. The Commission concluded that the Airport’s financing measures fell outside the scope of State aid rules, since Lübeck Airport has ceased its main economic activity and no longer operates scheduled or charter flights.

Moreover, in line with the new EU Court of Justice jurisprudence, the Commission found that the airlines’ de-icing and airport charges constituted a general measure and not State aid as they applied to all airlines using the airport. Finally, the Commission found that the terms of an agreement concluded in 2000 between Lübeck Airport and Ryanair regarding airport charges and marketing arrangements would have been acceptable to a private airport manager and did not contain any State aid.

The 2010 agreements between Lübeck Airport and Ryanair were subject to a separate decision. The European Commission, having assessed both contracts under the 2014 Aviation Guidelines (as they provided for specific conditions for Ryanair), concluded in its decision of 22 February 2018 that the two contracts contained terms acceptable to a private investor and therefore did not involve State aid. The assessment was based on an airport business plan, which included details of the airport charges and commercial revenues generated by the contract as well as the incremental costs under the contract.

This recent decision concludes the Lübeck Airport saga: two ECJ judgments, three European Commission decisions, 10 years of proceedings. No aid. Much ado about nothing...

1EU General Court, 9 September 2014, Hansestadt Lübeck v European Commission, T‑461/12.
2EU Court of Justice, 21 December 2016, European Commission v Hansestadt Lübeck, Case C-524/14.