Magnus Schmauch. EU Law on. Law, Economics and Policy

Transcription

1 Magnus Schmauch EU Law on State Aid to Airlines Law, Economics and Policy

2 Magnus Schmauch EU Law on State Aid to Airlines Law, Economics and Policy

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4 Magnus Schmauch EU Law on State Aid to Airlines Law, Economics and Policy

5 A catalogue record for this book is available from the German National Library, detailed bibliographical data can be found on the internet at All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the publisher. The publisher expressly disclaims all responsibility and liability with regard to the topicality, correctness, completeness or quality of the information provided. ISBN Print: ISBN E-Book: Lexxion Publisher Berlin Cover: Tozman Satz & Grafik, Berlin Typeset: Michael Bellenbaum, Berlin

6 1 Content FOREWORD PREFACE LIST OF ABBREVIATIONS INTRODUCTION Presentation of the topic Methodology A SINGLE SKY AIRLINE REGULATION IN THE EU Introduction The era of regulated air transport ( ) The Chicago system Bilateral Air Service Agreements Inter-airline Pooling Agreements The IATA and the tariff-fixing regime Deregulation in the United States Inspiration and role model Liberalization of the airline industry in Europe ( ) Introduction Air transport in EU law The first liberalization package and other developments ( ) The second Package and other developments ( ) The third package and developments after The Low-Cost Revolution in Europe Other developments after liberalization the 1996 and 1999 Communications from the Commission External relations International aspects of the airline industry The Commission on the move: Bilaterals between the Union and Third Countries Subsidies to airlines in the USA EU protection against subsidization of foreign airlines How do airlines make money? Conclusions STATE AID CONTROL IN THE EUROPEAN UNION State aid policy and State aid control EU Law and the Role of the ECJ EEA Law and the Role of the EFTA Court

7 2 Content 3.2 The interdisciplinary context of State aid law: economics and policy analysis Economics Policy Analysis Finding the balance: economic efficiency vs. equity The State Aid Action Plan Commission Guidelines and their application Article 107(1) TFEU The definition of State aid The resources must be attributable to the state Advantage The aid must confer an advantage on the undertaking The Market Economy Investor Principle Services of General (Economic) Interest The notion of an undertaking and the selectivity criteria The notion of an undertaking Selectivity The effect on trade and distortion of competition Introduction The development of Competition analysis under Article 107(1) TFEU The relationship between Articles 101 and 107 TFEU The applicability of Articles 107 and 101 TFEU Market definitions in Air transport Effect on trade between Member States State aid that is compatible with the Internal market Article 107(2) TFEU State aid that may be compatible with the Internal market Introduction Article 107(3)(a) and (c) TFEU Aid to promote regional economic development Article 107(3)(b) TFEU Aid to important projects and to remedy a serious disturbance in the economy Article 107(3)(c) TFEU Development of certain economic activities or of certain economic areas Article 107(3)(d) TFEU State aid that promotes culture and heritage conservation Article 107(3)(e) TFEU State aid specified by decision of the Council

8 Content The more economic approach Applying the State Aid Action Plan The State Aid Action Plan and State aid Control The Balancing Test What is the Common interest? Conclusions STATE AID PROCEDURE AND REGULATION 659/ Introduction Basic definitions in the Procedural Regulation New and existing aid temporal aspects Aid schemes and individual aid measures Other definitions in the Procedural Regulation Procedure for assessment of the aid The procedure regarding notified State aid Authorization by the Council Procedure regarding unlawful aid Decisions of the Commission Recovery of aid Misused aid The procedure regarding existing aid Third Parties and Interested Parties Monitoring Common provisions Locus standi: Access to justice Locus Standi in State aid Law General principles Locus standi for airlines a case study The simplification package The Notice on the Enforcement of State aid law by National Courts The Notice on a Simplified Procedure Code of best Practice in State aid Procedures Conclusions STATE AID LAW, AIR TRANSPORT AND THE AIRLINE INDUSTRY The rules in the Treaty of the Functioning of the European Union concerning air transport State intervention and Air transport The 1994 Guidelines Scope of the Guidelines

9 4 Content Operating aid to airlines Application of the Market Economy Investor Principle Capital Injections Loans and guarantees Privatizations of airlines Concessions of exclusive rights for activities accessory to air transport Transparency of financial transactions Accelerated procedure The 2005 Guidelines Origins: The Charleroi Decision and the Ryanair case Scope Start-up aid Conclusions RECENT COMMISSION DECISIONS ON STATE AID TO AIRLINES Introduction Aid schemes designed by airports and the Commission s invitation to submit comments Dortmund airport (favourable tariffs for new routes) Pau-Béarn airport (reduced airport service fees and marketing services via Ryanair s website) Tampere airport (preferential tariff for the sole user of a terminal and exemption from security charges) Lübeck Airport (privatization and reduced airport charges) Alghero airport (ground-handling charges and marketing support) Aarhus airport (preferential agreement concluded with low-cost airline) Bratislava airport (reduced airport charges) Frankfurt/Hahn airport (preferential tariffs and consultant reports claiming the scheme to be compatible with the MEIP) Berlin/Schönefeld airport (cross-subsidization from other airports, exclusive rent agreements, reduced charges and marketing support) Final decisions on State aid to airlines Toulon airport (Start-up aid to low-cost airline compatible with the Internal market)

10 Content Torino and Cuneo airports (Start-up aid declared compatible with the Internal market) State aid to the airline Intermediación Aérea SL (State aid compatible with the internal market) Leipzig airport and DHL (State aid to cargo operator) Alitalia (State guarantees to failing airline) Conclusion Enforcement of the State aid rules before national courts Airline-related cases Conclusion CONCLUSIONS The airline industry State aid control State aid procedure Guidelines on State aid to airlines Commission decisions Final remarks ANNEX THE FREEDOMS OF THE AIR BIBLIOGRAPHY Books and journals Newspapers and magazines SUMMARY

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12 7 Foreword It is a pleasure to introduce the present volume, which contains an adroit analysis of the rules on State aid to airlines. The work extensively addresses the legislation and current Guidelines applicable to airlines as well as how they have been dealt with. It also encompasses the developments of the airline industry, from the liberalization of the sector to the advent of the low-cost airlines. The airline industry has traditionally been the subject of large subsidies by national governments. In the European Union and the European Economic Area these subsidies have been reduced as a result of the three-step liberalization of the industry in the late 20 th century through legislative packages on European level. While the incumbent airlines have struggled to restructure in order to survive in a liberalized market, the newcomers, low-cost airlines, changed both the nature of air travel and the airline industry itself. The volume presents the peculiarities of State aid control in the EU and the EEA. Law, policy and economics all form integral parts of State aid law. With the spotlight placed on an intensely competitive industry, which nevertheless is considered to fulfill important services of general economic interest by connecting remote regions and thus promoting regional and social cohesion, the present book underscores the importance of understanding political and economic considerations behind the State aid policy in the EU and the EEA. These considerations illuminate certain features of State aid law such as the margin of discretion accorded to the European Commission and the EFTA Surveillance Authority. They also may provide a better understanding of the relevant case-law of the Court of Justice of the European Union which emphasizes the exclusive relationship between the Member States and the Commission to the detriment of the locus standi of individuals and economic operators, in particular competitors of the beneficiaries of the aid. A closer look is taken at the State Aid Action Plan (SAAP), presented by the European Commission in 2005, which has been sidelined since the 2008 financial crisis. The SAAP intended to introduce more elaborate economics in the field of State aid, but the financial crisis has shown that policy considerations still play a critical role in the field. Nevertheless, this policy initiative has led to more elaborate rules from the Commission on the application of Article 107(3) TFEU. The book covers the different aspects of State aid to airlines in both breadth and depth. As a result it should be useful not only to practitioners and those interested in State aid law more broadly, but also to those with an interest in the impact different policy considerations can have on the application of State aid

13 8 Foreword law in a specific sector. Readers interested in EEA law will find this book useful despite the limit implied in the title, since the relevant legislation is equally applicable in the EEA. Prof. Dr. Dr.h.c. Carl Baudenbacher President of the EFTA Court

14 9 Preface This thesis was written during my time in Luxemburg as a lawyer at the Court of Justice of the European Union and visiting researcher at the EFTA Court. It has always been a dream of mine to write one, and I am highly indebted to Professors Carl Baudenbacher and Peter Nobel, for giving me this opportunity to fulfil it. Thank you! I particularly wish to thank the EFTA Court for letting me borrow one of their offices during the years and former judge Pernilla Lindh, with whom I had the honor of working at the Court of Justice of the European Union during the years I also wish to thank Cath Howdle for the excellent and I guess often tedious work of editing my Euro-English and make it readable. There are countless others who deserve mention, but according to the old Swedish proverb, ingen nämnd, ingen glömd. This book is dedicated to Iris Spyckerelle and to il miglior fabbro, my grandfather Hans-Erik Mattsson. Without his faith this endeavor would never have been possible, but sadly he never got to see it become reality. Luxemburg, October 2012

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