EUROPEAN COMMISSION

Brussels, 30.11.2020 C(2020) 8566 final

PUBLIC VERSION

This document is made available for information purposes only.

Subject: State Aid SA.59378 (2020/N) – - Aid of a social character to passengers on domestic flights to and from and Sønderborg

Excellency,

1. PROCEDURE

(1) On 12 November 2020, Denmark pre-notified to the Commission an aid scheme that provides for social aid to certain categories of passengers travelling on domestic flights to and from Bornholm and Sønderborg airports (the “measure”).

(2) By electronic notification of 25 November 2020 (the “notification”), the Danish authorities notified the measure to the Commission, in accordance with Article 108(3) of the Treaty on the Functioning of the European Union (“TFEU”). The notification was registered under State aid case number SA.59378 (2020/N).

(3) Denmark exceptionally agrees to waive its rights deriving from Article 342 TFEU, in conjunction with Article 3 of Regulation 1/1958,1 and to have this Decision notified and adopted in English.

2. DESCRIPTION

2.1. The objective of the aid

(4) Bornholm Airport is a small regional airport located on the island of Bornholm, Denmark (the "Bornholm Airport"). The island lies in the between

1 Regulation No 1 determining the languages to be used by the European Economic Community, OJ 17, 6.10.1958, p. 385.

His Excellency Udenrigsminister Minister for foreign affairs Asiatisk Plads 2DK-1448 København, Denmark

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

Denmark, , Germany and . Sønderborg Airport is a small regional airport located on the island of , Denmark (the "Sønderborg Airport"). The island lies in the Baltic Sea between Denmark and Germany. Both Bornholm and Sønderborg airports are directly operated by the Danish Transport, Construction and Housing Authority (the "Transport Authority"), an agency within the Danish Ministry of Transport, Construction and Housing.

(5) The notified aid scheme is designed to increase mobility and accessibility to those two geographical areas to certain categories of passengers and to promote social inclusion of the populations of those . According to Denmark, due to the COVID-19 crisis the two regions and in particular Sønderborg experienced reduced connectivity to other regions of Denmark.

2.2. Nature and form of the aid

(6) The notified aid scheme provides for discounts on the domestic airline ticket fares to and from Bornholm and Sønderborg airports available to certain categories of passengers2 travelling to/from Bornholm and Sønderborg airports. The discount will correspond to 50% of the average ticket price for adults (hereafter referred to as “the average standard ticket price”).

(7) The standard ticket price for adults is the airline fare including taxes, airport charges and fuel/insurance/security surcharges etc. The average standard ticket price is calculated based on all tickets except tickets sold at a discount to the eligible final consumers and tickets sold through business agreements. The average standard ticket price is calculated for three periods:

(a) from the signing of contract between the Transport Authority and the airline to 30 November 2020,

(b) from 1 December 2020 to 15 December 2020, and

(c) from 16 December 2020 to 31 December 20203.

(8) For all tickets sold to eligible final consumers at a price corresponding to maximum 50% of the average standard ticket price within one of the periods above, airlines will receive from the Transport Authority a refund corresponding to 50% of the average standard ticket price in that same period.

(9) The discount must be available for all tickets on all departures for all eligible passengers. There is no restriction on the number of trips per eligible person on the route. The discount is available for both single and return journeys. Since the average standard ticket price may not be known in advance, the participating airlines risk that the price offered to eligible passengers turns out to be less than 50% of the average ticket price in which case the Transport Authority will not

2 Children: 2-11 years, young people: 12-25 years, students above 25 years, apprentices and persons liable for military service, elderly over 62 years and persons on early retirement, and disabled persons (e.g. flying with a carer).

3 For example, for tickets sold to eligible final consumers on 1 December 2020, the average standard ticket price for the period 1 December 2020 to 15 December 2020 will apply.

2

offer a refund. Denmark considers this will create an incentive for participating airlines to lower the price for eligible final consumers.

2.3. National legal basis

(10) The legal basis for the measure is the draft Ministerial decree concerning the approval of the aid scheme to incentivise airlines operating to/from Bornholm and Sønderborg airports to offer certain categories of eligible final consumers a discount.

2.4. Administration, budget and duration of the measure

(11) The Transport Authority will be responsible for granting the aid4. The call for applications for aid under the measure will set out the detailed conditions for receiving the aid, the procedure to follow, the documents to submit in applying for the aid, the commitments to be taken by the aid beneficiaries and the controls to be performed by the Transport Authority.

(12) The budget of the scheme is DKK 10 million (approximately EUR 1.3 million) to be allocated from the general budget of the State.

(13) The scheme will come into effect upon its approval by the Commission and will be in force until 31 December 2020.

2.5. Beneficiaries

(14) The measure is open to all airlines that operate domestic flights to/from Bornholm and Sønderborg airports in Denmark. The Danish authorities estimate that at least two airlines will benefit from the measure.

2.6. Necessity and justification of the measure

(15) In the opinion of the Danish authorities, the scheme is necessary and appropriate in light of the regional status of the eligible areas5. Both Sønderborg and Bornholm are non-predefined ‘c’ areas under paragraph 168 of the Commission’s Guidelines on Regional State aid for 2014-2020 (RAG)6. Sønderborg is a non- predefined ‘c’ area in application of Criterion 5 of paragraph 168 of the RAG and Bornholm is a non-predefined ‘c’ area in application of criterion 2 of paragraph 168 of the RAG7. The aim of the measure is to reduce the isolation of those

4 The aid will be granted directly by the Transport Authority to the beneficiaries.

5 Aid of a social character which is the subject of the present decision is considered by the Danish authorities to be more appropriate for air services that can be provided commercially but at a cost which is a barrier to social inclusion. It allows support to be targeted at those communities that are disadvantaged by high air fares. Those high fare levels (relative to other parts of Denmark) are a consequence of the “thinness” of typical routes between the concerned areas.

6 See: OJ C 209, 23.7.2013, p. 1-45.

7 See also: State aid case SA.38247 Regional aid map for Denmark (2014-20), OJ C 251, 1.8.2014, p. 1.

3

communities by promoting social and commercial cohesion through the proposed scheme.

2.7. Arrangements for the granting of the aid and monitoring

(16) Tickets will clearly state the price and the amount of the reduction. The airlines will require proof that a passenger is eligible (for example by checking the identity card or passport of the passenger) and will be required to commit to following a certain procedure to ensure that the relevant documentation has been verified before boarding. Those obligations will be determined in the contracts agreed between the Transport Authority and the airlines.

(17) The Transport Authority will ensure that all airlines that benefit from the scheme will comply with those obligations. If deemed necessary by the Transport Authority, unannounced inspections at the airports will be performed.

(18) The scheme will operate through the current sales distribution channels including travel agencies and directly through the airlines’ websites. There is no discrimination related to the distribution channels in the application of the scheme. The discounts are applied by the airline or booking agent at time of purchase. The airline or booking agent will subsequently invoice Transport Authority for all the discounts applied within an agreed period. Proof of the volume of discounts issued will be required and that the discounts were given to eligible passengers.

(19) Participating airlines will be required to report on the discounted tickets to the Transport Authority by 15 January 2021. The Transport Authority will disburse the aid no later than 20 February 2021. If the scheme does not have adequate funds to cover all of the discounted tickets sold to eligible final consumers, the funds will be paid out proportionately to participating airlines.

2.8. Cumulation

(20) The Danish authorities confirm that the aid cannot be cumulated with aid received from other local, regional or national aid scheme to cover the same eligible costs8.

3. ASSESSMENT

3.1. Existence of State aid

(21) For a measure to constitute State aid within the meaning of Article 107(1) TFEU, all the conditions set out in that provision must be fulfilled. First, the measure must be imputable to the State and financed through State resources. Second, it must confer an advantage on its recipients. Third, that advantage must be selective in nature. Fourth, the measure must distort or threaten to distort competition and affect trade between Member States.

(22) The measure is financed from the general budget of the State (recital (12)). The measure is imputable to the State, as it will be set out in a ministerial decree

8 Including de minimis aid (see Commission Regulation (EU) No 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid (OJ L 352, 24.12.2013, p. 1).

4

(recital (10)) and the aid will be granted by the Transport Authority (recital (11)), i.e. granted by the State itself or by any intermediary body acting by virtue of powers conferred on it. Therefore, the Commission considers that the measure is financed from State resources and is imputable to the State.

(23) The measure confers an advantage on its beneficiaries in the form of direct grants. As a result of the measure, certain categories of passengers will pay a lower price than they would otherwise. Lower prices due to the measure are in principle likely to incentivise those categories of passengers to fly more than they would otherwise on domestic flights to and from Bornholm and Sønderborg airports. The measure may thus bring additional passengers to the domestic airlines concerned (compared to a counterfactual situation without the measure), at no cost to those airlines.

(24) The advantage granted by the measure is selective, since it is awarded only to certain undertakings active in Denmark, namely airlines that operate domestic flights to/from Bornholm and Sønderborg airports in Denmark.

(25) The measure is liable to distort competition, since it strengthens the competitive position of its beneficiaries. It also affects trade between Member States, since those beneficiaries are active in sectors in which intra-Union trade exists.

(26) In view of the above, the Commission concludes that the measure constitutes aid within the meaning of Article 107(1) TFEU.

3.2. Lawfulness of the measure

(27) By notifying the measure before putting it into effect, the Danish authorities have respected their obligations under Article 108(3) TFEU.

3.3. Compatibility

(28) Since the measure involves aid within the meaning of Article 107(1) TFEU, it is necessary to consider whether that measure is compatible with the internal market.

(29) Pursuant to Article 107(2)(a) TFEU the Commission may declare compatible with the internal market aid “having a social character, granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned”.

(30) Point 156 of the Aviation Guidelines9 explains that aid of a social character for air transport services will be considered compatible with the internal market pursuant to Article 107(2)(a) TFEU, provided that the following cumulative conditions are met:

(a) the aid must effectively be for the benefit of final consumers;

9 Communication from the Commission, Guidelines on State aid to airport and airlines, OJ C 99, 4.4.2014, p. 3.

5

(b) the aid must have a social character, that is, it must, in principle, only cover certain categories of passengers travelling on a route (for instance passengers with particular needs like children, people with disabilities, people on low incomes, students, elderly people, etc.); however, where the route concerned links remote regions, such as outermost regions, islands, and sparsely populated areas, the aid could cover the entire population of that ;

(c) the aid must be granted without discrimination as to the origin of the services, meaning irrespective of the airline which is operating the services.

(31) The Commission finds that the measure will effectively benefit final consumers. The air carriers that operate the routes to/from Bornholm and Sønderborg airports in Denmark will act as intermediaries and will be reimbursed by the competent authority, the Transport Authority, on production of proof of sale, in an amount equal to the financial benefit that they have effectively granted to each of the eligible passengers.

(32) The Commission also finds that the benefit to be granted has a social character because it is reserved to particular categories of passengers whose situation justifies the payment of aid for social reasons. The categories of eligible consumers generally correspond to lower income passengers (children, young people and students, apprentices and persons liable for military service, elderly over 62 years and persons on early retirement, and disabled persons). Furthermore, the regions served by Bornholm and Sønderborg airports face connectivity issues to other regions of Denmark, that have been exacerbated due to the COVID-19 crisis (recitals (5) and (15)).

(33) Finally, the Commission finds that the notified measure is open without discrimination to all EEA air carriers that operate domestic air services to/from Bornholm and Sønderborg airports in Denmark.

(34) The Commission therefore concludes that the measure complies with all the conditions set out in Article 107(2)(a) TFEU and point 156 of the Aviation Guidelines.

3.4. Transparency

(35) The Danish authorities commit to comply with the transparency obligations with regard to publication of the details of any individual awards under the proposed measure, as required in section 8.2 of the Aviation Guidelines.

6

4. CONCLUSION

The Commission has accordingly decided not to raise objections to the aid on the grounds that it is compatible with the internal market pursuant to Article 107(2)(a) of the Treaty on the Functioning of the European Union.

If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to the disclosure to third parties and to the publication of the full text of the letter in the authentic language on the Internet site: http://ec.europa.eu/competition/elojade/isef/index.cfm.

Your request should be sent electronically to the following address:

European Commission, Directorate-General Competition State Aid Greffe B-1049 [email protected]

Yours faithfully,

For the Commission

Margrethe VESTAGER Executive Vice-President

7