EUROPEAN COMMISSION
Brussels, 29.12.2020 C(2020) 9659 final
In the published version of this decision, some PUBLIC VERSION information has been omitted, pursuant to articles 30 and 31 of Council Regulation (EU) This document is made available for 2015/1589 of 13 July 2015 laying down information purposes only. detailed rules for the application of Article 108
of the Treaty on the Functioning of the European Union, concerning non-disclosure of information covered by professional secrecy. The omissions are shown thus […]
Subject: State Aid SA.59188 (2020/NN) – Italy – COVID-19 aid to Alitalia
Excellency,
1. PROCEDURE
(1) By electronic notification of 25 December 20201, the Italian Republic notified aid to Alitalia – Società Aerea Italiana S.p.A in Extraordinary Administration (“Alitalia”) in the form of a EUR 73.02 million grant (“the Measure”). This Measure is granted (i) under the fund established by Article 79 of Decree-Law No 18 of 17 March 2020 granting compensation to airlines affected by the COVID-19 outbreak (“the Fund”), in accordance with Article 108(3) of the Treaty on the Functioning of the European
1 The notification followed preliminary exchanges between the Italian authorities and the Commission services, which started on 23 October 2020 with the submission of a pre-notification from the Italian authorities. The Commission’s services sent a request for information on 12 November 2020, to which the Italian authorities replied on 27 November 2020. On 11 December 2020, the Commission services sent an additional request for information to the Italian authorities that replied on 14 December 2020. The Italian authorities and the Commission services hold several conference calls throughout the pre-notification procedure.
S.E On. Luigi DI MAIO Ministro degli affari esteri e della cooperazione internazionale P.le della Farnesina 1 I - 00194 Roma Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111
Union (“TFEU”), and (ii) under Decree-Law 104 (“the August decree”) of 14 August 2020, authorising the Ministry of Economic Development to grant aid in the form of a direct grant up to EUR 250 million to companies meeting the eligibility conditions established by Decree-Law of 17 March 2020 to receive compensation under the Fund.
(2) Italy exceptionally agrees to waive its rights deriving from Article 342 TFEU, in conjunction with Article 3 of Regulation 1/1958,2 and to have the present decision notified and adopted in English.
2. DESCRIPTION OF THE MEASURE
2.1. Objective of the Measure
(3) Italy considers that the COVID-19 outbreak and the related governmental restrictions severely affected the aviation sector in that Member State. In that context, Decree-Law No 18 of 17 March 20203 provides for the establishment of the Fund of EUR 350 million to make good the damage directly suffered by airlines due to the imposition of travel restrictions and other containment measures linked to the COVID-19 outbreak.
(4) To be eligible for damage compensation under the Fund, a company must (i) hold an air passenger license issued by the Italian Civil Aviation Authority (ENAC) and (ii) be entrusted, on the date of adoption of Decree-Law No 18 (i.e. 17 March 2020) with public service obligations pursuant to Regulation (EC) No 1008/2008.4
(5) By decision of 4 September 2020,5 the Commission approved as compatible under Article 107(2)(b) TFEU aid in form of a grant of EUR 199.45 million to Alitalia for damages resulting from the COVID-19 outbreak due to the related governmental restrictions during the period 1 March to 15 June 2020.
(6) The present notification extends the period from 16 June to 31 October 2020 (“the Eligible Period”) for which compensation under the Fund can be granted to Alitalia for damages resulting from the COVID-19 outbreak due to the related governmental restrictions. A ministerial decree will establish the detailed arrangements for the application of the provision providing for compensation under the Fund for the additional period.
(7) The Measure aims at compensating damages suffered by Alitalia in the Eligible Period caused directly by the COVID-19 outbreak due to the related governmental restrictions on its operations on the following routes:
2 Regulation No 1 determining the languages to be used by the European Economic Community, OJ 17, 6.10.1958, p. 385.
3 Decree-Law of 17 March 2020, No 18, ‘Misure di potenziamento del Servizio sanitario nazionale e di sostegno economico per famiglie, lavoratori e imprese connesse all'emergenza epidemiologica da COVID- 19’, as amended and converted into law by Law of 24 April 2020, n. 27, by Article 202 of Decree-Law of 19 May 2020, n. 34 and by Law of 17 July 2020, n. 77.
4 Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (Recast) OJ L 293, 31.10.2008, p. 3.
5 Commission decision of 4 September 2020, SA.58114 Alitalia damage COVID 19, not yet published.
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- Rome Fiumicino (FCO) – New York (JFK)
- Rome Fiumicino – Washington (IAD)
- Rome Fiumicino – Miami (MIA)
- Rome Fiumicino – Chicago (ORD)
- Rome Fiumicino – Los Angeles (LAX)
- Rome Fiumicino – Boston (BOS)
- Milan Malpensa (MXP) – New York (JFK)
- Rome Fiumicino – Buenos Aires (EZE)
- Rome Fiumicino – Alger (ALG)
- Rome Fiumicino – Tel Aviv (TLV)
- Rome Fiumicino – Sao Paulo (GRU)
- Rome Fiumicino – Rio de Janeiro (GIG)
- Rome Fiumicino – Santiago de Chile (SCL)
- Rome Fiumicino – New Delhi (DEL)
- Rome Fiumicino – Podgorica (TGD)
- Rome Fiumicino – Toronto (YYZ)
- Athens (ATH) – Tel Aviv (TLV)
- Rome Fiumicino – Tokyo (NRT)
- Milan Malpensa – Tokyo (NRT)
(8) Alitalia meets the eligibility conditions to benefit from compensation under the Fund6 established in March 2020. Italy notified to the Commission the Measure under that Fund in favour of Alitalia. Thus, the present decision only covers the assessment of the aid provided to Alitalia7 and it does not assess the August decree.
(9) Italy notified the Measure under Article 107(2)(b) TFEU.
6 See recital 7 of the Commission decision of 4 September 2020.
7 The scope of the present decision does not cover other potential beneficiaries eligible to receive compensation from the Fund or assess the conditions under which compensation can be granted under the Fund itself.
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2.1.1. Travel restrictions linked to the COVID-19 outbreak
(10) The COVID-19 outbreak has resulted in travel restrictions imposed by Member States and third countries and the closing down of the vast majority of passenger air transport domestically, within the Union and globally. Although most of the general confinement measures and border closures adopted by Member States were partially lifted at domestic and Union level in the course of June 2020, the COVID-19 virus continued to pose a serious threat since its outbreak in the first quarter of 2020. As a result, many travel and governmental restrictions remained in place between 16 June and 31 October 2020, in particular on travels to/from third countries.
(11) The notification covers damages suffered on certain routes to/from third countries operated by Alitalia listed in recital (7). The following sub-sections list the restriction on travels and flight activities in place in Italy, Greece and in the third countries concerned.
2.1.1.1. Restrictions applicable in Italy on travels to/from third countries in the Eligible period
(12) Within the Union, Italy was the first country to be hit by the COVID-19 outbreak. Italy declared a state of emergency on 31 January 2020, when it reported its first cases of COVID-19 infections. Italy prolonged that state of emergency until 15 October 20208, which following further prolongation is still in force as of the date of adoption of the present decision.
(13) On 11 June 2020, Italy adopted Decree n°147 prolonging the existing travel restrictions to/from third countries.9 As a general rule, that Decree prohibited all non-essential travels to/from third countries except for essential business, absolute emergency and/or health motives.10 In addition, authorised incoming travelers from third countries were subject to a quarantine period of 14 days after their arrival in Italy.
(14) On 30 June 2020, the Ministry of Health issued an Ordinance n°165 of the Ministry of Health prolonging Decree n°147 until 14 July 2020,11 which enlarged the categories of citizens from third countries allowed to enter Italy by adding those who are permanent residents in Italy or studying in Italy. Furthermore, the ban on non-essential travels was lifted for a selected list of third countries, for which Italy only maintained quarantine measures to citizens from those selected third countries on their arrival in Italy.12
8 https://www.gazzettaufficiale.it/eli/id/2020/07/30/20G00112/sg.
9 Decree n° 147 of the President of the Council of the ministers of 11 June 2020, “Ulteriori disposizioni attuative del decreto-legge 25 marzo 2020, No 19, recante misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19, e del decreto-legge 16 maggio 2020, No 33, recante ulteriori misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19”.
10 Nationals from other Member States were exempted from the prohibition to enter the Italian territory.
11 Ordinance n°165 of the Health Ministry of 30 June 2020, “Ulteriori misure urgenti in materia di contenimento e gestione dell'emergenza epidemiologica da COVID-19”.
12 The selected list of countries were the following: Algeria, Australia, Canada, Georgia, Japan, Montenegro, Morocco, New Zealand, Rwanda, Serbia, South Korea, Thailand, Tunisia and Uruguay. Montenegro and
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(15) By Ordinance n°172 of 9 July 2020 of the Ministry of Health,13 Italy prohibited all travels and all indirect/direct flights to/from the following restricted list of third countries as of 10 July 2020: Armenia, Bahrein, Bangladesh, Brazil, Bosnia, Chile, Kuwait, North Macedonia, Moldova, Oman, Panama, Peru and the Dominican Republic.
(16) By Decree n°176 of 14 July 2020 of the President of the Council of the ministers,14 Italy prolonged the application of Decree n°147, Ordinance n°165 and Ordinance n°172 until 31 July 2020.
(17) By Ordinance n°178 of 16 July 2020 of the Ministry of Health,15 Italy added to the restrictive list of third countries for which both a full travel and flight ban applied the following countries: Kosovo, Montenegro and Serbia.
(18) All measures were prolonged until further notice by Decree-Law of 31 July 2020 n°83.16
(19) On 7 August 2020, Italy adopted Decree n°19817 mainly reiterating the travel and entry restrictions (already in place) until 7 September 2020. The Decree provided for a classification of countries into different groups (from A to F)18, for which different restrictions applied. Travel to/from third countries listed in Group E were prohibited as a general rule, except for essential business, absolute emergency, health motives, study, nationals from other Member States and their relatives (only when returning to Italy); all exempted persons were subject to a 14-days quarantine. Travels to third countries by any means of transport listed in Group F remained fully prohibited unless exceptional circumstances applied, though flight bans were withdrawn. Travel to third
Serbia were removed from that list as of 16 July 2020 (see recital (17)), and Algeria as of 1 August 2020 by Ordinance n°191 of the Ministry of Health of 30 July 2020.
13 Ordinance n°172 of the Health Ministry of 9 July 2020, “Ulteriori misure urgenti in materia di contenimento e gestione dell'emergenza epidemiologica da COVID-19”.
14 Decree n°176 of 14 July 2020 of the President of the Council of the ministers, “Ulteriori disposizioni attuative del decreto-legge 25 marzo 2020, n. 19, recante misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19, e del decreto-legge 16 maggio 2020, n. 33, recante ulteriori misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19”.
15 Ordinance n°178 of the Health Ministry of 16 July 2020, “Ulteriori misure urgenti in materia di contenimento e gestione dell'emergenza epidemiologica da COVID-19”.
16 Decree-Law n°83 of 31 July 2020, “Misure urgenti connesse con la scadenza della dichiarazione di emergenza epidemiologica da COVID-19 deliberata il 31 gennaio 2020”.
17 Decree of the President of the Council of the Ministers of 7 August 2020, “Ulteriori disposizioni attuative del decreto-legge 25 marzo 2020, n. 19, recante misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19, e del decreto-legge 16 maggio 2020, n. 33, recante ulteriori misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19”.
18 Group A included San Marino and Vatican. Group B: almost all EU and EEA countries in addition to the United Kingdom, Andorra and Monaco. Group C: Romania and Bulgaria. Group D: Australia, Canada, Georgia, Japan, New Zealand, Rwanda, South Korea, Thailand, Tunisia, Uruguay. Group E: all third countries not specifically mentioned. Group F: Armenia, Bahrein, Bangladesh, Brazil, Bosnia, Chile, Kuwait, North Macedonia, Moldova, Oman, Panama, Peru, the Dominican Republic, Kosovo, Montenegro and Serbia.
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countries listed in Group D remained in principle allowed subject to a 14-days quarantine upon arrival in Italy.
(20) On 7 September 2020, Italy prolonged the application of Decree n°198 until 14 October 2020.19 On 13 October 2020, Italy replaced Decree n°198 with Decree n°253 of the President of the Council of the Ministers,20 which did not substantially modify the rules applicable to travel and entry restrictions to/from third countries listed in Groups D, E and F. Decree n°253 applied until 13 November 2020 without modification.
(21) It follows from the above restrictions that during the Eligible Period, Italy applied a permanent prohibition of all travel to/from the United States, Israel, India, Canada and Argentina except for essential reasons (related to work, studies, health or other emergency); EU nationals and their relatives were exempted only one way (return to Italy). Those rules also applied to Algeria as of 1 August 2020 onward; to Brazil from 11 June to 9 July 2020 and to Montenegro from 11 June to 30 June 2020.
(22) There was no travel or entry ban imposed by Italy other than quarantine measures to/from Algeria (between 1 July and 1 August 2020) and Montenegro (1 July to 17 July 2020).
(23) Lastly, Italy applied a full prohibition of all travellers coming from Brazil (from 10 July onward) and Montenegro (from 17 July 2020 onward). All direct and indirect flights were prohibited to those countries (10 July – 8 August 2020 for Brazil; 17 July to 8 August 2020 for Montenegro).
2.1.1.2. Restrictions applicable in the United States on travels to/from Italy in the Eligible period
(24) The United States have adopted two Presidential Proclamations that have been in force without interruption or suspension since March-April 2020, including during the Eligible Period.
(25) On 11 March 2020, the United States issued Presidential Proclamation No 9933,21 effective as of 14 March 2020. This Proclamation suspended as a general rule the entry into the United States, as immigrants or nonimmigrants, of all aliens who were physically present within the Schengen Area during the 14-day period preceding their
19 Decree n°222 of the President of the Council of the ministers of 7 September 2020, “Ulteriori disposizioni attuative del decreto-legge 25 marzo 2020, n. 19, recante misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19, e del decreto-legge 16 maggio 2020, n. 33, recante ulteriori misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19”; Decree-Law n° 125 of 7 October 2020, “Misure urgenti connesse con la proroga della dichiarazione dello stato di emergenza epidemiologica da COVID-19 e per la continuita' operativa del sistema di allerta COVID, nonche' per l'attuazione della direttiva (UE) 2020/739 del 3 giugno 2020”.
20 Decree n°253 of the President of the Council of the Ministers of 13 October 2020, “Ulteriori disposizioni attuative del decreto-legge 25 marzo 2020, n. 19, convertito, con modificazioni, dalla legge 25 maggio 2020, n. 35, recante «Misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19», e del decreto- legge 16 maggio 2020, n. 33, convertito, con modificazioni, dalla legge 14 luglio 2020, n. 74, recante «Ulteriori misure urgenti per fronteggiare l'emergenza epidemiologica da COVID-19”.
21 Presidential Proclamation No 9933 - Suspension of entry as immigrants and non-immigrants of certain additional persons who pose a risk of transmitting 2019 novel coronavirus.
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entry or attempted entry into the United States. Exemption from that rule applied to citizens from the United States, permanent residents in the United States, direct relatives of a citizen from the United States and any other foreign citizen falling under the following category:
- Alien of national interest for the United States;
- Alien invited by the United States’ public authorities;
- Crew members;
- Foreign government official or immediate family member of an official;
- Any alien whose entry would further important United States law enforcement objectives, as determined by the Secretary of State, the Secretary of Homeland Security, or their respective designees.
(26) Presidential Proclamation No 9933 provides that an alien who circumvents the application of that proclamation through fraud, willful misrepresentation of a material fact, or illegal entry shall be a priority for removal by the Department of Homeland Security.
(27) On 22 April 2020, the United States also adopted Presidential Proclamation No 10014.22 This Proclamation suspended as a general rule visa grant to immigrants for travels into the United States, except for very specific categories of people.23 That Proclamation was prolonged until 31 December 2020 and complemented by Presidential Proclamation of 22 June 202024 suspending the grant of several categories of non-immigrant visas (temporary work visas, intern and exchange visitors visas, temporary intracompany transferees visas) with only limited exceptions.
2.1.1.3. Restrictions applicable in Japan on travels to/from Italy in the Eligible period
(28) Since 4 April 2020, the Japanese authorities have issued a full ban on entry to any foreigners who have stayed in Italy within 14 days prior to the application for landing except for special exceptional circumstances.25 Those special exceptional circumstances were admitted for the following categories of foreigners: direct relatives of a Japanese citizen; permanent resident in Japan; medical workers and professors filling a vacancy at a Japanese educational institution they belong or will belong to; workers invited by companies established in Japan that can ensure the required
22 Presidential Proclamation No 10014 of 22 April 2020 suspending entry of immigrants who present risk to the U.S. labor market during the economic recovery following the COVID-19 Outbreak.
23 Visa could be granted only to lawful permanent resident of the United States, medical purposes, certain investment purposes, direct relatives of citizens from the United States (spouse or child) and any alien of national interest or that would further important United States law enforcement objectives.
24 Presidential Proclamation of 22 June 2020 suspending entry of aliens who present a risk to the U.S. labor market following the coronavirus outbreak
25 Article 5, paragraph (1), item (xiv) of the Immigration Control and Refugee Recognition Act, Cabinet Order No. 319 of 4 October 1951.
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epidemic prevention and control measures26; and any other individual application justified by exceptional circumstances subject to approval by the Japanese authorities.
(29) In addition, the Japanese authorities suspended all visa validity and visa exemptions with Italy as of 20 March 2020. Since 1 April 2020, the Japanese authorities are requesting airlines to curb the number of arrival passengers to Japan by such measures as reducing the number of passenger arrival flights in order to ensure the appropriate implementation of quarantine measures.27
(30) All those measures were and are still in force without modification at the date of adoption of the present decision, including during the Eligible Period.
2.1.1.4. Restrictions applicable in Argentina on travels to/from Italy in the Eligible period
(31) On 16 March 2020, the Argentinian authorities adopted Decree n°27428 establishing a general prohibition of entry into the territory of all foreign nationals that do not reside in Argentina, to the very few exceptions of persons involved in the transport of goods or sanitary/health transportation to/from Argentina, as well as crew members.29 That Decree was prolonged fourteen times without modification beyond 31 October 2020.30
(32) In addition, the national civil aviation administration of Argentina adopted a resolution on 27 April 2020 suspending all commercial air transport services within, from and to Argentina until 1 September 2020.31
2.1.1.5. Restrictions applicable in Canada on travels to/from Italy in the Eligible period
(33) On 18 March 2020, the Canadian authorities issued a decree according to which foreign nationals are prohibited from entering Canada if they arrive by means of an aircraft from a foreign country.32 That general prohibition is still in force today, although successive modifications were made on the list of exemptions.
26 That exception applied only as of 1 October 2020.
27 See the website of the Ministry of foreign affairs: https://www.mofa.go.jp/ca/fna/page4e_001053.html.
28 Decree n°274 of 16 March 2020, “Prohibicion de ingresso al territorio nacional” (DECNU-2020-274-APN- PTE).
29 Exceptions concerned also foreigners that are direct relatives of Argentinian citizens subject to strong justification (see https://www.argentina.gob.ar/justicia/derechofacil/leysimple/covid-19-prohibicion-de- ingreso-al-territorio-nacional#ley).
30 For the list of acts prolonging Decree n°274, see under Article 1 of Decree n°274: https://www.argentina.gob.ar/normativa/nacional/decreto-274-2020-335479/texto.
31 Resolution 144/2020 of the national civil aviation administration of 27 April 2020 (RESOL-2020-144-APN- ANAC#MTR).
32 Order in Council n°4 of 18 March 2020 - Minimizing the Risk of Exposure to COVID-19 Coronavirus Disease in Canada Order (Prohibition of Entry into Canada).
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(34) On 16 June 2020, incoming travellers from Italy were made subject to Order in Council n°13 which provided that the general ban on entry of foreign nationals did not apply to: Canadian citizens or permanent residents in Canada; direct relatives of Canadian citizens; diplomats or foreign government officials; workers and students in the medical field; holders of a valid work or study permit (granted before 18 March 2020); any foreigner invited by the Canadian government or who is of national interest for Canada; and foreigners who can provide an essential service while in Canada.33 Categories of people exempted from entering into Canada were nevertheless prohibited to enter for an optional or discretionary purpose, such as tourism, recreation or entertainment. Air carriers were obliged to deny boarding on flights to Canada to persons not falling under the above exemption, suspected of being affected by the COVID-19 virus or not complying with the health-related measures listed in the Interim Order of 17 June 2020 issued by the Ministry of Transport and successively prolonged beyond 30 October 2020.34
(35) In addition, several of the exempted categories had to undergo a 14-day quarantine period upon arrival in Canada.35
(36) Those exceptions remained in place until at least 31 October 2020.36
2.1.1.6. Restrictions applicable in Algeria on travels to/from Italy in the Eligible period
(37) The Algerian authorities have suspended all international flights except repatriation flights to/from Algeria since 22 March 2020.37 That ban remained in force throughout the Eligible Period.38
(38) In addition, entry to Algeria was limited to Algerian nationals returning on repatriation flights from abroad, foreign nationals with diplomatic visas and employees of foreign companies operating in Algeria. Eligible persons had to self-isolate for 14 days after arrival in Algeria.
33 The precise exemption list can be found in section 3 of Order in Council n°13 of 8 June 2020 - Minimizing the Risk of Exposure to COVID-19 Coronavirus Disease in Canada Order (Prohibition of Entry into Canada).
34 Interim Order of the Ministry of Transport of 17 June 2020 respecting Certain Requirements for Civil Aviation Due to COVID-19, repealed and replaced with similar acts (see: https://tc.canada.ca/en/ministerial- orders-interim-orders-directives-directions-response-letters).
35 Order in Council of 14 April 2020 - Minimizing the Risk of Exposure to COVID-19 Coronavirus Disease in Canada Order (mandatory isolation n°2), repealed and substituted by successive Orders in Council dated of 29 June 2020, 30 August 2020, 28 September 2020 and 7 October 2020.
36 Order in Council n°13 was repealed and replaced by successive Orders in Council, all available at: https://www.canada.ca/en/public-health/corporate/mandate/about-agency/acts-regulations/list-acts- regulations.html#emergency.
37 Communication of the Prime Minister’ services of 21 March 2020.
38 See for example Communication of the Council of the Ministries of 28 June 2020.
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2.1.1.7. Restrictions applicable in India on travels to/from Italy in the Eligible period
(39) As of 16 June 2020, the Indian authorities applied a general prohibition for foreigners to enter into the country subject to very few exceptions, namely direct relatives of Indian citizens (spouses, children, parents) and certain workers (healthcare professionals; engineering, managerial, design or other specialists travelling to India on behalf of foreign business entities located in India; and technical specialists and engineers travelling for installation, repair and maintenance of foreign-origin machinery and equipment facilities in India on the invitation of a registered Indian business entity). 39
(40) In the same vein, all existing visas were suspended and all incoming passenger traffic prohibited except for the exemptions mentioned in recital (39).
(41) Further specific exemptions were also admitted.40 These conditions applied until 21 October 2020, when India allowed all foreign nationals intending to visit India for any purpose except for those on a tourist visa.41
(42) Although as of 22 October 2020 the Indian authorities relaxed the rules for travelling to India except for those on tourist visa , all scheduled international commercial air passengers services has been suspended by the Indian Directorate General of Civil Aviation since 14 April 2020 and continued throughout the entire Eligible Period and beyond 31 October 2020.42
2.1.1.8. Restrictions applicable in Israel on travels to/from Italy in the Eligible period
(43) Since March 2020, Israel implemented an entry ban for all foreigners except under exceptional circumstances subject to approval by the public authorities. Exceptional circumstances applied to direct relatives of Israeli citizens, foreign experts in specific fields, health motives or important family events (funerals or births only for direct relatives and with proof).43 That ban was extended throughout the Eligible Period,44
39 Order of 12 June 2020 of the Ministry of Home Affairs No.25022/24/2020-F.V/F.I. and Order of 1 June 2020 of the Ministry of Home Affairs No.25022/24/2020-F.V/F.I.
40 The following categories of persons could be admitted into the Indian territory (Order of 30 June 2020 of the Ministry of Home Affairs No. 25022/24/2020-F.V/F.I): foreign nationals who are persons of Indian origin who wish to come to India on account of family emergencies like critical medical conditions of immediate family members or death; foreign nationals stranded in the close neighbouring countries and seeking to exit to their destination country through India; and foreign nationals coming to India on any sub-categories of Employment Visa along with their dependents holding Dependent Visa.
41 Order of 21 October 2020 of the Ministry of Home Affairs, No.25022/24/2020-F.V/F.I.
42 See Circular of the Director General of Civil Aviation of 14 April 2020, prolonged on several occasions (for example: Circular of the Director General of Civil Aviation of 26 June 2020 and Circular of Director General of Civil Aviation of 27 October 2020).
43 See for example the list of exemptions applicable on 12 July 2020: https://www.gov.il/en/departments/news/covid19-entering-israel. See also https://www.gov.il/en/departments/news/border_closing_coronavirus_14062020.
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and applied together with an exit ban whereby all citizens leaving the country, including nationals, had to justify their exit from Israel by reference to essential reasons only.
(44) In addition, Israel adopted a nation-wide lockdown as of 13 September 2020, which was extended until 18 October 2020, when it started to ease the restrictions.
2.1.1.9. Restrictions applicable in Greece in the Eligible period
(45) Already as of 17 March 2020, the Greek authorities have implemented a general prohibition of all non-essential travels to/from third countries except for specific and limited purposes or categories of persons.45 Greek nationals were exempted only one way namely, onreturn to Greece.
(46) As an additional limitation to the exceptions mentioned in recital (45), , as of 12 August 2020, the Hellenic Civil Aviation Authority imposed specific measures to airlines not to transport more than 600 passengers per week from Israel.46 That number was raised to 1 200 passengers per week as of 28 August 2020, and to 5 000 as of 16 September until 19 October 2020.
2.1.2. Impact of the travel restrictions on Alitalia
(47) The measures adopted to contain the COVID-19 outbreak negatively affected the European aviation sector, impairing airlines’ operations significantly. Estimates by Eurocontrol show a significant decrease in flights between 15 June and 31 October 2020 compared to the same period in 2019, with a 76% decrease on 17 June 2020, 52.1% on 5 August 2020 (lowest difference) and 58% on 4 November 2020.47 Although the situation of the airline market improved as of July 2020 compared to the second quarter of 2020, air traffic remained severely affected by the ongoing COVID- 19 pandemic, and tended to worsen as of the end of October 2020 with the increase of travel restrictions all over the world to face an emerging second wave of pandemic.
(48) According to Italy, Alitalia’s business activities were and continue to be significantly affected by the disruptive effects that the virus and associated travel bans have had on
44 See for example the announcement of the extension of the ban on foreigners (https://www.jpost.com/health- science/ban-on-foreign-entry-to-israel-extended-through-aug-1-632772).
45 Joint Ministerial Decision Δ1α/ΓΠ.οικ.19030, “enforcement of the ban on entry into the country of third- country nationals other than the countries of the European Union and the Schengen Agreement to limit the spread of COVID-19 coronavirus.” (Gazette Β’ 916/17.3.2020), successively prolonged by Joint Ministerial Decisions beyond 31 October 2020. The exemptions were applicable to medical staff performing services in Greece; long-term residents of EU/Schengen and third country nationals with residence permit within EU/Schengen; diplomatic staff; personnel employed in the transport sector, including seafarers, aircraft crews, crews and technical personnel of hired aircraft firefighting equipment, as well as drivers of lorries, who pass through for the carriage of goods and the absolutely necessary auxiliary personnel for their transport; caregivers of elderly and disabled people and seasonal agricultural workers.
46 Notam of 12 August 2020 of the Hellenic Civil Aviation Authority.
47 Eurocontrol - COVID19 Impact on European Air Traffic – Comprehensive Assessment. Air Traffic situation for Thursday 5 November 2020 compared with equivalent period in 2019. Available at: EUROCONTROL Comprehensive Assessment for Thursday, 05 November 2020.
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the air transport sector at European and world level, causing a drastic reduction in the operating network and routes operated by the company.
(49) According to Italy, the restrictions in place in the foreign countries listed in section 2.1.1 as well as in Italy and Greece hugely affected Alitalia’s operations, and particularly intercontinental and international flights, as those foreign countries continued to apply limitations on entry into the territory in relation to foreign citizens. As a result, Alitalia incurred significant losses on routes to/from certain third countries until at least 31 October 2020.
(50) Statistics from the Italian Civil Aviation Authority (‘ICAA’) show that between June and October 2020, the total air passenger traffic (all airports and all companies) between the United States and Italy dropped by 99% compared to the same period in 2019.48 Air traffic movements decreased from 13 494 in 2019 to 2 097 flights operated in 2020 during the Eligible Period.49 The same drop in traffic is observed for traffic between Italy with other third countries to/from which Alitalia was operating flights. The total passenger traffic volume between Italy and Canada dropped by 99.18% in 2019 and 2020 during the Eligible Period;50 99% between Italy and Israel;51 99.12% between Italy and Montenegro;52 99.23% between Italy and Argentina;53 100% between Italy and Brazil54 and Japan;55 and 92% between Italy and India.56
2.1.2.1. Flight Rome Fiumicino (FCO) – Boston (BOS)
(51) According to ICAA, 114 895 passengers were transported last year on the route Boston to Rome during the Eligible Period against [0-10 000] in 2020. Alitalia was the only company operating a few flights in 2020, with a decrease in load factor of 70% compared to last year, as shown by Table 1.
Table 1: Alitalia’s Figures for FCO-BOS for June-October
48 The passenger traffic fell from 2 734 536 passengers transported in 2019 to 26 349 in 2020.
49 This number includes all aircrafts movements, including cargo traffic. Furthermore, seven companies (including Alitalia) operated passenger air services on the main routes between Italy and the United States in 2019 during the Eligible Period: Alitalia transported approximately [600 000-700 000] passengers, while the rest of the companies transported more than a million altogether. In 2020, only Alitalia (approximately more than [15 000-25 000] passengers) and Delta airlines (approx. [0-10 000] passengers) operated flights.
50 703 426 passengers transported in 2019 down to 5 765 in 2020.
51 740 386 passengers transported in 2019 down to 6 841 in 2020.
52 62 291 passengers transported in 2019 down to 551 in 2020.
53 158 126 passengers transported in 2019 down to 1 213 in 2020.
54 312 467 passengers transported in 2019 down to 4 in 2020.
55 151 798 passengers transported in 2019 down to 0 in 2020.
56 134 498 passengers transported in 2019 down to 10 906 in 2020.
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Number of Number of Seat load Revenue PAX flights factor (%) (EUR ‘000s)
2019 [60 000 – 271 89 30 886 70 000]
2020 [0 – 10 44 19 2 097 000]
Source: Alitalia
2.1.2.2. Flight Rome Fiumicino – Washington IAD
(52) According to ICAA, 116 048 passengers were transported last year on the route Washington to Rome by United Airlines and Alitalia while none were transported this year during the Eligible Period.
Table 2: Alitalia’s Figures for FCO-IAD for June-October
Number of Number of Seat load Revenue PAX flights factor (%) (EUR ’000s)
2019 [30 000 – 194 76 17 423 40 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.3. Flight Rome Fiumicino – New York JFK
(53) According to ICAA, 430 874 passengers were transported last year on the route New York to Rome by American airlines, Delta airlines, Alitalia and Norwegian Air Shuttle against 19 552 transported by Alitalia and Delta airlines during the Eligible Period in 2020. Table 3 shows that Alitalia’s load factor dropped by 60% and its revenues decreased by 87% in 2020 compared to 2019.
Table 3: Alitalia’s Figures for FCO-JFK for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [210 000 – 830 88 103 058 220 000]
2020 [10 000 – 200 31 13 480 20 000]
Source: Alitalia
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2.1.2.4. Flight Rome Fiumicino – Los Angeles (LAX)
(54) According to ICAA, 126 392 passengers were transported last year on the route Los Angeles to Rome by Alitalia and Norwegian Air Shuttle against none in 2020 during the Eligible Period.
Table 4: Alitalia’s Figures for FCO-LAX for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [60 000 – 262 90 44 648 70 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.5. Flight Rome Fiumicino – Miami (MIA)
(55) According to ICAA, Alitalia was the only company operating between Miami and Rome in 2019 and 2020. The company canceled that route in 2020. In the meantime, 116 110 passengers were transported from Milan to Miami in 2019 by American airlines and Air Italy. Both airlines also canceled that route in 2020 during the Eligible Period.
Table 5: Alitalia’s Figures for FCO-MIA for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s )
2019 [50 000 – 274 85 30 611 60 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.6. Flight Rome Fiumicino – Chicago (ORD)
(56) According to ICAA, 174 273 passengers were transported last year on the route Chicago to Rome by Alitalia, United airlines and American airlines against none in 2020 during the Eligible Period.
Table 6: Alitalia’s Figures for FCO-ORD for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [40 000-50 214 84 19 559 000
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2020 0 0 0 0
Source: Alitalia
2.1.2.7. Flight Milan Malpensa – New York (JFK)
(57) According to ICAA, 421 644 passengers were transported last year on the route New York to Milan by Alitalia, American airlines, Delta airlines, Air Italy and Emirates against [0-5 000] by Delta airlines in 2020 during the Eligible Period.
Table 7: Alitalia’s Figures for MXP-JFK for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [60 000-70 276 87% 26 399 000]
2020 0 0 0 0
2.1.2.8. Flight Rome Fiumicino – Buenos Aires (EZE)
(58) According to ICAA, 158 126 passengers were transported last year on the route Buenos Aires to Milan by Alitalia and Aerolineas Argentinas against 1 213 by the same airlines (repatriation flights) in 2020 during the Eligible Period.
Table 8: Alitalia’s Figures for FCO-EZE for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [70 000-80 275 88 40 590 000]
2020 [0-5 000] 5 44 627
2.1.2.9. Flight Rome Fiumicino – Sao Paulo (GRU)
(59) According to ICAA, 178 271 passengers were transported in 2019 between Rome and Sao Paulo by Alitalia and Tam Linhas Aereas ([230 000-240 000] with passengers from Milan to Sao Paulo operated by Linea Aerea Nacional de Chile): none of the companies operated the routes in 2020 during the Eligible Period (including from Milan).
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Table 9: Alitalia’s Figures for FCO-GRU for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [120 000- 478 88% 63 284 130 000]
2020 0 0 0 0
2.1.2.10. Flight Rome Fiumicino – Rio de Janeiro (GIG)
(60) According to ICAA, [60 000-70 000] passengers were transported in 2019 between Rome and Rio de Janeiro by Alitalia, which did not operate the route in 2020 during the Eligible Period and neither did other companies from other airports between Italy and Brazil.
Table 10: Alitalia’s Figures for FCO-GIG for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [60 000-70 275 86% 29 462 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.11. Flight Rome Fiumicino – Santiago de Chile (SCL)
(61) According to ICAA, [40 000-50 000] passengers were transported in 2019 between Rome and Santiago de Chile by Alitalia which did not operate the route in 2020 during the Eligible Period and neither did other companies from other airports between Italy and Chile.
Table 11: Alitalia’s Figures for FCO-SCL for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [40 000-50 197 80% 26 827 000]
2020 0 0 0 0
Source: Alitalia
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2.1.2.12. Flight Rome Fiumicino – Tokyo (NRT)
(62) According to ICAA, 84 120 passengers were transported in 2019 between Rome and Tokyo by Alitalia and Aeroflot: none of the companies operated the route in 2020 during the Eligible Period.
Table 12: Alitalia’s Figures for FCO-NRT for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [40 000-50 270 88% 49 637 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.13. Flight Milan Malpensa – Tokyo (NRT)
(63) In 2019, Alitalia was the only airline operating passenger flights from Milan to Tokyo. It did not operate the route in 2020, and neither did any other company fly from other Italian airports to Japan and vice-versa: no passengers were transported in 2020 during the Eligible Period.
Table 13: Alitalia’s Figures for MXP-NRT for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [50 000 – 274 84% 39 317 60 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.14. Flight Rome Fiumicino – Toronto (YYZ)
(64) According to ICAA, 264 701 passengers were transported in 2019 between Rome and Toronto by Alitalia, Air Transat and Air Canada, against 4 270 transported by Air Transat and Air Canada in 2020 during the Eligible Period.
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Table 14: Alitalia’s Figures for FCO-YYZ for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [50 000 – 250 91% 21 930 60 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.15. Flight Rome Fiumicino – Alger (ALG)
(65) According to ICAA, 63 517 passengers were transported in 2019 between Rome and Alger by Alitalia and Air Algeria ([80 000-90 000] with passengers from Milan operated by Air Algeria): none of the companies operated the route in 2020 during the Eligible Period.
Table 15: Alitalia’s Figures for FCO-ALG for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [40 000-50 527 62 5 528 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.16. Flight Rome Fiumicino – Tel Aviv (TLV)
(66) According to ICAA, 322 120 passengers were transported in 2019 between Rome and Tel Aviv by Alitalia, Ryanair, Vueling airlines, Israir, Neos, El Al Israel airlines, Arkia Israel airlines and Easyjet Europe (461 259 passengers including passengers from Milan to Tel Aviv transported by Alitalia, Easyjet Europe, Neos and El Al Israel airlines). In 2020, 2 164 passengers were transported by Ryanair and Israir ([3 000- 5 000] with passengers from Milan transported by Easyjet Europe) during the Eligible Period.
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Table 16: Alitalia’s Figures for FCO-TLV for June-October
Number of Number of Seat load Revenue PAX flights factor (%) ((EUR ’000s)
2019 [140 000- 1 068 78 23 957 150 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.17. Flight Rome Fiumicino – New Delhi (DEL)
(67) According to ICAA, 97 388 passengers were transported in 2019 between Rome and New Delhi by Alitalia and Air India: none of the companies operated the route in 2020 during the Eligible Period.
Table 17: Alitalia’s Figures for FCO-DEL for June-October
Number of Number of Seat load Revenue PAX flights factor (%) (EUR ‘000s)
2019 [60 000-70 276 86% 19 219 000]
2020 0 0 0 0
Source: Alitalia
2.1.2.18. Flight Rome Fiumicino – Podgorica (TGD)
(68) According to ICAA, 38 736 passengers were transported in 2019 between Rome and Podgorica by Alitalia and Montenegro airlines ([50 000-60 000] with passengers from Milan to Podgorica transported by Wizz Air Hungary). In 2020, [0-5 000] passengers were transported by Montenegro airlines ([0-5 000] with passengers from Milan transported by Wizz Air Hungary) during the Eligible Period (only in July 2020).
Table 18: Alitalia’s Figures for FCO-TGD for June-October
Number of Number of Seat load Revenue PAX flights factor (%) (EUR ‘000s)
2019 [10 000-20 193 73 1 292 000]
2020 0 0 0 0
Source: Alitalia
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2.1.2.19. Flight Athens – Tel Aviv
(69) According to ICAA, by 300 flights 34 949 passengers were transported in 2019 between Athens and Tel Aviv by Alitalia, El Al, Ryanair, Israir and Aegean. Italy provided the following figures registered by Alitalia in 2019 on the route Athens-Tel Aviv:
Table 19: Alitalia’s Figures for ATH-TLV for June-October
Number of Number of Seat load Revenue PAX flights factor (%) (EUR ‘000s)
2019 [30 000-40 270 65 3 251 000]
2020 0 0 0 0
Source: Alitalia
2.2. National legal basis
(70) The legal basis for the Measure is Article 79(1) and (2) of Decree-Law No 18 of 17 March 2020. A joint ministerial decree adopted by the Ministry of Economic Development, the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport will lay down the detailed arrangements for the application of that provision to the Eligible period for damage compensation notified by Italy.
(71) On 14 August 2020, the Italian authorities adopted the August Decree57 authorising the Ministry of Economic Development to grant aid in the form of a direct grant up to EUR 250 million to companies meeting the eligibility conditions established by Decree-Law of 17 March 2020 to receive compensation under the Fund, and which requested or will request the aid. The August Decree aimed at preserving the continuity of the air services in the context of the COVID-19 outbreak, pending the outcome of a notification procedure before the European Commission.58
2.3. Form and budget of the measure
(72) The Measure will take the form of a grant. The budget is set at EUR 73.02 million and is to be paid from the general budget of the Italian State.
(73) Italy confirms that the notified aid to Alitalia will be net of any amount recovered by insurance, litigation, arbitration or other source for the same damage. If the aid is paid out before such amounts have been established and paid, Italy will recover an amount corresponding to such compensations from the beneficiary in a second step.
57 Decree-Law of 14 August 2020, No 104 ‘Misure urgenti per il sostegno e il rilancio dell'economia’.
58 The August Decree refers to a pending notification concerning compensation to be paid under the Fund set up to compensate airlines under Article 79(2) of Decree-Law of 17 March 2020. The Commission observes however that Italy only notified an aid to Alitalia; there is no pending notification procedure concerning compensation to be paid under the Fund at the time of adoption of the present decision.
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2.4. Administration of the measure
(74) The Measure will be managed by the Ministry of the Economic Development, the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport.
2.5. Beneficiary
(75) The beneficiary of the Measure is Alitalia Società Aerea Italiana SpA.
(76) In May 2017, Alitalia - Società Aerea Italiana S.p.A. and its wholly owned subsidiary Alitalia Cityliner S.p.A. were placed in extraordinary administration pursuant to national insolvency legislation by decrees of the Italian Ministry of Economic Development respectively of 2 and 12 May 2017. They were declared insolvent by judgment by the Court of Civitavecchia on 11 and 26 May 2017.
(77) At the date of the adoption of the present decision, Alitalia and Alitalia Cityliner S.p.A. are subject to two formal investigation proceedings by the Commission.59
(78) Alitalia is a major network airline operating in Italy. Before the COVID-19 outbreak, Alitalia served more than 100 destinations all over the world, carrying over 21 million passengers from its main hub at Rome Fiumicino and other airports in Italy. Alitalia is one of the largest Italian employers, with over 11 000 employees.
2.6. Eligible costs and modalities for compensation
(79) According to Italy, the eligible costs correspond to the damages directly suffered by Alitalia during the Eligible Period on the routes listed in recital (7). Italy defines the damages as the net losses due to the containment measures taken by governments as a consequence of the COVID-19 outbreak.
(80) The net losses in that period are quantified as the difference between the profit/loss incurred between 16 June and 31 October 2020 and those incurred during the same period in 2019 on the routes identified in recital (7) that can be attributed to the measures taken by governments identified in sections 2.1.1.1 to 2.1.1.9. That calculation takes into account the following elements:
(a) loss of revenue: a review of the impact of the containment measures taken by governments as a consequence of the COVID-19 outbreak on total revenue, including (i) fare revenues from tickets (tickets which could not be sold), and (ii) additional / accessory revenues (seat reservation, upgrades);
(b) additional and avoided costs: a review of Alitalia’s cost base and the impact (both positive and negative) of the containment measures taken by governments as a consequence of the COVID-19 outbreak on variable costs, including deviation in (i) all variable costs (in particular fuel costs, fees and charges, maintenance costs, IATA commissions and catering costs), (ii) fixed costs which varied due to the containment measures taken by governments as a consequence of the COVID-19 outbreak (in particular lower personnel costs
59 See State aid SA.48171 (2018/C) (ex 2018/NN, ex 2017/FC) — Alleged State aid in favour of Alitalia (published in the OJ on 20.07.2018, JOCE C/256/2018) and State aid SA.55678 - New loan to Alitalia (not yet published in the Official Journal).
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and marketing costs). Costs items do not include any refund (effectively paid or to be paid).
(81) The relevant containment measures affect specific routes. In order to identify the damage caused by the COVID-19 outbreak through those containment measures, a detailed route-by-route analysis was required. The route-by-route analysis submitted by Italy is as follows:
(a) Comparing routes affected by the containment measures and routes not affected by them allows identification of the volume of passengers who have not flown due to the containment measures, and to distinguish them from the volume of passengers who would have not flown in any event regardless of the containment measures. Domestic routes in Italy were not affected by the containment measures and therefore provide a good benchmark to identify those latter volumes. The number of passengers on all Italian domestic routes during the Eligible Period in 2020 was 58% lower than in 2019,60 meaning that 42% of passenger numbers in 2019 were retained in 2020. By comparison, a number of international and intercontinental routes were affected by the containment measures during the Eligible Period and retained lower percentages of passengers than the domestic routes61. The difference between these lower percentages and the 42% of domestic routes provides an estimate of the specific impact of the containment measures in terms of the number of passengers.
(b) The loss of passengers attributable to the containment measures for a number of international and intercontinental routes implied a significant reduction of revenues, as well as savings of variable costs. Data on revenues and variable costs for 2019 and 2020 have been used to estimate the lost revenues and avoided variable costs stemming from the loss of passangers attributable to the containment measures.
(c) While fixed costs do not tend to vary significantly with ordinary fluctuations of passengers that are observed in the normal course of business, they can show some variation when the change in the number of passengers is significant, as it is the case for reductions of more than 58% observed in the 19 routes identified in Section 2.1.2. At the same time, it cannot be assumed that fixed costs decrease proportionally to the number of passengers, as if they were fully variable. The lower than proportional variation of fixed costs with the number of passengers reflects the economies of scale of the economic activity. The level of fixed costs corresponding to a retention of 42% of passengers has been
60 58% of the passengers that traveled in 2019 during the Eligible Period did not travel in 2020 during that same period even in the absence of restrictions at domestic level.
61 In particular, Italy applied a general prohibition of non-essential travels to most of the third countries (see section 2.1.1.1) and also to other Member States with the implementation of quarantine measures as of approximately mid-August 2020. The domestic level is therefore in this case the most reasonable proxy to use to determine the level of traffic absent any travel restrictions, in the absence of any other more appropriate alternative.
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estimated using a linear approximation,62 based on the actual fixed costs and passenger volumes in 2019 and 2020.
(d) The allocation of fixed costs route-by-route is based on the actual allocation keys63 used by Alitalia in 2019. Many routes exhibit in 2020 reduced or no traffic due to transitory and not permanent circumstances. Capacity cannot be adjusted quickly and temporarily, hence the fixed costs corresponding to routes temporarily suspended cannot be avoided. Hence, fixed costs have been allocated route-by-route in 2020 based on the allocation shares of 2019.64
(82) The application of that route-by-route analysis entailed the identification of the number of passengers, revenues, costs and profits for the 19 affected routes identified in Section 2.1.2, as shown in Table 20.
Table 20: Figures for the 19 eligible routes
Number of Revenues (EUR Variable costs Fixed costs Profits (EUR passengers ‘000s ) (EUR ’000s ) (EUR ‘000s) ‘000s )
Actual 2019 [1 300 [500 000-600 [400 000 – 500 [100 000-200 [50 000-100 000-1 400 000] 000] 000] 000] 000]
Adjusted based on [500 000- [200 000-300 [100 000-200 [50 000-100 [0-50 000] 42% of 2019 600 000] 000] 000] 000] passengers
Actual 2020 [50 000-100 - [50 000-100 [0-50 000] [0-50 000] [0-50 000] 000] 000]
Estimated damage n/a n/a n/a n/a 73.023
Source: Alitalia
(83) Based on that route-by-route analysis, Italy submits that EUR 73.022 million can be considered to constitute a damage suffered by Alitalia and directly linked to the
62 The actual fixed costs and number of passengers at company level observed in 2019 and in 2020 provide empirical evidence of the fixed costs of Alitalia that correspond to two very different levels of passengers. These two pairs of data show that fixed costs can be adjusted downwards when the level of passengers is reduced very significantly, but only to a limited extent. The linear approximation consists in using the limited reduction of fixed costs observed between 2019 and 2020, applying it proportionally to the lower reduction of 58% of 2019 passengers that it is assumed would have occurred absent the relevant containment measures.
63 That is the percentage of the fixed cost of a given route from the total fixed costs of all routes.
64 Three new routes have been operated by Alitalia in 2020 that were not operated in 2019. Fixed costs have been allocated to each of those three routes based on the average share of fixed cost of the routes in the same category (i.e. domestic, international). This adjustment does not have a significant impact on the results of the quantitative analysis.
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COVID19 outbreak due to the relevant containment measures between 16 June and 31 October 2020.
2.7. Cumulation
(84) The Italian authorities confirm that the aid cannot be cumulated with other aid (also de minimis) covering the same eligible costs.
2.8. Commitments
(85) Italy commits to define in the ministerial decree referred to in Article 79(2) of Decree Law No 18 of 17 March 2020, the methodology for calculating the damages suffered by Alitalia from 16 June to 31 October 2020. The methodology will allow calculation of the net losses for each specific route eligible to compensation65 as explained in section 2.6.
3. ASSESSMENT
3.1. Legality of the Measure
(86) Pursuant to Article 108(3) TFEU, when the Commission has been notified of plans to grant aid, the Member State concerned must not grant the aid until the Commission notifiedd a decision approving that aid (“the standstill obligation”).
(87) According to Article 79(1) and (2) of Decree-Law No 18 of 17 March 2020, the granting of the aid to compensate airlines that meet the eligibility criteria to benefit from compensation under the Fund66 for damages suffered due to the COVID-19 pandemic is subject to the prior authorisation of the Commission.
(88) On 14 August 2020, as stated in recital (65), Italy adopted the August Decree authorising the Ministry of Economic Development to pay up to EUR 250 million to the beneficiaries of the Fund. Since it is an act conferring the right to receive the aid from the State budget, the Italian authorities adopted a legally binding act by which they undertook to grant the aid to any beneficiary of the Fund that has requested or will request it, including Alitalia.67 As noted in recital (8) and footnote 58, Italy did not notify the August Decree and this decision does not include a State aid assessment of the August Decree.
(89) On the basis of the August Decree, Alitalia is eligible to receive EUR 73.02 million (the Measure).
(90) It follows that the Italian authorities granted the Measure in breach of the standstill obligation. The Measure is therefore illegal under Article 108(3) TFEU.
(91) The Commission notes however that Italy did not disburse the Measure to Alitalia or paid aid under the August Decree to any other undertaking.
65 See section 2.1.2.
66 See recital (3).
67 See judgment of 14 January 2004, Fleuren Compost v Commission, Case T-109/01, EU:T:2004:4, paragraph 74.
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3.2. Existence of State aid
(92) Article 107(1) TFEU defines State aid as any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States.
(93) For a measure to be categorised as 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.
(94) The Measure is imputable to the State, since it is administered by the Ministry of the Economic Development, the Ministry of Economy and Finance and the Ministry of Infrastructure and Transport. It is financed through State resources, since the Measure will be paid out from the general budget of the State.
(95) The Measure confers an advantage on Alitalia in the form of a grant. Under the current market circumstances it is assumed that no market operator would provide a grant to Alitalia, as a private investor would never provide a grant to a beneficiary without demanding a remuneration and/or compensation. The Measure thus provides financial resources to the beneficiary which it would not have obtained under normal market conditions. The Measure is selective, since it is granted to Alitalia as opposed to other airlines that do not fulfil the eligibility requirements to benefit from the Fund. Equally, the Measure is selective in that the Fund from which Alitalia receives compensation is only open to the aviation sector.
(96) The Measure is liable to distort competition, since it strengthens the competitive position of Alitalia. It also affects trade between Member States, since Alitalia is active in the aviation sector, in which intra-Union trade exists.
(97) In view of the above, the Commission concludes that the Measure constitutes aid within the meaning of Article 107(1) TFEU. The Italian authorities do not contest that conclusion.
3.3. Compatibility
(98) Article 107(2)(b) TFEU covers aid which is, in law, compatible with the internal market, provided that it satisfies certain objective criteria. Since this is an exception to the general principle stated in Article 107(1) TFEU that State aid is incompatible with the internal market, Article 107(2)(b) TFEU must be interpreted narrowly. Therefore, only damage caused by natural disasters or exceptional occurrences may be compensated for under that provision. There must be a direct link between the damage suffered by an undertaking and the exceptional occurrence, and the compensation must not exceed the amount of damage.
(99) Where those criteria are satisfied, the Commission is bound to declare such aid compatible with the internal market, and it has no discretion in that regard. Therefore, the existence of two formal investigation procedures in respect of previous measures granted to Alitalia ongoing at the time of adoption of the present decision (see recital
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(71)) does not preclude the Italian authorities from granting aid under Article 107(2)(b) TFEU.
3.3.1. The notion of exceptional occurrences with the meaning of Article 107(2)(b) TFEU
(100) Article 107(2)(b) TFEU provides that aid to make good damage caused by natural disasters or exceptional occurrences shall be compatible with the internal market. Neither the TFEU nor Union legislation contains a precise definition of the notion of exceptional occurrence. As they constitute exceptions to the general prohibition of State aid within the internal market laid down in Article 107(1) TFEU, the 68 Commission, in line with the consolidated Union case-law has consistently held that the notions of ‘natural disaster’ and ‘exceptional occurrence’ referred to in Article 107(2)(b) TFEU must be interpreted restrictively.
(101) The characterisation of an event as being an exceptional occurrence is made by the Commission on a case-by-case basis, having regard to its previous practice in the field.69 In that regard, the following indicators relating to the event concerned must be cumulatively met: (i) unforeseeable or difficult to foresee;70 (ii) significant scale/economic impact71 and (iii) extraordinary, i.e. differ sharply from the conditions under which the market normally operates.72
68 Judgment of the Court of Justice of 11 November 2004, Spain v Commission, C-73/03, EU:C:2004:711, paragraph 37 and judgment of the Court of Justice of 23 February 2006, Atzeni and others, in Joined Cases C-346/03 and C-529/03, EU:C:2006:130 paragraph 79.
69 Exceptional occurrences which have been accepted in the past by the Commission include war, internal disturbances and strikes, and, with certain reservations and depending on their extent, major industrial accidents which result in widespread economic loss, see Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to 2020, paragraph 330 (OJ C 204, 1.07.2014, p. 53).
70 Commission decision of 1 August 2008 in case SA.32163, Remediation of damage to airlines and airports caused by seismic activity in Iceland and the volcanic ash in April 2010, Slovenia, paragraph 31, OJ C 135, 9.5.2012, p. 1.
71 Elements taken into account by the Commission to consider that the occurrence reached a significant scale: negative consequences cannot be contained (Commission decision of 4 October 2000 in case NN 62/2000, Régime temporaire d'aides aux entreprises victimes des intempéries et de la marée noire – France, OJ C 127, 29.05.2003, p. 32), or the number of dead or injured people (Commission decision of 11 April 2012 in case SA.33487, Agricultural and fisheries aid to compensate for damage due to exceptional occurrence (red mud "Aluminium accident"), Hungary, paragraph 35, OJ C 120, 25.04.2012, p. 1; Commission decision of 2 May 2002 in case N241/2002, Régime en faveur des entreprises victimes de la catastrophe industrielle de Toulouse, France, paragraph 19, OJ C 170, 16.07.2002, p. 16), the immense ecological and economic damage (Commission decision of 11 April 2012 in case SA.33487, paragraph 36, OJ C 120, 15.04.2012, p. 1), the amount of material damage, despite the local character of the industrial accident (Commission decision of 2 May 2002 in case N 241/2002, paragraph 19, OJ C 170, 16.07.2002, p. 16).
72 In its decision of 19 May 2004 in case C-59/2001 (OJ L 62, 2007, p. 14), the Commission considered that the (alleged) fall in sales of poultry meat in a Member State not directly affected by the dioxin contamination did not in itself constitute an exceptional occurrence. Even though it was an unforeseeable event, it formed part of the normal commercial risks to which an undertaking is exposed.
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3.3.2. COVID-19 outbreak as an exceptional occurrence
(102) Following the first reports of cases of acute respiratory syndrome (COVID-19) in the Wuhan municipality in China at the end of December 2019, the Chinese authorities identified a novel coronavirus (SARS-CoV-2) as the main causative agent, which had not been previously identified in humans. The outbreak rapidly evolved, affecting not only other parts of China but has also spread to the majority of countries worldwide, including all Member States. Outbreaks of novel virus infections among people are always a public health concern and can have a significant economic impact. Specific sectors and areas are particularly affected by the outbreak, be it because of national outbreak control measures, travel restrictions or supply chain disruptions.
(103) The World Health Organization (“WHO”) warned about the very high risk that COVID-19 would spread and have a global impact. The subsequent spread of COVID- 19 ultimately resulted in far-reaching disruption of various economic sectors. That disruption was thus clearly outside the normal functioning of the market. In order to avoid an exponential increase in the number of cases, accompanied by social alarm and severe economic consequences, containment measures needed to be adopted.
(104) On 11 March 2020, the WHO characterised the COVID-19 disease as a pandemic. The public health risk deriving from the absence of therapeutics or vaccines for the novel COVID-19 virus determined the exceptionality of the circumstances. The rapidity of the spread caused enormous consequences both in terms of fatal outcomes in high-risk groups and in terms of economic and societal disruption.73 The necessity to adopt and encourage the respect of measures aimed at interrupting transmission chains stemmed from that acknowledgement.
(105) Since March 2020, Member States adopted various measures that aimed to limit the spread of the coronavirus, e.g. travel restrictions for non-essential travels, closure of borders, closure of non-essential shops, obligation for companies to organise working from home for every position where this is possible and various social distancing measures.
(106) In view of the above, the COVID-19 outbreak qualifies as an exceptional occurrence, as it was not foreseeable and is clearly distinguishable from ordinary events, by its character and its effects on the affected undertakings and the economy in general, and therefore falls outside the normal functioning of the market.
(107) In this context, the COVID-19 outbreak can be considered as an exceptional occurrence within the meaning of Article 107(2)(b) TFEU.74
73 ECDC’s Rapid Risk Assessment, Outbreak of novel Coronavirus disease 2019 (COVID-19): increase transmission globally – fifth update, 2 March 2020.
74 See Commission Decision of 12 March 2020 in State aid case SA.56685 (2020/N) – Denmark – Compensation scheme for cancellation of events related to COVID-19, OJ C 112, 03.04.2020, and Commission Decision of 31 March 2020 in State aid case SA.56765 (2020/N) – France – COVID-19 Moratoire sur le paiement de taxes et redevances aéronautiques en faveur des entreprises de transport public aérien sous licences d'exploitation délivrées par la France.
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3.3.3. Causal link between the damage to be compensated by the notified measure and the COVID-19 outbreak
(108) The Commission has examined the Measure pursuant to Article 107(2)(b) TFEU, which requires a direct link between the damage and the exceptional occurrence for which the State aid measure provides compensation. That assessment has led to the following observations.
(109) As described in detail in section 2.1.1, the COVID-19 outbreak has resulted in travel restrictions all over the world and the closing down of the vast majority of passenger air transport. Those containment measures were intended to avoid the spread of the virus, but they negatively affected the aviation sector. Although part of those containment measures and travel restrictions were lifted in the course of June 2020 at national and Union level, many of them remained in force in third countries for travels to Italy75 and vice-versa.
(110) The Measure aims at compensating losses suffered by Alitalia on specific routes between 16 June and 31 October 2020 where governmental restrictions implemented both by Italy, Greece and third countries existed. Such restrictions took the form of a full ban on travel and flight activities, as for example between Italy and Montenegro or Brazil,76 where all airline companies were barred from operating air services for a certain time, before an easing of restrictions to a full entry ban of any incoming traveller (with only very limited exceptions) from those two countries in Italy.77
(111) Other forms of bans included a full prohibition of foreign nationals on both side of a route operated by Alitalia. On one hand, Italy and Greece adopted a general prohibition of non-essential travel to/from third countries except for work, health or other emergency motives. On the other hand, most of the third countries to which Alitalia operated also implemented full prohibition of foreign nationals with exceptions that concerned specific categories of persons78 determined by law or persons that had to obtain on a case-by-case assessment prior approval by the public authorities to enter into the country.79
(112) Under those circumstances, and taking into account the specificities of long-haul flights which usually require higher variable costs than short-haul flights,80 the restrictions adopted on the specific routes eligible to the Measure formally prevented airline companies such as Alitalia from transporting a vast majority of passengers,
75 As well as on the ATH-TLV route.
76 See recital (15).
77 International air passengers services were also suspended by Algeria (see section 2.1.1.6) and India (see section 2.1.1.7) where Alitalia was flying.
78 For example, entry to the United States was strongly limited for foreigners, who had either permanent residents, direct relatives (father, spouse or child) of a US citizen or a person of national interest for the United States (see section 2.1.1.2).
79 See for example the restrictions in place in Israel (see section 2.1.1.8) and in Japan (see section 2.1.1.3).
80 Variable costs such as fuel, onboard catering services, ground handling services and airport charges necessarily increase with long-haul flights given the duration of the flight and the size of the aircraft.
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namely those in the categories that did not meet the conditions to benefit from the exemption to the prohibition on foreign nationals (leisure or business travel). That conclusion is not undermined by the entitlement for individuals to come back to their respective country of nationality or residence, as it is very likely that these individuals would travel only one way.
(113) The data provided by Italy show in addition that the governmental restrictions affected not only Alitalia but all other airlines that were normally operating these routes prior to the COVID-19 outbreak, with significant decrease in passengers transported and flights operated, not to mention the total disappearance of any air commercial services on certain routes and/or between Italy and third countries81. In these circumstances, the Commission takes the view that the restrictions implemented by Italy, Greece and all the third countries listed in section 2.1.1 had the effect of rendering the air services on the routes listed in section 2.1.2 de facto unviable, and were as such equivalent to a full ban.
(114) Therefore, there is a direct link between the damages and the COVID-19 outbreak due to the travel restrictions adopted by Italy, Greece and other countries.
(115) The Commission considers that, for the purposes of calculating the damage subject to possible compensation under Article 107(2)(b) TFEU, net losses occurring during the period 16 June to 31 October 2020 on each of the routes listed in recital (7) can be considered as damage directly linked to the exceptional occurrence.
(116) That conclusion is without prejudice to an evaluation of further losses directly caused by the COVID-19 outbreak that Alitalia may have suffered or still suffers directly due to governmental containment measures and which Italy can prove are directly linked to COVID-19 related containment measures. In this contexts the Commission hightlights that any further aid aimed at covering that additional damage will require, the Commission’s prior assessment and authorisation.
3.3.4. Proportionality of the aid measure
(117) In order to be compatible with Article 107(2)(b) TFEU, the aid must be proportional to the damage directly caused by the exceptional occurrence. Aid must not result in over- compensation of damage; it should only make good the damage caused by the exceptional occurrence.
(118) To ensure proportionality, it is necessary to analyse the assumptions and evidence on which the calculation of damage is based. In particular, it is necessary to look at how the exceptional occurrence has actually and directly affected the operations of Alitalia route-by-route (e.g. those on which Alitalia has been prevented from operating) and in terms of the costs and revenues of the company.
(119) The damage to be compensated corresponds to the net loss, defined as loss of profitability directly linked to the COVID-19 outbreak and the containment measures put in place. The loss of profitability is the difference between the profits that Alitalia would have expected during the period from 16 June to 31 October 2020 on those routes, had the containment measures linked to the COVID-19 outbreak not occurred.
81 As well as on the ATH-TLV route.
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(120) The Commission agrees that in this case a route-by-route analysis has to be undertaken since only specific routes were affected by the relevant containment measures. The route-by-route quantitative analysis submitted by Italy appropriately identifies the damage attributable to the containment measures. In particular:
(a) By comparing routes affected by the containment measures and routes not affected by them in the Eligibility period (i.e. domestic routes), it is possible to distinguish the loss of passengers due to the containment measures from the reduction of passengers that would have been lost in any event regardless of the containment measures. That strategy appropriately identifies what would have been the level of passengers absent the containment measures (i.e. the counterfactual).
(b) The distinct approach to revenues and variable costs, on the one hand, and fixed costs, on the other hand, appropriately takes into account the impact of large variations of output and the economies of scale that characterise the cost structure of an airline. Fixed costs can show some variation when confronted with large variations of output, as the one affecting Alitalia, although any such variation is likely to be less than proportional. The linear adjustment of fixed costs submitted by Italy, as well as the allocation of fixed costs based on the 2019 data route-by-route, provides a reliable estimate of the avoided fixed costs at the level of the routes.
(121) The Commission considers that the methodology submitted by Italy allows a quantitative identification of the damage attributable to the COVID-19 outbreak and the relevant containment measures. The Commission considers that the route-by-route analysis submitted by Italy provides a reliable method to calculatethe damage sufferered by Alitalia due to the containment measures and hence considers that the compensation of EUR 73.02 million for the eligible routes is proportional because it precludes overcompensation.
(122) In light of the above, the Commission considers that the Measure granted by Italy to Alitalia under Article 107(2)(b) TFEU (i.e. a compensation of EUR 73.02 million) does not exceed the damage estimated to have been incurred by Alitalia directly linked to the exceptional occurrence due to the governmental restrictions.
(123) In addition, the Italian authorities have confirmed that the aid cannot be cumulated with other aid (also de minimis) covering the same eligible costs.82
(124) The Commission therefore concludes that the notified measure of EUR 73.02 million provides for compensation that does not exceed what is necessary to make good the damage.
4. CONCLUSION
The Commission regrets that Italy failed to meet its obligations under Article 108(3) TFEU to notify the August Decree. Nevertheless, in light of the above, the Commission has decided not
82 See recitals (73) and (84) of the present decision.
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to raise objections to the aid amounting to EUR 73.02 million on the grounds that it is compatible with the internal market pursuant to Article 107(2)(b) 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 for Competition State Aid Greffe B-1049 Brussels [email protected]
Yours faithfully,
For the Commission
Margrethe VESTAGER Executive Vice-President
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