EUROPEAN COMMISSION Brussels, 12.11.2019 C(2019) 8028 final In the published version of this decision, PUBLIC VERSION some information has been omitted, pursuant to articles 30 and 31 of Council This document is made available for Regulation (EU) 2015/1589 of 13 July 2015 information purposes only. laying down 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.45139 (2017/NN) and SA.45140 (2017/NN) – Belgium – Antwerp and Ostend-Bruges Airports Sir, 1. PROCEDURE (1) On 13 April 2016, the Belgian authorities pre-notified to the Commission investment aid and operating aid for the airports of Antwerp and Ostend-Bruges (“Ostend airport”). The pre-notifications were registered under the number SA.45139 for Ostend airport and SA.45140 for Antwerp airport. (2) On 23 March 2017, the cases were transferred to the registry of non-notified aid, as the operating and investment aid to both airports had been granted before any Commission authorisation. (3) Between March 2017 and September 2019, the Belgian authorities provided additional information. His excellency Sir Didier Reynders Ministry of Foreign and European Affairs Rue des Petits Carmes, 15 B-1000 Brussels Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 (4) By letter of 26 October 2018, the Belgian authorities informed the Commission that, following amendment of the General Block Exemption Regulation (“GBER”)1 in June 2017, the planned investment aid to Ostend airport fell within the scope of the GBER. Since this has reduced the scope of the notification, this decision relates only to the investment aid to Antwerp airport and the operating aid to Antwerp and Ostend airports. 2. DETAILED DESCRIPTION OF THE MEASURES 2.1. The LOM-LEM structure (5) Following the institutional reform law of 8 August 1980, the Belgian regions were given powers to equip and operate public airports and aerodromes situated within their territory2. Since 1988, the ownership and management of the three regional airports located on its territory (Antwerp, Ostend and Kortijk-Wevelgem) is in the hands of the Flemish Region (Department of Mobility and Public Works of the Government of Flanders, as a Department with Separate Management. (6) To end the declining trend in passenger numbers and to make the Flemish airports more market-oriented, the Decree of 10 July 2008 on the management and operation of the regional airports of Ostend-Bruges, Kortrijk-Wevelgem and Antwerp introduced a new structure for the airport management, the so-called LOM-LEM structure: - The “LOM” (LuchthavenOntwikkelingsMaatschappij or Airport Development Company) is a public entity and the lessee of the airport infrastructure. The LOM is responsible for the provision and (extraordinary) maintenance of the basic infrastructure (i.e. infrastructure necessary to accommodate aircraft movements, to keep the ICAO certificates and environmental and other permits) put at the disposal of the LEM; - The “LEM” (LuchthavenExploitatieMaatschappij or Airport Operating Company) is the airport operator, a private partner responsible for the commercial exploitation of the airport. The LEM is responsible for the basic maintenance of the airport and for all investments necessary to economically and commercially develop the airport. (7) The Flemish Region considered that a private operator would be better placed to further develop the regional airports in Flanders, to better develop commercial opportunities and to estimate and manage operating risks. Therefore, since October 2014, Antwerp and Ostend airports have been operated by a French private company, EGIS Projects S.A. (“Egis”), through its subsidiaries LEM Antwerp and LEM Ostend-Bruges (hereafter, “LEM Antwerp” and “LEM Ostend”, and together “the LEMs”). Egis was awarded a 25 year concession 1 Commission Regulation (EU) 2017/1084 of 14 June 2017 amending Regulation (EU) No 651/2014 as regards aid for port and airport infrastructure, notification thresholds for aid for culture and heritage conservation and for aid for sport and multifunctional recreational infrastructures, and regional operating aid schemes for outermost regions and amending Regulation (EU) No 702/2014 as regards the calculation of eligible costs, OJ L 156, 20.6.2017, p. 1-18. 2 Except Brussels National Airport ("Brussels airport") which falls under the responsibility of the Belgian Federal State. 2 following a competitive public tender procedure which took place between December 2009 and February 2013. (8) The infrastructure of Antwerp and Ostend airports is owned by the Flemish Region and managed through the independent public agencies , LOM Antwerp and LOM Ostend-Bruges (hereafter, “LOM Antwerp” and “LOM Ostend”, and together “the LOMs”). The LOMs were established on 6 June 2014 and on 27 October 2014 the LOM-LEM structure formally entered into force at both airports. (9) While the LOM-LEM structure was only put in place by October 2014, on 19 July 2013, the Flemish Region, on behalf of the LOM Antwerp and the LOM Ostend, already concluded with the LEM Antwerp and LEM Ostend respectively the concession agreements (the “Concession Agreements”). Under the terms of the Concession Agreements, the LOMs put the infrastructure of the two airports at the disposal of the LEMs in a state that is suitable for use by airlines. The LOMs ensure that the ICAO certificate, environmental and other permits necessary for the safe operation of the airports are maintained. The LOMs are also authorised to collect concession fees from the LEMs. (10) The Concession Agreements provide that the investments in basic infrastructure are to be carried out by the LOMs. Upon payment of a yearly concession fee, the LEMs are entitled to operate and manage the airports and are responsible for all other investments and maintenance of the airport. (11) The concession fees paid by the LEMs include two components, one fixed and one variable. The fixed concession fee is to be increased if the LOMs make additional investments which are not related to the basic infrastructure. The variable concession fee is calculated based on the airport’s turnover. (12) In addition, on 19 July 2013, two subsidy agreements (“the Subsidy Agreements”) were signed between the Flemish Region and the LEMs. These Subsidy Agreements only took effect at the start of the LOM-LEM structure in October 2014 and were concluded for a period of 5 years (i.e. October 2014- October 2019). The Subsidy Agreements grant public funding to the LEMs for: (i) fire protection and security functions at the airports (activities of non- economic nature), and (ii) certain services associated with the airports’ activities that are economic in nature. 2.2. Overview of the airports 2.2.1. Ostend airport (13) Ostend airport is a regional airport owned by the Flemish Region, which is situated 5 km from the Belgian North Sea coast, an important destination for tourism in West Flanders. The airport focuses on freight and passenger traffic. While in the past Jetairfly and Thomas Cook were active at the airport, today TUI fly (previously Jetairfly) is the main tour operator operating charter flights to several holiday destinations on the Mediteranean coast and the Canary Islands. Regarding commercial passenger flights, the airport has a base capacity of […]. The total passenger numbers over the period from 2013 to 2018 are provided in Table 1. 3 Table 1: Passenger traffic development at Ostend airport 2013-2018 2013 2014 2015 2016 2017 2018 Total 247 669 253 044 276 027 434 9703 365 345 419 865 passengers Source: https://www.luchthaven-oostendebrugge.com/statistieken/ (14) Ostend airport is located in a densely populated area and has a catchment area of 3 million people within 45 minutes’ drive4. (15) The business plan submitted by Egis foresees an average annual growth rate of […] % at Ostend airport and a growth to approximately […] (departing) passengers or […] (total) passengers by 2039 (end of the concession agreement). (16) Based on the report “Economic importance of air transport and airport activities in Belgium” published by the National Bank of Belgium, direct and indirect value added at Ostend airport in 2015 was EUR 37.1 million. The airport employed a total of 633 direct and indirect full-time equivalents in 20155. (17) Ostend airport is located 69 km or 50 minutes by car from the small regional airport of Kortrijk-Wevelgem. The airport serves approximately 100 000 passengers per year. This airport does not operate scheduled flights, but is mainly used for private flights and, occasionally, medical flights and pilot training. 2.2.2. Antwerp airport (18) Antwerp airport is a regional airport owned by the Flemish Region and situated near the city of Antwerp, the second most populous city of Belgium. Antwerp airport has a base capacity of approximately […]6. The airport is mainly used by passengers from the Province of Antwerp. Based on a market study conducted by Antwerp airport in 2016, 75.8 % of the outbound passengers at Antwerp airport were from the Province of Antwerp and 10 % from the province of East-Flanders. (19) The airport has a runway of 1510 metres7 which makes it unsuitable for medium- sized jet aircraft, including, for example, those operated by Ryanair8. The 3 In March and April 2016, the airport accommodated 100 000 additional passengers due to the closure and temporary reduced capacity at Brussels airport in the aftermath of terrorist attacks. After Brussels airport resumed its activities, traffic at Ostend airport dropped to its normal level. 4 http://www.egis-airports-network.com/project/resources/apps/ost-airport-greatest-assets.pdf, accessed on 6 August 2019. 5 https://www.nbb.be/en/articles/economic-importance-air-transport-and-airport-activities-belgium- report-2015, accessed on 5 July 2019. 6 This base capacity is calculated based on the environmental permit.