Brussels, 31 July 2020 Case No: 85346 Document No: 1143144 Decision No 099/20/COL Ministry of Trade, Industry and Fisheries PO Box 8090 Dep 0032 Oslo NORWAY Subject: COVID-19 Compensation to TORP Sandefjord Airport 1 Summary (1) The EFTA Surveillance Authority (“ESA”) wishes to inform Norway that, having assessed the compensation to TORP Sandefjord Airport (“the measure”), it considers that the measure constitutes state aid within the meaning of Article 61(1) of the EEA Agreement and decides not to raise objections1 to the measure, as it is compatible with the functioning of the EEA Agreement, pursuant to its Article 61(2)(b). ESA has based its decision on the following considerations. 2 Procedure (2) The Norwegian authorities notified the measure on 30 July 2020.2 3 Description of the measure 3.1 Background (3) The COVID-19 outbreak has resulted in travel restrictions and advice against non- essential travel all over the world, closing down the vast majority of passenger air transport.3 In an attempt to counter the spread of the virus, the Norwegian Government has adopted a series of measures that have resulted in an almost complete shut-down of all civil aviation, both domestic and international. This has resulted, among other things, in significant losses in turnover for Norwegian airports. (4) The aviation sector has been directly affected by the following measures: (i) Restrictions on daily life. In the wake of the crisis, responsible health authorities closed down schools and universities, prohibited cultural and sports events, and closed down certain business activities and meeting points.4 (ii) Rejection of foreign nationals. According to Regulation No 293 of 15 March 2020 relating to rejection of foreign nationals out of concern for public health,5 only Norwegian citizens were allowed into Norway, with very 1 Reference is made to Article 4(3) of the Part II of Protocol 3 to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice. 2 Document Nos 1146868–1146871. 3 See Eurocontrol, EACCC Pandemics Factsheet, Version 3.0, 16/04/2020, p. 33. 4 Decision of the Norwegian health authorities of 12 March 2020, available here. 5 https://lovdata.no/dokument/LTI/forskrift/2020-03-15-293. Rue Belliard 35, B-1040 Brussels, tel: +32 2 286 18 11, www.eftasurv.int Page 2 narrow exemptions for non-citizens that had particularly pertinent reasons for entering the country. These rules have since been relaxed. (iii) Travel restrictions and quarantine rules. According to Regulation No 470 of 27 March 2020 on infection control etc. during the corona outbreak,6 persons allowed to enter the country were quarantined upon arrival.7 On 15 June 2020, the Ministry of Foreign Affairs lifted the travel restrictions and quarantine obligation for European countries that meet specific criteria concerning day-to-day infection levels (“the green areas”). The map over the green areas is updated at least every 14 days, meaning it may be difficult to determine some time in advance if a country will be affected by the quarantine rules and travel restrictions. (iv) Distancing advice applicable on board aircraft. From 28 April 2020 to 11 June 2020, the Norwegian Government required airlines to operate with an empty seat between passengers on flights.8 (5) After 12 March 2020, the traffic at TORP Sandefjord Airport (“Sandefjord Airport”) dropped 95% below its normal level due to the measures taken by Governments to tackle the COVID-19 pandemic. This has led to a significant reduction and/or suspension of services, resulting in high operating losses for Sandefjord Lufthavn AS (“SLH”), the operator of the airport. (6) SLH was forced to reduce its activity to the absolute minimum, in order to reduce costs, and thereby securing the survival of SLH. According to the Norwegian authorities, a complete shutdown of the airport was considered the preferred option by SLH in response to the COVID-19 outbreak. However, due to contractual obligations with the airline Widerøe and the need to ensure continued operation of the critical technical and crew base for the airline, SLH upheld very limited operations at the airport. (7) Even though SLH has done what is possible to reduce costs, the losses expected over the next months and those already incurred will in all likelihood result in the failure of SLH. This will have severe negative knock-on effects for local citizens, the economic activity of the region, and Norwegian air transport in general. 3.2 Objective (8) The measure is meant to cover part of the damage directly caused to SLH from 1 March 2020 to 30 September 2020 (“the compensation period”) due to the public containment measures taken as a consequence of the COVID-19 outbreak. 3.3 National legal basis and aid granting authority (9) The Norwegian Parliament has appropriated NOK 90 million to remedy the consequences of the COVID-19 pandemic and secure the continued operation of the airport. The parliamentary appropriation is based on the constitutional 6 https://lovdata.no/dokument/SF/forskrift/2020-03-27-470. 7 Initially for 14 days and later reduced to 10 days. The rules were only subject to few exemptions. 8 https://www.regjeringen.no/no/aktuelt/korona-veileder-for-luftfarten-er-klar/id2700198/ (measure introduced); https://www.regjeringen.no/no/aktuelt/ny-side6/id2706066/ (measure lifted). Page 3 prerogative of the Parliament to appropriate moneys, according to Section 75 letter d of the Constitution of Norway.9 (10) The aid will be granted by the Ministry of Transport in accordance with the directives given by the Norwegian Parliament. This will be done by means of a contract setting out the terms for the grant, SLH’s commitments, and sanctions in case of breach of these terms. (11) The legal basis for the aid to SLH is therefore the contract between the Ministry of Transport and SLH, which implements the objective of the Norwegian Parliament of securing continued operations of Norwegian airports. 3.4 Beneficiary (12) The beneficiary of the aid, SLH, is the operator of Sandefjord Airport, which is an international airport, located at Torp in Vestfold and Telemark County, some 120 km by road south-south-west of Oslo. (13) Norwegian airports can be divided in two groups: (a) the network of 42 airports owned by Avinor, and (b) other airports, typically operated by undertakings owned mainly by municipalities and/or counties. (14) Sandefjord Airport is the largest privately operated airport in Norway, with 2 073 228 passengers in 2019. SLH has a 20-year concession from the Ministry of Transport to operate and own Sandefjord Airport as a civil airport until 31 December 2030. SLH is owned 43.26% by Vestfold and Telemark County, 43.26% by Sandefjord Municipality and 13.48% by Vestfold Flyplassinvest AS. (15) Sandefjord Airport is the third largest international airport in Norway based on the number of passengers, after the two Avinor airports at Gardermoen (Oslo) and Flesland (Bergen). Sandefjord Airport is also the 11th largest domestic airport in Norway. (16) Sandefjord Airport has both national and international routes operated by ten airlines, among others Widerøe, KLM and Ryanair. (17) SLH was not an undertaking in difficulty, as defined in Article 2(18) GBER, on 31 December 2019.10 According to the Norwegian authorities, SLH has delivered positive operating results every year since 2000. 3.5 Aid instrument, budget and duration (18) The aid will be awarded in the form of a grant, paid as a lump sum. The amount of the grant is NOK 90 million. 9 The reasoning for the grant given by the parliamentary committee is reflected in Innst. 368 S (2019-2020) page 2. See also Recommendation to the Parliament (Innst. 360 S (2019-2020) point 1.1.11). 10 Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (OJ L 187, 26.6.2014, p. 1), referred to at point 1j of Annex XV to the EEA Agreement, as amended by 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 schemes for outermost regions and amending Regulation (EU) 702/2014 as regards the calculation of eligible costs (OJ L 156, 20.6.2017, p. 1), see Joint Committee Decision No 185/2017. Page 4 (19) The grant will compensate damage caused by COVID-19 accrued by SLH between 1 March and 30 September 2020. (20) The estimated damage suffered by SLH is NOK 134 480 000 (see section 3.6). Therefore, the aid intensity is estimated to be approximately 66.9%. 3.6 Eligible costs and modalities of compensation (21) The eligible costs correspond to the damage caused by the COVID-19 outbreak to SLH. The damage is defined as the loss of added value.11 (22) The loss of added value will be quantified based on an analysis of the impact of the COVID-19 outbreak, comparing SLH’s operating results during the compensation period with SLH’s operating results for Sandefjord Airport from 1 March to 30 September 2019 (“the reference period”). (23) The Norwegian authorities note that the effects of COVID-19 were visible already the day after the first cases were identified in Norway, on 26 February. From that moment the traffic declined immediately with 5% in the following days. When the traffic was closed down on 12 March, the traffic at Norwegian airports had already dropped significantly.