Europe questions German airport cash

THE European Commission (EC) is investigating whether German state aid of €255 million (US$365 million) to Leipzig-Halle Airport, constitutes an unfair advantage over its rivals.

The aid, made public last year, covers 100 per cent of the costs for various infrastructure projects begun in 2006. Those projects include ones for noise reduction, de-icing areas, taxiways and bridges, apron and hangar extensions, a new terminal and small aircraft shed, planning costs for the extension of the southern and northern runways, functional security buildings and checkpoints.

Germany says infrastructure projects are not ‘economically viable’ meaning no private investor would finance them and therefore they do not constitute economic activity, which would contravene state aid rules.

However, the EC disagrees saying that the airport’s economic security is strong, firstly because the airport is now the European hub of DHL and secondly because it handled 663,000 metric tonnes of freight in 2010, up from 524,000 tonnes in 2009.

“At this stage,” the EC’s competition commission said in a statement, “the EC considers that Germany has not demonstrated that the public funding, which covers 100 per cent of the cost of expanding the airport, is justified and proportionate.

“In view of the airport’s good economic prospects, a 100 per cent public funding of the investments seems to be excessive, and may trigger a windfall profit for the airport that would distort competition.

“The airport is in competition with cargo airports not only from Germany but also from other member states, such as Vatry (France) and Brussels (Belgium).”

In addition, the EC reveals how the aid was given with no business plan or long-term profitability assessment.