Prof. Dr. Moritz Lorenz Lars Hettstedt April 19 2023 Advocate general recommends reversal of General Court judgment on Hahn Airport Arnecke Sibeth Dabelstein | Aviation - Germany Prof. Dr. Moritz Lorenz, Lars Hettstedt Aviation IntroductionFactsGeneral CourtAdvocate generalCommentIntroductionFew economic operators give rise to so many and diverse state aid cases as regional airports. The advocate general at the European Court of Justice, Priit Pikamäe, recently addressed state aid measures for Hahn Airport and issued his opinion in case C-466/21 P, recommending to set aside the General Court's judgment.The Commission is facing repeated corrections of its decisions. Soon, it will also have to deal with the extension of the Guidelines for Airports and Airlines (the Aviation Guidelines) beyond 2023. Many financial support measures will be allowed to continue at least in 2024.FactsIn 2017, the European Commission allowed the German federal state of Rhineland-Palatinate to cover operating losses of Hahn Airport amounting to €25.3 million. The Commission approved the aid measure without a formal investigation procedure. This was based on:the fact that there were no other airports in the catchment area; andthe low negative impact on competition and trade in the EU member states.Lufthansa, however, considered the compensation payments to be distorting competition and therefore brought an action before the General Court.General CourtThe General Court annulled the Commission's decision in favour of Hahn Airport,(1) arguing that the Commission's examination had been insufficient and incomplete. The Commission should have examined all the criteria specified in the Aviation Guidelines for the assessment of the catchment area. This, however, had not been done. The Commission's decision therefore failed to eliminate all concerns regarding the compatibility of the state aid with the internal market.Advocate generalThe advocate general took the view that the General Court's 2021 judgment could not be upheld. The advocate general argued that the General Court had committed errors of law when rendering its judgment. In particular, the General Court had failed to observe:the obligation to state reasons; andthe rule that the parties should be heard.It was criticised that the General Court had not sufficiently substantiated the existence of a competitive relationship between Ryanair flights from Hahn Airport and Lufthansa flights from Frankfurt Airport. No distinction was made between the use of Frankfurt Airport as a "hub" by Lufthansa and the "point-to-point" traffic by Ryanair at Hahn. In addition, Lufthansa had not pleaded on the possible competitive relationship – in particular, between Frankfurt and Hahn Airports.CommentThe opinion adds another twist to the saga of litigation in relation to state aid for Hahn Airport. It is indeed surprising that the competitive relationship between Frankfurt and Hahn Airports was not given more weight in the decision as Hahn Airport positioned itself as an alternative to Frankfurt Airport.Support measures for regional airports are likely to give rise to further decisional practice. According to media reports, the Commission's policy decision to phase out state aid for regional airports in 2023 is at a tipping point. Although no formal decision has yet been made, there are increasing signs that the ban on state aid for regional airports starting from 2024 in the Aviation Guidelines is to remain suspended for the time being. The Commission had adopted the Aviation Guidelines to eventually put a stop to the continuous subsidisation of regional airports that was taking place in many places in Europe at the time. Its compatibility with the rules of the EU single market is not unlimited.The ban on state aid in the Aviation Guidelines would mean that, starting 2024, no more state aid would be permitted for airports with fewer than 3 million passengers per year. In Germany, this would affect 14 of 24 regional airports. However, the Commission apparently feels compelled to act, considering the sharply reduced passenger numbers due to the covid-19 pandemic. The Commission's decision is therefore eagerly awaited. This is, however, not expected before the second half of 2023.For further information on this topic please contact Moritz Lorenz or Lars Hettstedt at Arnecke Sibeth Dabelstein by telephone (+49 40 31 779 70) or email ([email protected] or [email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.Endnotes(1) Judgment of 19 May 2021, Case T-218/18.