The European Commission has opened an in-depth investigation under the EC Treaty`s state aid rules into possible aid granted by the German Land of Saxony to DHL and Leipzig/Halle airport, through the financing of the…
The European Commission has opened an in-depth investigation under the EC Treaty`s state aid rules into possible aid granted by the German Land of Saxony to DHL and Leipzig/Halle airport, through the financing of the new southern runway and financial guarantees endorsed by Saxony.
The Commission has doubts that the two operations have been carried out on terms that would be acceptable to a market investor. In particular, the Commission wants to ensure that DHL does not receive additional state aid over and above the regional investment aid already approved by the Commission for the new DHL hub at Leipzig-Halle Airport. The risk is that further aid would distort competition in the European express parcel market. The opening of an investigation procedure gives interested parties an opportunity to comment on the proposed measures. It does not prejudge the outcome of the investigation.
In April 2006, Germany notified to the Commission a series of arrangements concerning the construction and operation of the new southern runway at Leipzig/Halle airport. The expansion of the airport is linked to the decision of express parcel operator DHL – a subsidiary of Deutsche Post – to establish its European express parcel hub at Leipzig/Halle airport.
The Commission has identified two potential state aid elements:
- The construction of the southern runway will be financed by capital contributions from the Land of Saxony, which is the main shareholder of Leipzig/Halle airport. Since this new runway appears to be dedicated to DHL operations, its public financing might have to be analysed as a commercial operation and raise State aid concerns. A preliminary assessment by the Commission indicates that the revenues from the southern runway might not be sufficient to cover the additional costs or to provide for remuneration for the capital invested by the Land of Saxony that would be expected by a market investor. On the basis of the information currently available, the Commission cannot exclude that the capital contributions from the Land of Saxony gives an economic advantage to DHL and Leipzig/Halle airport.
- The possibility for the DHL hub at Leipzig/Halle airport to operate 24 hours per day, seven days per week over the coming years is financially guaranteed by the Land of Saxony. In the absence of appropriate remuneration for the risks assumed by the Land of Saxony, the Commission doubts that these guarantees have been obtained on market terms.
The Commission already approved investment aid to DHL under the 1998 EU Multisectoral Framework on regional aid for large investment projects.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
