As regards the condition that the measure must contribute to a well-defined objective of common interest, Germany submitted that the objective of the financing of airport infrastructure at Frankfurt Hahn airport was always to improve the economic structure of the economically underdeveloped and scarcely populated Hunsrück region.

Thirdly, Germany stated that, taking into account all parts of the airport activities, Frankfurt Hahn airport created 3 063 jobs in the Hunsrück region in 2012 out of which 74 % were full-time positions. According to Germany, 90 % of those employees also live in the region. Germany argued that Frankfurt Hahn airport helps to prevent the movement of young, qualified employees towards other regions as well as an economic and social decline of the regional communities and their infrastructure. Furthermore, Germany pointed out that the presence of Frankfurt Hahn airport not only produces the aforementioned direct effects for the labour market, but also has enormous indirect, induced and catalysing effects through an increasing number of economic and touristic activities. In this respect, Germany referred to positive secondary effects for the region, namely less unemployment and more tax payers, thereby providing more money for the municipalities in the regions to support the local economy. In total, the airport generated around 11 000 jobs through incoming tourism for the whole Rhineland-Palatinate.

Germany argued that the financing of infrastructure at Frankfurt Hahn airport has also helped to achieve the well-defined objective of common interest to combat air traffic congestion at major Union hubs. In this regard Germany pointed to the fact that the capacity limits of Frankfurt Main airport have been constantly exceeded. Germany submitted that especially in the light of its 24-hour operating licence, Frankfurt Hahn airport was therefore serving to provide additional capacity in order to relieve the congestion at Frankfurt Main airport.

Furthermore, Germany submitted that supporting Frankfurt Hahn airport also serves the objective of common interest of increasing the mobility of Union citizens. In this regard, Germany pointed out that Frankfurt Hahn airport is the only German airport offering direct flights to Kaunas (Latvia), Kerry (Ireland), Kos (Greece), Montpellier (France), Nador (Morocco), Plovdiv (Bulgaria), Pula (Croatia), Rhodos (Greece), Santiago de Compostela (Spain) and Volos (Greece). Also, according to Germany, Frankfurt Hahn airport contributes to the job mobility of young people, who can reach the region Hunsrück and Rhineland-Palatinate region at low prices. Similarly, Germany pointed out that the high-quality universities and institutions of higher education in Koblenz, Mainz, Kaiserslautern, Trier, Wiesbaden, Mannheim, Bonn, etc., where for the most part no tuition fees apply, are now easily accessible to students from all over the Union.

Germany argued, moreover, that it is also of common interest that the Hunsrück region and the surrounding regions of Rhineland-Palatinate are connected to other peripheral regions, for example Limerick, which has already manifested itself through city partnerships. As the fourth biggest national economy in the world, Germany stated that it is focussing not only on connecting to the major European hubs, but also on connecting the regions with each other. According to Germany, becoming more independent from the major hubs such as Heathrow, Charles de Gaulle, Schiphol or Frankfurt/Main, is important for the Union since it will mean not only more direct connections, but also more reliability especially for the freight business as regional airports are less prone to cancellations due to weather, strikes, terrorism or cancellation due to cancellation risks.

Germany considers that the financed investments are necessary and proportionate to the objective of common interest (see recital 68 and following). According to Germany, the investments were undertaken according to the needs and the constructed infrastructure was necessary for the airport in order to guarantee connectivity, to allow for the development of the region and to decongest Frankfurt Main airport. Germany pointed out that the infrastructure was not disproportionate or too opulent for the needs of users of the airport. Hence, Germany considered that this compatibility condition was met.

According to the information provided by Germany, all potential users of the infrastructure have access to the airport on equal and non-discriminatory terms. Germany submitted that the airport charges paid for the use of the infrastructure were based on commercially justified differentiation and that the schedule of airport charges is available to all potential users in a transparent and non-discriminatory manner.

Firstly, Germany stated that there are no substitution effects between Frankfurt Hahn airport and other airports in the catchment area, such as Zweibrücken airport and Frankfurt Main airport. According to Germany, there are no undue negative effects on competition with those airports as a result of the aid granted to FFHG, either in relation to passenger or to freight traffic. Germany submitted that, on the contrary, for flying with low-cost carriers the passengers would rather use hub airports (such as Köln/Bonn or Frankfurt Main) than regional airports (such as Frankfurt Hahn). Germany argued that in recent years, low-cost carriers have increasingly had to provide more flights to the major hubs since traditional airlines have lowered their prices and started to enter the market of low-cost flights. In this regard, Germany stated that regional airports, such as Frankfurt Hahn, are now under a greater pressure to compete with the hub airports for leisure passengers. Therefore, Germany concluded that the financing has not led to any undue negative effects on competition, but has on the contrary proven appropriate for the transition of the airport towards a stable business model in the future.

Secondly, Germany argued that the fact that Fraport, before getting constituted in Frankfurt Hahn airport, was already the operator of Frankfurt Main airport, shows that no substitution movements from Frankfurt Main towards Frankfurt Hahn airport were to be expected. Instead, Fraport was investing in the possibility to decongest Frankfurt Main airport and use the additional, complementary function of Frankfurt Hahn airport, as a future capacity overload was foreseeable for the Frankfurt Main hub. According to Germany, the ban on night flights at Frankfurt Main airport was one of the main factors in this reasoning as Frankfurt Hahn airport had a 24-hour operating licence.

In conclusion, Germany argued that the effects of the financing in favour of FFHG were limited to the positive regional effects for the Hunsrück region as a whole, whilst no undue negative effects were created in relation to other airports as Frankfurt Hahn airport is being used to decongest Frankfurt Main. Furthermore, Germany stated that apart from Luxembourg airport, which is already 1 hour and 30 minutes travelling time (111 km) from Frankfurt Hahn airport, there are no other foreign airports competing in the same catchment area. Even in relation to Luxembourg, the aid granted does not have any negative distortive effect on competition according to Germany.

Germany stated that in the absence of investment aid, the level of economic activity of the airport would be significantly reduced. Germany submitted that the aid was necessary as it compensated only the costs of financing and a lower amount would lead to lower levels of investment.

Concerning the requirement that the aid must contribute to the achievement of the well-defined objective of common interest, Germany submitted that the coverage of operating costs of FFHG was always aimed at the objective of improving the economic structure of the economically underdeveloped and scarcely populated Hunsrück region. In this regard the Germany used the same reasoning as for the assessment of the compatibility of the investment aid to finance the airport infrastructure (see Section 4.4.1).

Germany explained why Frankfurt Hahn is making operational losses which have to be covered. Germany stated that it is quite an ambitious objective for an airport such as Frankfurt Hahn airport with 1-3 million passengers to become profitable and be able to cover its operating costs. According to Germany, it was not possible to achieve this ambitious objective in the start-up years (referring to the period between the start of commercial passenger traffic at the airport until today) of Frankfurt Hahn airport since the airport was burdened by very high infrastructure investments which it financed itself on the capital market and for which it had to pay high interest. In addition, Germany stated that since the world economic and financial crisis, there has been a stagnation of passenger and especially freight traffic.

Germany submitted that in the light of these circumstances, there was a need for state invention to cover the operating losses since FFHG would otherwise have become insolvent. According to Germany, this would also have resulted in the withdrawal of the 24-hour operating licence, meaning that FFHG would have had to stop operating all flights, resulting in turn in the loss of clients, such as airlines and freight carriers. Germany pointed out that it would then also have become very difficult to find a new operator for the airport.

Germany submitted that covering the operating costs was an appropriate measure to achieve the intended objective. Germany argued in this respect that if Frankfurt Hahn airport had had to stop operating and had disappeared from the relevant markets, then the objectives of common interest pursued in developing the Hunsrück region and making conversion investments would not have been achieved. In this regard, Germany emphasised that in contrast to a private investor, a public investor has to take those objectives into account when considering the alternative of closure of the airport.

Germany argued that in order to maintain Frankfurt Hahn airport in operation, it was a necessary to cover its operating costs as FFHG would otherwise have become insolvent. Germany stated that the coverage of operating costs was in turn the basis also for realising the objectives of common interest as stated in recital 84 and following. Furthermore, Germany argued that without this operating aid, the financial consolidation of the airport as foreseen by the operator now would have been unthinkable, since the airport would have accrued more and more debt instead of making it out of its debts. According to Germany, the incentive effect of the measures is already demonstrated by that fact that FFHG is continuously progressing towards profitability.

Germany argued that any aid element contained in the loans was limited to the operating losses and represented the absolute minimum necessary in order to maintain Frankfurt Hahn airport in operation and keep it from becoming insolvent.

Germany considered that there were no undue negative effects on competition and trade between Member States. In this regard Germany used the same reasoning as for the assessment of the compatibility of investment aid to finance airport infrastructure (see Section 4.4.1).

In order to determine whether an appropriate risk premium has been added to the base rate the rating of the undertaking needs to be determined. FFHG is not rated by a credit rating agency. Germany, however, submitted that, in the risk margin indication of Deutsche Bank, the bank also assessed the credit worthiness of FFHG. On the basis of Deutsche Bank's analysis of FFHG's financial reports of 2006 to 2008, it puts FFHG in the [<BBB+] rating category. However it does not specify an exact rating for the company.

The Commission notes that the [<BBB+] rating category includes all ratings that are below [BBB+]. Hence, the [<BBB+] rating of FFHG according to Deutsche Bank could accordingly be interpreted as any rating below [BBB+] on the Standard & Poor's rating scale.

Besides the analysis of Deutsche Bank, Germany submitted rating indications for FFHG conducted by two other banks. The Commission notes that these banks also assigned FFHG a [<BBB+] rating category. In 2010 Volksbank assigned FFHG a rating of […] according to its internal rating scale (that rating corresponds to [B to BB] on the Standard & Poor's rating scale). In 2011 Kreissparkasse Birkenfeld assigned FFHG a rating of […] according to its rating scale (that rating corresponds to [B- to BB-] on the Standard & Poor's rating scale).

Finally, Germany provided ratings of FFHG established according to Moody's credit-scoring model based on the data available at the time the ISB loans were granted (see Table 8). These ratings confirm the [<BBB+] rating assigned by Deutsche Bank and vary between [B2] on the Moody's rating scale (this is [B] on the Standard & Poor's rating scale) and [Baa3] on the Moody's rating scale (this is [BBB-] on the Standard & Poor's rating scale).

In the light of the considerations in recitals 153 to 158, the Commission considers that FFHG's rating corresponds to no better than [BBB-] on the Standard & Poor's rating scale.

However, in order to determine whether, in addition to any possible advantage granted through the 100 % state guarantee (see Section 6.2), the ISB loans conferred any advantage on FFHG, the rating of the issuer of the 100 % state guarantee (that is the rating of the Land Rhineland-Palatinate) needs to be taken into account as otherwise the advantage stemming from the state guarantee would be taken into account twice. As stated in recital 117, the Land Rhineland-Palatinate has an AAA rating.

Therefore, given that the ISB loans were granted against the background of a state guarantee, the Commission considers it appropriate to determine the risk margin on the basis of 5-year EUR bonds of the German Länder (amounting to [5 to 25] basis points). The Commission further observes that in its analysis Deutsche Bank added a risk premium of [5 to 25] basis points due to the fact that the loans were not granted directly to the Land, but were only collateralised by a 100 % state guarantee, as well as an additional premium of [5 to 25] basis points for the limited tradability of the debt. The Commission considers that these are reasonable assumptions and that the resulting risk margin between [20 basis points and 70] basis points is appropriate given the creditworthiness of the issuer of the guarantee.

With regard to ISB loans numbers 2 and 5 which have variable rates the actual interest rate is Euribor plus a risk margin of [0,35 %-0,55 %] p.a. and [0,25 %-0,45 %] p.a., respectively. The risk margin for ISB loan number 2 was within the bandwidth determined by Deutsche Bank, while the risk margin for ISB loan number 5 was 4 basis points below the risk premium determined by Deutsche Bank. No bank fee was charged on either of the two ISB loans. Hence, the Commission considers that the rate charged for the provision of the two loans provides an (albeit small) element of advantage (the interest rate paid for loan number 2 appears to be between [10-30] basis points below the benchmark rate and for loan number 5 between [5-25] basis points).

The Commission notes that the interest rate of ISB loans numbers 1, 3 and 4 is fixed. As all three loans are amortising, in order to establish the relevant maturity of the loans in question, the amortisation of the loans has to be taken into account.

The Commission has for that purpose calculated the weighted average life (WAL) of the loans, which indicates the average number of years that each euro remains outstanding. The WAL of loan number 1 has been calculated at 3,92 years, the WAL of loan number 3 at 1,17 years and the WAL of loan number 4 at 3,29 years.

Loans numbers 1, 3 and 4 were granted at rates well above these calculated benchmark rates (loan number 1 at [> 3 %;< 4,5 %], loan number 3 at [> 3 %;< 4,5 %] and loan number 4 at [> 3 %;< 4,5 %]) and the Commission considers that fact to be an indication that the loans were indeed in line with market conditions, thereby excluding the existence of an advantage.

The investment aid in favour of FFHG aimed at financing the further conversion of the former US military base into a civilian airport and substantially developing the infrastructure of the airport. Those measures provided a significant contribution to the regional development and connectivity of the Hunsrück region and the creation of new jobs in an area economically hit by the closure of the US military base, as well as the decongestion of Frankfurt Main airport.

The Commission considers that the development of Frankfurt Hahn airport also contributed significantly to the creation of new jobs in the Hunsrück region. As shown by Germany, taking into account all parts of the airport activities, Frankfurt Hahn airport created 3 063 jobs in the Hunsrück region in 2012 out of which 74 % were full-time positions and 90 % of those employees also live in this region.

Moreover, the development of Frankfurt Hahn airport had also positive indirect, induced and catalysing effects on the creation of jobs in the region as well as regional development in general through an increasing number of economic and touristic activities. According to the information provided by Germany, Frankfurt Hahn airport contributes significantly to the development of incoming (~ 33 % of passengers corresponding to approximately 1 million passengers in 2005) and outgoing tourism (~ 67 % of passengers) in the Land Rhineland-Palatinate. As pointed out by Germany, 88 % of the incoming passengers stay at least one night in the region and generated approximately 5,7 million overnight stays in 2005. Since 88 % of incoming tourists from Frankfurt Hahn stay at least one night and more than 80 % of those even stay two to 10 days, they generate a total turnover of about EUR 133,7 million per year. Moreover, incoming tourism generated around 11 000 jobs in Rhineland-Palatinate.

The aided investments at issue also helped to improve the accessibility of the area. Nevertheless, the duplication of unprofitable airports (or the creation of additional unused capacity) does not contribute to an objective of common interest. In this case, the Commission takes the view that the investment aid does not lead to such a duplication which would diminish the medium-term prospects for the use of existing infrastructure at other, neighbouring airports. Indeed, there are no other airports within 100 kilometres or 60 minutes travelling time from Frankfurt Hahn airport. The closest airports to Frankfurt Hahn are Frankfurt Main airport, which is located at 115 kilometres distance or 1 hour 15 minutes travelling time by car, and Luxembourg airport, which is located 1 hour and 30 minutes travelling time (111 kilometres) away.

Frankfurt Main airport is an international hub airport with a wide variety of destinations and is predominantly served by network carriers offering connecting traffic, whereas Frankfurt Hahn airport serves low-cost point-to-point flights. Traffic at Frankfurt Main airport has continuously increased since 2000, from 49,4 million passengers in 2000 to approximately 58 million in 2012. However, during that period growth has been affected by congestion problems and capacity constraints. As pointed out by Germany, the capacity limits of Frankfurt Main airport were constantly exceeded. Therefore, according to Germany, especially in the light of its 24-hour operating licence, Frankfurt Hahn airport played an important role in providing additional capacity in order to relieve the congestion at Frankfurt Main airport. In fact, until 2009 Fraport was the majority shareholder of FFHG, the operator of Frankfurt Hahn airport (2,7 million passengers in 2013, around 4 million passengers in 2007 at its peak) and the operator of Frankfurt-Main airport (58 million passengers and 2,1 million freight), and was as such pursuing a diversification strategy.

Luxembourg airport, which is the nearest airport to Frankfurt Hahn but still around 111 kilometres or 1 hour 30 minutes travelling time by car away, had around 1,7 million passengers in 2008 and experienced a rapid growth to 2,2 million in 2013. Even though Luxembourg airport is slightly smaller than Frankfurt Hahn airport in terms of passenger traffic, its freight activity is substantially larger, with 674 000 tonnes in 2013. It offers a variety of scheduled flights to European capitals and charter flights to leisure destinations. This selection of destinations to a large extent meets the needs of the employees of the financial and international institutions located in Luxembourg.

Saarbrücken airport is located around 128 kilometres away from Frankfurt Hahn airport which amounts to over 2 hours travelling time by car. In addition, Frankfurt Hahn is served mainly by low-cost carriers (Ryanair) and freight constitutes a rather important element in its business model whereas Saarbrücken airport offers mainly scheduled flights to national destinations and has only limited air freight transport.

With regard to Zweibrücken airport, Germany emphasised that the distance of 127 km to Frankfurt Hahn airport translates into a travelling time of 1 hour and 27 minutes by car or around 4 hours by train. Moreover, Germany submitted that, looking at passenger and air freight traffic between 2005 and 2012, no relationship of substitution between the airports can be deduced.

At the same time it should be noted that, before Zweibrücken entered the market in 2006, Frankfurt Hahn airport was already a well-established airport with more than 3 million passengers and channelling 123 000 tonnes of freight. In view of the historical development of the two airports, their geographical location and the free capacity available at Frankfurt Hahn airport at the time when Zweibrücken airport entered the commercial aviation market in 2006, the Commission concludes that it is rather the opening of Zweibrücken airport which constituted an unnecessary duplication of infrastructure.

Therefore, the Commission concludes that the investments into Frankfurt Hahn airport do not constitute a duplication of existing non-profitable infrastructure. On the contrary, Frankfurt Hahn airport has played an important role in decongesting Frankfurt Main airport without limiting the latter's plans to expand. Without the investments into Frankfurt Hahn airport there was in fact a risk that the region would be underserved in terms of its transport needs.

In the light of the considerations in recitals 199 to 210, the Commission therefore concludes that the investment aid directed at the construction and operation of infrastructure at Frankfurt Hahn airport meets a clearly defined objective of common interest, namely regional economic development, creation of jobs and improvement of the accessibility of the region.

According to Germany, the investments were undertaken according to the needs (and were thus proportionate) and the constructed infrastructure was necessary for the airport in order to serve the connectivity and the development of the region and to decongest Frankfurt Main airport.

Based on the information provided by Germany, the Commission agrees that the financed investments were necessary and proportionate to the objective of common interest (see recital 68 and following). Indeed, without these investments the conversion of the former US base into a fully functioning civil aviation airport could not have been completed. The construction of passenger and freight facilities, aprons and modernisation of taxiways had to be carried out in order to further develop civil flight operations. Hence, the constructed infrastructure was necessary for the airport in order to serve the connectivity and the development of the region.

Also, the infrastructure project was undertaken only to the extent it was necessary to attain the goals set: while the infrastructure was built for a maximum passenger traffic of around 4 to 5 million passengers and 500 000 tonnes of freight, the traffic statistics displayed in Table 1 and Table 2 show that the passenger traffic steadily increased until 2007 to reach a record of 4 million passengers (following by a decline to 2,7 million in 2013 for the reasons set out in recital 219) and that the freight volume increased to more than 500 000 tonnes of freight in 2011. This means that the expected traffic demand largely corresponded to the actual demand and that the investments were not disproportionately large.

While it is important to avoid that investment constitutes a duplication of an existing unprofitable infrastructure, this is not the case here. As already explained in recitals 203 to 210, there are no other airports within 100 kilometres distance and 60 minutes travelling time, and even if a wider catchment area was to be considered there are no duplication effects. The closest airport is Frankfurt Main airport, which Frankfurt Hahn airport was intended to decongest.

In the light of these considerations, the Commission considers that this compatibility condition is met.

Germany submitted that before the decision to further develop the airport infrastructure was taken, traffic forecast studies were conducted by external experts in order to identify the traffic potential for Frankfurt Hahn airport.

The information submitted shows that at that time the external experts forecasted significant growth from 0,3 million passengers in 2000 to up to 3,8 million passengers by 2010 (see Figure 6 and Figure 7). With regard to freight development, the experts projected a development from 151 000 tonnes in 2001 to up to 386 000 tonnes in 2010 (see Figure 8), with the growth in the freight business between 2006 and 2010 coming from the freight flights diverted from Frankfurt Main airport due to curfew. However, these projections could only be fulfilled if the investments were undertaken to the planned extent.

The Commission notes that these traffic forecasts (see recital 218) were confirmed by the actual traffic development at Frankfurt Hahn airport (see Table 1 and Table 2). In 2007 Frankfurt Hahn airport served around 4 million passengers. Following a period of significant growth, air traffic in Germany and the Union in recent years has been negatively affected by the economic and financial crisis in 2008/2009, which resulted in a decrease in passenger air transport in Germany in 2009. The passenger development at Frankfurt Hahn airport was further impacted by the introduction of an air passenger tax in Germany in 2011. Currently Frankfurt Hahn airport serves around 2,7 million passengers p.a. With regard to freight, Frankfurt Hahn airport handled 565 000 tonnes of freight in 2011. Due to the bankruptcy of one of its clients, the airport processed only 447 000 tonnes in 2013.

In the light of these considerations, it can therefore be concluded that Frankfurt Hahn airport is already using most of its capacity and that the medium-term prospects for the use of the capacity were satisfactory.

Hence, the Commission considers that this condition is satisfied.

According to point 39 of the 2005 Aviation Guidelines the category of an airport can provide an indication of the extent to which airports are competing with one another and therefore also the extent to which public funding granted to an airport may distort competition.

Within the standard catchment area of Frankfurt Hahn airport (1 hour travelling time by car or 100 kilometres distance) there are no other commercially exploited airports. Even if one were to extend the catchment area, the Commission considers that the aid does not create undue negative effects on competition and trade between Member States.

As far as Frankfurt Main airport (the closest airport at around 115 kilometres distance and 1 hour 15 minutes travelling time) is concerned, the investments at Frankfurt Hahn airport did not result in negative substitution effects. In fact, before getting involved in Frankfurt Hahn airport, Fraport was already the operator of Frankfurt Main airport, but was nevertheless investing in Frankfurt Hahn airport with a view to decongesting Frankfurt Main airport, as a future capacity overload was foreseeable for that hub. In particular, the ban on night flights at Frankfurt Main airport was one of the main factors to be taken into consideration as Frankfurt Hahn airport had a 24-hour operating licence.

Even though Frankfurt Hahn experienced significant growth in the period from 2000 until 2007, Figure 1 shows that in comparison to Frankfurt Main the traffic share remained very limited. From 2000 to 2003 Frankfurt Main airport experienced steady passenger growth from 48 million in 2000 to 54,2 million in 2007. Due to the economic crisis, Frankfurt Main experienced a slight decrease to 50,9 million in 2009, followed by a rapid increase to 58 million. With regard to the freight activities, Frankfurt Main airport experienced steady growth from 1,6 to 2,2 million tonnes in 2013.

In addition, contrary to Frankfurt Main and Luxembourg airports, Frankfurt Hahn airport is not served by a train connection. Overall, no substitution effect on rail transport can be expected.

In view of the considerations in recitals 223 to 228, the Commission considers that any undue negative effects on competition and trade between Member States are limited to the minimum.

The Commission must establish whether the State aid granted to Frankfurt Hahn Airport has changed the behaviour of the beneficiary in such a way that it engaged in activity contributing to the achievement of the objective of common interest that (i) it would not have carried out without the aid; or (ii) it would have carried out in a more restricted or different manner. In addition, the aid is considered to be proportionate only if the same result could not be reached with less aid and less distortion. This means that the amount and intensity of the aid must be limited to the minimum needed for the aided activity to take place.

According to the information submitted by Germany, without the aid the investment could not have been realised. Germany submitted that the aid was necessary as it compensated only the costs of financing and a lower amount would have led to lower levels of investment.

Indeed, according to the financial results summarised in Table 3 and Table 4 the airport is still loss-making and not able to finance its investment costs. Therefore, it can be concluded that the aid was necessary to make investments in order to decongest the airport infrastructure and to meet the current requirements for modern airport infrastructure. Without the aid, Frankfurt Hahn airport would not have been able to meet the expected demand of airlines, passengers and freight forwarders and the level of the economic activity of the airport would have been reduced.

It should also be noted that the public support was granted in a period when FFHG realised very significant investments into the infrastructure (more than EUR 220 million in 2001-2012). Of this amount, EUR 46 million were invested during the period under consideration (2009 to 2012). It follows that the investment aid covered only a fraction of the overall investment costs and was limited to the difference between the interest rate paid for the funds and the market rate under which FFHG would have received those funds on the market. Also, the investment aid under consideration was granted in the form of a 100 % state guarantee and funds at preferential terms and not in the form of a direct grant.

The Commission therefore considers that the aid measure at stake had an incentive effect and that the amount of aid was limited to the minimum necessary for the aided activity to take place, and was thus proportionate.

On the basis of the above, the Commission concludes that the investment aid granted to Frankfurt Hahn airport is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty as it complies with the compatibility conditions laid down in point 61 of the 2005 Aviation Guidelines.

According to Section 5.1.2(a) of the 2014 Aviation Guidelines, in order to give airports time to adjust to new market realities and to avoid any disruptions in the air traffic and connectivity of the regions, operating aid to airports will be considered to contribute to the achievement of an objective of common interest, if it: (i) increases the mobility of Union citizens and connectivity of regions by establishing access points for intra-Union flights; (ii) combats air traffic congestion at major Union hub airports; or (iii) facilitates regional development.

In the light of the considerations in recitals 199 to 204, the Commission considers that the continued operation of Frankfurt-Hahn airport increased the mobility of Union citizens and connectivity of regions by establishing an access point for intra-Union flights in the Hunsrück region. In addition, the continued operation of the airport facilitated the regional development of the Hunsrück region and the creation of new jobs. Moreover, the operation and development of Frankfurt Hahn airport also served to decongest Frankfurt Main airport.

The Commission therefore concludes that the measure at stake meets a clearly defined objective of common interest.

According to Section 5.1.2(b) of the 2014 Aviation Guidelines, in order to assess whether State aid is effective in achieving an objective of common interest, it is necessary to identify the problem to be addressed. In this respect, any State aid to an airport must be targeted towards a situation where aid can bring about a material improvement that the market cannot deliver itself.

The Commission notes that Frankfurt Hahn airport is a regional airport with approximately 2,7 million passengers p.a. It has high fixed operating costs and under present market conditions it is not able to cover its own operating costs. Therefore, there is a need for State intervention (see point 89 of the 2014 Aviation Guidelines).

According to Section 5.1.2(c) of the 2014 Aviation Guidelines, any aid measure to an airport must be an appropriate policy instrument to address the objective of common interest. The Member State must, therefore, demonstrate that no other less distortive policy instruments or aid instruments could have allowed the same objective to be reached.

According to Germany, the aid measures at stake are appropriate to address the intended objective of common interest that could not have been achieved by another less distortive policy instrument.

In this case the aid amount (the difference between the market rate for the funds provided by the cash-pool and the actual rate) stayed below the uncovered operating losses (see Table 4, Ebitda excluding the extraordinary revenue of the airport) actually incurred and was limited to the minimum necessary as it was granted only as a repayable loan and not as a direct grant. No other policy measure would allow the airport to continue its operation. Hence, the compensation of losses is limited to the minimum and does not provide for any profits.

In view of recitals 244 and 245, the Commission considers that the measures at stake were appropriate to reach the desired objective of common interest.

According to Section 5.1.2(d) of the 2014 Aviation Guidelines, operating aid has an incentive effect if it is likely that, in the absence of operating aid, the level of economic activity of the airport would be significantly reduced. This assessment needs to take into account the presence of investment aid and the level of traffic at the airport.

Without the aid the scale of the operations at Frankfurt Hahn airport would be severely impacted and reduced, leading eventually to the market exit of the airport due to uncovered operating losses.

In view of the above, the Commission considers that the aid measures at stake had an incentive effect.

According to Section 5.1.2(e) of the 2014 Aviation Guidelines, in order to be proportionate, operating aid to airports must be limited to the minimum necessary for the aided activity to take place.

In this case, the aid amount was limited to the extent of uncovered operating cost of capital, as it compensated only the costs actually incurred.

Therefore, the Commission considers that the amount of the operating aid in this case was proportionate and limited to the minimum necessary for the aided activity to take place.

According to Section 5.1.2(f) of the 2014 Aviation Guidelines, when assessing the compatibility of operating aid account will be taken of the distortions of competition and the effects on trade.

Within the standard catchment area of Frankfurt Hahn airport (1 hour travelling time by car or 100 kilometres distance) there are no commercially exploited airports. Even if this standard catchment area was to be further extended to other airports in the proximity of Frankfurt Hahn airport, as demonstrated in recitals 224 and 228, there are no undue negative effects on competition between the airports located in the proximity of Frankfurt Hahn airport (that is Frankfurt Main, Luxembourg and Saarbrücken airports).

In view of the above, the Commission considers that any undue negative effects on competition and trade between Member States due to the operating aid granted in favour of FFHG are limited to the minimum.

In light of the considerations in recitals 238 to 255, the Commission concludes that the measures are compatible with the internal market on the basis of Article 107(3)(c) of the Treaty.