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09/12/2016

Brussels orders France to reclaim Ryanair subsidies

Competition

Brussels orders France to reclaim Ryanair subsidies

Ryanair has been accused of receiving an unfair economic advantage in several EU countries.

[Mikel Ortega/Flickr]

The European Commission has taken Paris to court for failing to recover nearly €10 million in anticompetitive subsidies paid to Ryanair and Transavia. EurActiv France reports

The European Commission’s ongoing battle with Ryanair over illegal state aid has entered a new stage. The EU’s competition authority announced on 27 July 2015 that it would take France to court for its failure to recover illegal state aid given to Ryanair and Transavia.

Brussels had ordered France on 23 July 2014 to reclaim nearly €10 million it had paid to the two low-cost airlines to help them set up operations at the airports of Pau, Nîmes and Angoulême. 

>> Read: Ryanair ordered to repay €10m in French state aid

Ryanair was ordered to repay €6.4 million of aid it received for its base at Nîmes airport, €2.4 million for Pau-Pyrénées airport and €870,000 for Angoulême, where the company has since ceased its operations. Transavia, a branch of Air France, was also ordered to repay €430,000 in illegal state aid.

Contractual and marketing arrangements

“Through various contractual and marketing arrangements with the airports, the airlines paid less than the additional costs linked to their presence in the airport,” the Commission said in a press release.

One year after the Commission’s decision, the airlines are yet to return the illegal aid. The process suffered delays when the carriers took the French government to court after the authorities issued the initial recovery order.

>> Read: MEPs join forces to raise EU state aid limit on regional airports

“Ryanair has also appealed two out of three of the Commission’s decisions (concerning Pau and Angoulême) before the EU General Court,” the Commission said. Unlike an appeal in French law, these appeals have no “suspensory effect under EU law, meaning that France continues to be under an obligation to recover the incompatible aid,” the European executive added.

Accusations

For several years, Ryanair has faced repeated accusations of benefiting from illegal state aid in France and other EU countries, to ensure the company continues to serve regional airports.

Despite adopting more flexible guidelines on state aid for airports and airlines in February 2014, Brussels is still pursuing several companies and airports over illegal subsidies.

>> Read: Revised EU state aid rules ‘could lead to closure of 100 small airports’

Aside from the cases of Angoulême, Pau and Nîmes, the EU executive found that Ryanair had also received an “undue economic advantage, estimated at around €318 569” in its agreement with the airport of Altenburg-Nobitz in Germany, which it has ordered the carrier to repay. 

Background

In 2004, Ryanair won a major victory when the European Court of Justice overturned a European Commission decision that would have forced Ryanair to reimburse aid received from the Charleroi regional airport in Belgium.

EU rules adopted in the aftermath of the Charleroi case recognised the legality of start-up aid for opening new routes in regional airports. But it stressed the aid should only be granted for a maximum of three years and that no single airline should benefit from it. Moreover, competition between carriers operating at the same airport must not be distorted, it said.

European regional authorities had supported Ryanair in the Charleroi case, saying regional airports were vital for the local economy

Further Reading