Ryanair sues at EU’s top court over KLM’s €3.4bn bailout

Ryanair contends that KLM's state aid was not legal. [Photo: Leeds Fotografica / Shutterstock]

Low-cost Irish airline Ryanair has launched legal action against the European Commission over its decision to approve the Dutch government’s €3.4 billion in state aid for national carrier KLM.

According to a complaint published this week, Ryanair insists that the European Court of Justice annul the Commission’s decision and make the EU executive pay any legal costs.

The coronavirus pandemic has slashed air travel demand over the last nine months and the aviation industry is concerned that passenger numbers are not recovering at their predicted pace.

Governments have approved tens of billions of euros in bailout cash for the likes of Air France, Lufthansa, TAP and more, in order to help those carriers ride out the crisis and preserve as many jobs as possible.

But Ryanair CEO Michael O’Leary is firmly against state intervention in airlines and has urged governments right from the start of the pandemic not to grant them and the Commission not to approve them. Earlier in 2020, he pledged to sue if bailouts took off.

A case against Portugal’s TAP is pending and O’Leary said he would contest Lufthansa’s €9bn cash injection.

Vestager hails KLM’s 'very good' €3.4bn bailout

The European Commission has approved the Dutch government’s €3.4 billion support package for national airline KLM, despite criticism levelled at conditions linked to pay cuts.

In a statement issued before the Commission gave its thumbs up in July, Ryanair said that “this Dutch government subsidy is bad news for competition and consumer interests as it will further delay the necessary reforms at the bloated Air France-KLM.”

The complaint makes five claims against the Commission, the first of which maintains that the EU executive was wrong to exclude Air France’s own bailout from the scope of the decision. 

Air France and KLM are part of the same airline group and the French carrier was the recipient of €7 billion in government support.

“The European Commission ignored the damage caused by the COVID-19 crisis to such pan-European airlines and their role in the air connectivity of the Netherlands by authorising the Netherlands to reserve aid to KLM,” the complaint added.

Ryanair alleges that the EU executive breached “general principles of European law regarding the prohibition of discrimination, free provision of services and free establishment” and unfairly punished low-cost pan-European carriers.

The complaint adds that the Commission failed to carry out a “balancing test” of how the aid would affect the Dutch economy, did not start a formal investigation procedure, and did not properly justify its final decision.

It is hard to gauge how long the legal action will last, although experts estimate that state aid cases could take at least six to eight months to be heard at the ECJ.

EU transport chief cautions against green strings for airline bailouts

European Commissioner for Transport Adina Vălean told EURACTIV in an interview that the coronavirus outbreak means it is the wrong time to condition state aid for airlines on green measures, but warned the industry to stick to its passenger rights obligations.

[Edited by Zoran Radosavljevic]

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