Two low-cost airlines must repay almost €10 million of French state aid, after the EU Commission decided that it gave them an unfair competitive advantage. EURACTIV France reports.
Ryanair has been given its marching orders. On 23 July, the European Commission told the Irish airline to return almost €10 million in French state aid which was granted to improve services in three regional airports.
The European competition watchdog concluded that the aid was illegal, despite new European rules to make state aid to aviation more flexible that were adopted in February 2014.
The Commission said in a press release that state aid to Ryanair and Air France’s low-cost branch Transavia gave them an “undue economic advantage, distorting competition in the Single Market.”
“No private operator would have accepted to grant similar conditions to the airline in similar circumstances,” said the EU executive body in a memo.
“EU state aid rules in the aviation sector allow public authorities to grant support where it is justified, namely where it improves the accessibility of a region and meet citizens’ transport needs,” said EU Commission Vice President in charge of competition policy, Joaquín Almunia.
According to the Commission, the aid that Ryanair and Transavia received was not in the interest of the Community. The decision is particularly hard on Ryanair. It will have to reimburse €6.4 million of aid received to improve services in the Nimes airport.
The Irish airline will also have to repay €2.4 million for the Pau-Pyrenees airport and €868,000 for the Angouleme airport, where it has since stopped routes.
Air France has accused Ryanair for years of receiving millions of euros in illegal subsidies in exchange for using regional airports. Ryanair’s agreement to serve these airports is conditional on the airport authorities’ granting it aid. This kind of special treatment exasperates Air France, which filed a complaint to the European Commission in 2010.
“Taxpayers’ money should not be used to grant an undue advantage to certain airlines,” said Joaquín Almunia.
The French government said that these decisions “answer questions that aviation actors have been asking for years on the legality of certain financial practices developed between airports and airlines.” It also called on airports to “take account of these decisions and re-orientate and diversify their development model and revenue.”
In a press release, Ryanair claimed it respected European competition rules and that it will appeal “the decisions in Pau, Angouleme and Nimes cases where the EU Commission mistakenly suggested that the airports’ agreements with Ryanair did not fully comply with the EU State aid rules.”
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 (EURACTIV 02/02/04).
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 (EURACTIV 06/09/05).
European regional authorities had supported Ryanair in the Charleroi case, saying regional airports were vital for the local economy (EURACTIV 02/02/04).