Ryanair has lost its challenge to state aid for Air France and SAS, after a European court ruled the support did not break state aid rules.
The General Court, the second highest in Europe, said the French scheme, which allowed for the deferral of airport tax for airlines registered in France, did not constitute discrimination. “The extension of that deferral to companies not established in France would not, by contrast, have made it possible to achieve the objective of making good the economic damage suffered by the airlines operating in France in so precise a manner and without a risk of overcompensation,” the court said in its ruling.
The Swedish scheme, which backed airlines with a loan guarantee, was also compatible with EU laws, it said. It also had a nationality condition, with only airlines registered in Sweden eligible. “The scheme at issue is presumed to have been adopted in the interest of the European Union,” the ruling said.
Under normal circumstances, EU law bans state aid to businesses where it threatens to distort normal commercial competition. But regulators had allowed the support for airlines under loosened rules, with the aviation industry largely grounded by pandemic travel restrictions.
Ryanair said it would appeal the ruling to the EU Court of Justice, accusing national politicians of being “obsessed” with their flag carriers.
“A nationality condition in a State aid scheme is plainly incompatible with the single market,” said a spokesperson for the airline.
“During the Covid-19 pandemic over €30 billion in discriminatory State subsidies has been gifted to EU flag carriers and, if allowed to stand, this will distort the level playing field in EU aviation for decades to come, giving chronically inefficient national airlines a leg up on their efficient low-fare competitors.
“Now is the time for the European Commission to stop caving in to national governments’ inefficient bail-out policies and start protecting the single market, Europe’s greatest asset for future economic recovery.”
Ryanair has been vocal in recent months in its opposition to state bailouts for its rivals. The airline is challenging more than a bailouts for airlines across Europe, including a €9 billion deal to save Lufthansa, over concerns the cash boost for rivals will allow them use to sell flights below their cost, giving it a state-funded advantage over non-aided rivals. The company fears burning its own cash reserves while others get government rescue packages.
Ryanair has already cut back on staff and closed bases for the winter as the ongoing Covid-19 pandemic batters the travel industry.
