Monday 22 January 2018

Ryanair ordered to pay back €2m after EC state aid ruling

Irish airline has instructed its lawyers to appeal the ruling
Irish airline has instructed its lawyers to appeal the ruling
John Mulligan

John Mulligan

Ryanair intends to appeal a ruling by the European Commission yesterday that the carrier must pay back about €2m in state aid subsidies it received from an airport in Austria.

The Commission found that Ryanair and Tuifly secured an "undue advantage" as a result of certain airport services and marketing agreements concluded between them and the operator of Klagenfurt in southern Austria. The airport is owned by Austria's State of Carinthia and the City of Klagenfurt.

Ryanair stopped using the airport in 2013. Between 2000 and 2015, the tiny airport handled anywhere between 200,000 and 500,000 passengers a year.

"Airport services and marketing agreements concluded with Ryanair, Tuifly and HLX (a carrier merged with Hapagfly in 2007 to form Tuifly) could not, when they were concluded, have been expected to generate more revenues than additional costs," said the European Commission.

It added: "As no profit-driven airport manager would have concluded such loss-making agreements, they amount to state aid to the airlines. Moreover, the agreements simply reduce the operating costs of the airlines, without contributing to common transport objectives."

The Commission said that the agreements distort competition and breach state aid rules. Ryanair benefited to the tune of €2m in aid, while Tuifly's benefit was calculated at €1.1m, and HLX's at €9.6m.

"In order to reduce the distortion of competition created by the illegal subsidies, Ryanair, Tuifly and HLX now have to pay these amounts back to Austria," added the Commission.

A number of airports have been targeted in the past for providing what the Commission said was illegal state aid to Ryanair and other carriers such as EasyJet. "We note the Klagenfurt decision, where we stopped flying in 2013.

"We disagree with the findings and have instructed our lawyers to appeal," said a Ryanair spokesman.

The Commission determined yesterday that some incentive schemes operated by the Austrian airport did not breach state aid rules, and that its distance from other airports reduced any competitive effect of some financial support it offered.

Irish Independent

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business