Ryanair wins action over airport discounts

EUROPE’S SECOND-HIGHEST court has ruled that the EU executive was wrong to decide that Ryanair received illegal state aid when it opened its first European hub at Charleroi airport.

The landmark decision was welcomed by Ryanair chief executive Michael O’Leary yesterday.

He called on the European Commission to drop similar cases currently under investigation.

He also asked the commission to redraft its existing state aid guidelines for airports, which it published in 2005 after making its Charleroi ruling.

“Today’s decision is great news for Charleroi, competition, consumers and low-cost airports across Europe.

“Ryanair now calls on the EU commission to drop their other state aid cases against similar regional and secondary airports – Alghero, Aarhus, Bratislava, Frankfurt-Hahn, Hamburg Lübeck, Pau, Berlin Schönefeld and Tampere,” said Mr O’Leary.

The European Court of First Instance (CFI) found the commission made an error in law when it decided that discounts in landing charges and ground-handling services negotiated by Ryanair from the Walloon region in Belgium amounted to illegal state aid.

“The commission’s refusal to examine together the advantages granted by the Walloon region and Charleroi airport and to apply the principle of the private investor in a market economy to the measures adopted by the Walloon region . . . is vitiated by an error in law. Consequently, the CFI annuls the commission decision,” the court said in its judgment.

In effect, the court has found that public authorities that own airports should not be treated differently by the commission when negotiating landing charges compared to the operators of private airports.

The CFI argued that public authorities negotiating landing fees and other charges at airports may be engaged in “economic activity”, and should not automatically be categorised as engaging in the “exercise of public authority powers”.

The commission, which can appeal the CFI decision on points of law only and has 60 days to lodge an appeal, said it was studying the judgment before commenting fully.

But a spokeswoman for the commission noted that the court had “looked at the methodology of the commission approach rather than commenting on substance” in its decision.

The commission had ruled as illegal an agreement under which the Walloon region granted Ryanair a reduction of some 50 per cent on landing charges and undertook to compensate the airline for losses from any subsequent change in airport fees.

Ryanair had also agreed to base between two and four aircraft at Charleroi airport and operate at least three rotations a day per aircraft in return for the airport agreeing to contribute to costs incurred.

Mr O’Leary said the decision clarified that the low-cost airports model worked. He also indicated that he wanted to mend fences with the commission, which he accused of making a “politically biased” decision last year to block a proposed takeover of Aer Lingus.

He said Ryanair would not officially notify the commission about its new takeover bid for Aer Lingus until it had received an affirmative response from Aer Lingus shareholders.