Ryanair in threat to sue EU on aid issue

Ryanair is threatening to sue the European Commission for what it says is a failure to tackle state aid to some of its rival airlines, writes Barry O'Halloran

The low-cost carrier's announcement came as the commission itself launched a series of investigations into airports around Europe which it believes are offering illegal supports to the Irish airline and a number of its competitors in a bid to attract business. Ryanair said yesterday that it complained to the commission over a year ago about "hundreds of millions of euro" in illegal state aid given to Air France, Germany's Lufthansa, Alitalia and Greece's Olympic Airways by their respective governments.

The airline's head of regulation, Jim Callaghan, said it was in the process of lodging a complaint against the commission with the European Court of Justice, which is responsible for administering EU law.

Mr O'Callaghan said the commission's refusal to act on its complaint was another example of its "twin-track approach" to state aid. "On the one hand they refuse to take action against serious violations of the state aid rules by national governments to protect their flag carrier airlines like Air France, Lufthansa, Alitalia and Olympic, while at the same time they launch bogus investigations against small regional and secondary airports like Charleroi," he said.

Charleroi in Belgium fell foul of the commission three years ago over incentives given to Ryanair to use the airport as a hub, which it said constituted an illegal state aid. A Belgian local authority owns Charleroi Airport.

Mr O'Callaghan singled out several examples of what Ryanair believes are blatant abuses of the state aid rules. "The French government's discounting of domestic airport fees amounts to an illegal state aid to Air France of approximately €1 billion over the past seven years," he said.

"The German government has allowed state-owned Munich Airport to rack up losses of over €50 million per annum on a new terminal built exclusively for Lufthansa. These losses are a massive subsidy to Lufthansa, the only occupant of this terminal."

The commission's transport division said yesterday it would study Ryanair's submission to the courts once it receives it. "We believe that the commission has been dealing with the cases mentioned by Mr Callaghan both fairly and effectively, in accordance with its duties," a spokesman said.

"We are confident that, when reviewing our action, the court will confirm this."

However, at the same time, the commission announced that it was launching investigations into a number of regional airports in the EU that have been offering deals to low-cost carriers, including Ryanair, to attract business.

The inquiries include Schonefeld Airport in Germany, which has been offering rebates and marketing grants to Ryanair, Aer Lingus and a range of other airlines, that the commission says could constitute state aid.