European court annuls EU airline levy order

Ryanair and Aer Lingus likely to continue actions against Government over travel tax

Ryanair and Aer Lingus are likely to continue suing the Government in separate rows over travel tax following a European court ruling on the now-defunct levy that saved them a total of €16 million.

Europe's general court said yesterday that it has annulled a European Commission order demanding that the Government collect €8 per head for millions of passengers carried by the two airlines between 2009 and 2011.

The ruling, which has saved Ryanair €12 million and Aer Lingus €4 million, is the latest twist in a series of cases triggered by the Government’s introduction of the controversial travel tax in 2009.

Cases proceeding

Both airlines are planning to proceed with cases against the Government demanding that it repay them millions in travel tax. Their claims are based on the fact that when it was introduced there were two rates: €2 per passenger for journeys up to 300km and €10 for longer trips.

Aer Lingus and Ryanair claim that the lower rate should have applied across the board. Consequently they argue the Government should repay them the difference between the two charges; €8 for each passenger charged at the higher rate. The value of Aer Lingus’s claim is €60 million.

The Fianna Fáil-Green Party administration sparked the row when it introduced the original two-tier tax in 2009.

Following a complaint from Ryanair, the European Commission found that the lower rate constituted illegal state aid, as it favoured airlines whose business was mainly over shorter trips.

The Government switched to a flat €3 charge in 2011. However, the commission ordered it to collect the €8 difference between the two rates from Ryanair, Aer Lingus and Aer Arann, for each passenger charged at the lower rate, between 2009 and 2011.

Ruling welcomed

The two bigger airlines appealed this ruling in separate cases taken to the EU’s General Court, which upheld their claims.

Ryanair spokesman Robin Kiely welcomed the court's ruling. He said it confirmed that the airline does not have to pay around €12 million to the State in travel tax.

Aer Lingus confirmed that the commission’s ruling would have cost it €4 million had it stood and pointed out that the judgement removes the basis for legal proceedings taken against it by the Government in April 2013.

The airline noted that it has consistently opposed the tax which it argued damaged the Republic’s aviation industry.

The coalition axed the levy last year. The move was partly responsible for stimulating the launch of new services from the Republic’s airports by a number of airlines, including Ryanair and Aer Lingus.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas