Ryanair and Aer lingus sue State for millions over air travel tax

Airlines want repayment of the allegedly unlawfully paid variable tax, which no longer applies since April 2014

The airlines are  seeking damages over what they claim was the unlawful levying of a variable rate tax between 2009 and 2011.

The airlines are seeking damages over what they claim was the unlawful levying of a variable rate tax between 2009 and 2011.

 

Ryanair and Aer Lingus are claiming hundreds of millions from the State in repayments of the air travel tax, the High Court has heard.

The airlines are also seeking damages over what they claim was the unlawful levying of a variable rate tax between 2009 and 2011.

Mr Justice Max Barrett made rulings on Tuesday for progressing six cases over the tax, which is no longer applied. He directed a unitary, rather than modular, trial of the separate cases involving the State, Aer Lingus, Ryanair and Aer Arann.

The disputed tax was introduced at a €2/€10 rate in 2009 before being changed to a flat rate in March 2011 of €3 following an European Commission decision. In April 2014, the rate was reduced to zero.

In the cases by Ryanair and Aer Lingus, they want repayment of the allegedly unlawfully paid variable tax for the period in which it was levied. Mr Justice Barrett said the sums at issue could amount to between €100 and €200m.

Ryanair has provided figures indicating some 9.8 million flights were subjected to some €86m in air travel tax during the unlawful period, the judge said. Both airlines are also seeking damages.

The Minister for Finance and the State are seeking, in their proceedings, to recover the unlawful State aid found by the European Commission to have been put in place as a result of the variable rate.

By providing a lower rate of €2 for flights of under 300km, as against the €10 for over 300km, this was unlawful State aid, the Commission found.

In December 2016, the European Court of Justice said the amount to be recovered was the difference between the lower and higher tax — €8 per passenger.

Aer Arann, which was sued by the State parties on its own, and also in separate proceedings along with Aer Lingus, had come out of examinership in 2010 having got new investment from the Stobart group.

It reached a settlement agreement with the State in 2015 in relation to its own proceedings against the State but was still a defendant in the unlawful aid case brought by the State. Among issues in dispute is whether an amended defence to those outstanding proceedings complies with Aer Arann’s obligations under the separate settlement it reached with the State.

Ryanair and Aer Lingus sought a modular trial of the cases dealing with liability and quantum of sums involved. Aer Arann said the action against it for recovery of alleged unlawful aid should be postponed until after Aer Lingus and Ryanair cases seeking damages and restitution of the tax.

Mr Justice Barrett said the Aer Arann proposal would involve postponing the decision on the State aid recovery which appeared to him to be contrary to EU law and could not be allowed.

The judge said there would be a unitary trial.

He declined an application from the State parties that the airlines provide material and reports on which the repayment of taxes and damages was based.

He agreed to permit Aer Arann amend its defence and counterclaim but rejected its proposal for the sequencing of the trial. The judge said it was unlikely the cases could be heard until later this year or the first half of next year.