EU court backs Ryanair over Brussels in Belgian airport row

18th December 2008, Comments 0 comments

Court annuls a decision by the European Commission, which is also pursuing the airline in a string of similar cases.

LUXEMBOURG - An EU court handed Ryanair a key legal victory over the European Commission on Wednesday, saying the Irish budget airline does not have to repay Belgian state aid provided in a Brussels airport deal.

The European Court of First Instance said Ryanair did not have to repay funds gained via special concessions it gained in a special deal with Brussels' Charleroi airport, thereby annulling a decision by the European Commission, which is also pursuing the airline in a string of similar cases.

The Luxembourg-based court decided that though the airport is a public sector company controlled by the Walloon region of southern Belgium, that did not mean that special concessions granted to entice Ryanair to operate there should necessarily be considered as illegal state aid.

"The mere fact that the activity is carried out in the public sector does not mean that it can be categorised as the exercise of public authority powers," the court ruled, adding that a purely private operator may have done the same thing.

Ryanair, Europe's largest low fares airline, welcomed the EU court decision and called on the European Commission to drop its cases against a number of similar airports.

The EU executive should "focus instead on real and blatant breaches of the state aid rules by Europe's flag carriers," Ryanair said in a statement, citing Italian government aid for Alitalia and an Austrian "sweetener" to Lufthansa to encourage it to buy Austrian Airlines.

"Today's decision now clarifies that the low cost airports model works and does not involve state aid and Ryanair now calls on the commission to drop their other complaints... most of which have again been brought by competitors trying to block competition," the airline said on its website.

The special concessions - including a 50-percent reduction in landing charges, contributions to costs incurred by Ryanair in establishing its Belgian base, and assurances of compensation for any loss of profit arising from future rises in airport charges - should have been considered in the same way as a private deal to secure business, the court said.

"By entering into the first agreement with Ryanair the Walloon region carried out activities of an economic nature" it added.

A European Commission spokeswoman said the court's judgement would be studied before a decision on any further action.

"It's important to stress here that the judgement looks at the methodology of the commission's approach rather than commenting on the substance of the 'private investor test' which is at the heart of this case," she said.

The case goes back to late 2001 when Ryanair started using Charleroi, an airport south of Brussels, negotiating advantageous conditions for its long-term presence there, with the Irish airline signing up to a 15-year deal.

The commission, the European Union's executive body, ruled in 2004 that approximately 4.0 million euros out of 15 million euros of incentives paid to Ryanair by Charleroi airport amounted to illegal state aid.

Ryanair took the case to the EU court and the commission is free to appeal the decision.

Ryanair has a record of such deals, helping to boost the revenues of smaller airports normally some way from the centre of the city they serve.

EU Commission spokeswoman Pia Ahrenkilde Hansen, said all the other cases would be treated on their merits.

She said that "as far as we see this judgment does not have an immediate impact on the other cases," which concern airports in Alghero, Aarhus, Bratislava, Hahn, Luebeck, Pau, Schonefeld and Tampere.


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