French airports urged to limit subsidies

15th December 2003, Comments 0 comments

PARIS, Dec 12 (AFP) - A study commissioned by the French government and released Friday called for limits on contracts between low cost airlines such as Ryanair and secondary French airports.

PARIS, Dec 12 (AFP) - A study commissioned by the French government and released Friday called for limits on contracts between low cost airlines such as Ryanair and secondary French airports.

But the study, requested by Secretary of State for Transport Dominique Bussereau, at the same time hailed Ryanair's capacity for successful innovation.

"Ryanair has shown ... its capacity to uncover and then develop routes where no other company has ventured," the report said."In addition, it has shown that it is possible for airports to compete with each other."

While acknowledging that airports can offer lower usuage rates to budget carriers, the authors of the study suggested that certain limits be placed on the practice.

They said the terms of such offers should be publicized and then made available to all airline users "in the same situation".

In addition, regional airport managers can grant "promotional assistance" to low cost carriers that is limited in time and accorded after it is shown that the airline had delivered on its promises to increase traffic to the region, according to the report.

The study finally called for simplified administrative procedures in France under which airlines can benefit from subsidies if they fly certain routes that may not be greatly profitable but are necessary to promote regional development.

Ryanair, an Irish carrier, has been successful in boosting traffic to secondary airports in European regions where local authorities are anxious to spur the economy.

In France most regional airports are under the management of local chambers of commerce, themselves statutory bodies.

Some of them, with local authorities, have competed to attract Ryanair and its passengers by contributing to the airline's promotional costs.

On such a basis, Ryanair opened a route from London to the eastern French city of Strasbourg on October 31, 2002. Traffic boomed.

That prompted Air France's subsidiary, Brit Air, to take legal action against Ryanair, claiming that the assistance the Irish airline received amounted to improper subsidies from public funds.

A commercial court found against Ryanair, which closed the route and switched traffic to Baden-Baden across the border in Germany.

But the airline also lodged an appeal against the ruling with a court in Nancy, eastern France, which on Tuesday said it would issue its findings before the end of the year.

Meanwhile Ryanair is awaiting a decision by European Union competition authorities arising out of a similar complaint made against its arrangements with Charleroi airport, a public body, in Belgium.

 © AFP

                                                                Subject: France news

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