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Ryanair wins battle against Aegean in fight against state aid for airlines

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Ryanair has gone to court 16 times against the Commission on state aid

Ryanair’s latest challenge to state aid for European airlines took a step forward on Wednesday when the European Court of Justice agreed to hear in its General Court a review of the European Commission’s approval of state aid to Greece’s Aegean Airlines.

This is a battle that Ryanair is fighting on many fronts. In the case of Aegean Airlines ( T-340/21), the Greek carrier had been awarded compensation for damages experienced during the pandemic.  Ryanair argued that specific provisions of the Treaty on the Functioning of the European Union, the general principles of European law that have underpinned the liberalisation of air transport in the EU since the late 1980s (i.e., non-discrimination, free provision of services and free establishment) had not been respected.

The ruling by the EU’s highest court will simply allow the litigation to go forward; a prolonged battle is still to be expected.

Still, it is a victory for Ryanair which has pursued litigation for what it alleges is misapplied state aid in 16 lawsuits against the Commission for allowing state aid to individual airlines such as Lufthansa, KLM, Austrian Airlines and TAP, as well as national schemes that mainly benefit flag carriers.

In May, the budget airline won two victories in its fight against billions of euros extended in state aid to rivals as Europe’s second-highest court annulled the support given to KLM and Portugal’s TAP on the grounds that regulators failed to justify the huge cash injections.

In both cases, the court cited “inadequate reasoning” on the part of  the Commission in its decisions to allow the state aid.

Ryanair commented in a statement after the ruling: “”The European Commission’s approvals of state aid to Air France-KLM and TAP went against the fundamental principles of EU law and reversed the clock on the process of liberalisation in air transport by rewarding inefficiency and encouraging unfair competition.”

But Ryanair has not been able to make this argument in every case.

The same court rejected Ryanair’s challenge to a €10 billion Spanish fund for virus-hit companies approved by the European Commission, saying the measure complied with EU law.

Ryanair also suffered a setback when the Court backed Lufthansa’s  challenge to the Commission’s 2017 decision allowing state aid to Frankfurt Hahn airport, where the Irish carrier was the main beneficiary.

But, on June 9, Ryanair won the General Court’s annulment of the European Commission’s approval of state aid by Germany to Condor.  In April 2020, the German government granted a €550 million loan to the German budget flyer Condor, which had already benefited from a €380 million rescue loan from Germany in 2019 following the bankruptcy of its parent company, Thomas Cook.

“During the Covid-19 pandemic over €30 billion in discriminatory state subsidies has been gifted to EU flag carriers.  Unless halted by the EU Courts in line with today’s ruling, the effects of market distortion caused by this State aid will be felt for decades.  If Europe is to emerge from this crisis with a functioning single market, the European Commission must stand up to national governments and stop rubberstamping discriminatory State aid to inefficient national airlines,” Ryanair commented after the ruling.

 

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