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Ryanair succeeds in getting EU airline bailouts annulled in Luxembourg

written by Hannah Dowling | May 20, 2021

Ryanair has finally achieved two victories in European courts, as it continues its attempt to fight against bloc members bailing out their national airlines.

The giant European budget airline has legally challenged the European Commission’s decision to approve a number of states to financially bail out major national airlines and rivals in the bloc.

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In its latest case, Ryanair successfully annulled the government-provided financial support given to rivals KLM and TAP in Europe’s second-highest court, based on an inability to justify the excessive cash injections.

In 2020, the European Commission approved a €3.4 billion bailout for KLM by the Dutch government, and a €1.2 billion loan to state-owned Transportes Aereos Portugueses (TAP) by Portugal.

“The General Court annuls the Commission’s decision to approve the Netherlands financial aid for the airline KLM amid the COVID-19 pandemic on the grounds of inadequate reasoning,” the Luxembourg-based General Court said on Wednesday.

Similarly, the court’s judges also rejected the EU’s clearance of state aid for TAP, also citing “an inadequate statement of reasons” by the Commission.

Despite the win, the court noted that the annulments, and notably the recovery of involved monies, would be suspended pending new decisions by the European Commission – decisions that can again be challenged by Ryanair at the General Court.

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“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,” Ryanair said in a statement after the ruling.

In a statement, KLM said that the judgement in Luxembourg was of little consequence, due to the fact that state aid will not have to be repaid until the Commission can review the decision.

Meanwhile, Portuguese Prime Minister Antonio Costa said that the decision was simply a preliminary one, and that the government aid was justified in light of the COVID-19 pandemic.

“Given the crisis that hit the aviation sector around the world, it was unthinkable for the European Commission not to lift restrictions on state aid,” he said.

“There is no reason to believe their legal experts did not study the matter well.”

Also on Wednesday, the court ruled against Ryanair in its challenge of a €10 billion Spanish fund, which was found to have complied with EU law.

Last month, Ryanair also lost its battle against airline bailouts in Sweden, Denmark and Finland.

The European Court of Justice ruled against Ryanair’s challenges, and cleared Sweden and Denmark to provide financial aid to SAS, and Finland to do the same for Finnair.

The court ruled that the provision of a €600 million loan by Finland to Finnair was “necessary” in light of the significant role the airline plays in the national economy.

In a separate ruling, the EU court ruled that state aid provided to SAS by Sweden and Denmark, “given that SAS’s market share is much higher than that of its closest competitor in those two member states, the aid does not amount to unlawful discrimination”.

The court argued that these measures “comply with EU law”.

Despite the decision, Ryanair, the largest European airline by passenger numbers, said at that time it will appeal the court’s ruling, and continue to challenge aid provisions approved for Lufthansa, KLM and airBaltic.

Ryanair has long rallied against national carrier bailouts by major nation-states in the bloc, and has argued that the notion goes against the very principle of the EU single market.

The budget carrier has estimated that Brussels has thus far approved pandemic-related state aid to the tune of €30 billion.

“Today’s judgments set the process of liberalisation in air transport back by 30 years by allowing Finland, Denmark and Sweden to give their national flag carriers a leg up over more efficient competitors, based purely on nationality,” Ryanair said in a statement, adding its intentions to appeal the decisions.

“If Europe is to emerge from this crisis with a functioning single market, airlines must be allowed to compete on a level playing field.

“Undistorted competition can weed out inefficiency and benefit consumers through low fares and choice. Subsidies, on the other hand, encourage inefficiency and will harm consumers for decades to come.”

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