New Ryanair probe into state 'subsidies'

New Ryanair probe into state 'subsidies'

Europe’s competition watchdog has started its latest probe into whether Ryanair benefits from illegal state subsidies to airports.

The European Commission is to investigate the carrier’s deals with Nimes airport in France, which allegedly gave Ryanair “undue economic advantage” over its competitors at the expense of French taxpayers.

The regulator will probe rebates and marketing agreements between Ryanair and the airport that may have given the airline an “undue economic advantage,” as well as financial arrangements between French authorities and Nimes airport.

The airport received state subsidies of more than €2 million and cash advances of more than €9 million from 2000 until 2006, the commission said.

The investigation will also cover public subsidies to Veolia Transport, a private company which has operated the airport since 2007.

The payments may violate EU state aid rules because they “may cover ordinary operating expenses,” which distorted competition.

EU regulators opened a similar probe into Ryanair’s agreements with Carcassonne airport earlier this month, adding to several reviews of discounts and subsidies offered by small, regional airports across Europe to attract budget airlines.

Brussels must approve large state subsidies to airports and airlines and can order companies to pay back government funding if it can’t be justified as providing a public service.

A key issue for the investigation is whether part of this potentially illegal state support was passed on to Ryanair, which was offered marketing support contracts and reduced charges to entice it to use the airport regularly.

Ryanair said its “arrangements with all EU airports comply with competition rules”. It added that European courts had “dismissed similar commission claims against Ryanair” over Charleroi airport in Belgium.

The commission plans to revise its state aid guidelines for the airline sector later this year.

This will have potentially significant impact on Ryanair because the rules will more precisely address issues around the rise of low-cost carriers and the development of small regional airports, the Financial Times reported.

Flag-carriers have little interest in smaller airports for anything other than their role feeding passengers to hubs offering higher-margin long-haul routes.

But budget airlines have used them to drive the consumer-friendly point-to-point market.


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