European Airports, Budget Carriers to Repay Millions in “Illegal” Aid
Joe Cortez October 01, 2014
An EU ruling claims that subsidies to low-cost carriers were illegal and called on the carriers to refund millions of dollars.
Several European low-cost carriers could soon be forced to reimburse the government millions, as a result of receiving allegedly “illegal” aid. Reuters reports that the European Commission has ordered two airports and several budget airlines, including Ryanair and Germanwings, to return millions of dollars in what regulators are calling “illegal subsidies.”
According to reports, the subsidies in question came from Germany’s Zweibruecken Airport (ZQW). The Commission claims that ZQW gave Ryanair, Germanwings and TUIFly illegal subsidies for flying into the airport, including marketing and airport services. The value of the subsidies and services is estimated at more than $2.1 million. The Commission is also demanding ZQW to repay around $59 million, because the subsidies may have given the low-cost carriers an unfair advantage over competitors.
Of the three airlines accused of receiving illegal benefits, TUIFly is the only one that continues to fly into and out of the embattled airport. Germanwings told Reuters that they are reviewing the Commission’s decision, while ZQW did not have a comment.
In a statement printed on their website, Ryanair claimed that its “airport arrangements comply with the EU State aid rules,” adding that its lawyers have been instructed to “appeal this ruling to the extent it alleges otherwise.”
“Ryanair has to date carried over 136 million passengers at the 10 airports where our commercial arrangements have been confirmed by the EU Commission,” said Ryanair spokesman Juliusz Komorek in the written statement. “[This is] compared to just 50,000 passengers at Zweibruecken airport where the Commission today suggested that the airport agreement did not comply with State aid rules.”
Italy’s Alghero-Fertilia Airport (AHO) will be required to pay back “small amounts of illegal state aid” given to Germanwings and Meridiana. The ruling also affirmed that arrangements had been made by Ryanair with Brussels South Charleroi Airport (CRL), Frankfurt-Hahn Airport (HHN) and Stockholm Vasteras Airport (VST).
[Photo: iStock]
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Nothing new. Unfortunately the idea of playing on a level field is new to some governments and airlines. It's worse when international carriers use excessive state aid to outcompete international airlines on routes to and from their home country. I am all for competition as long as a level field is used.