Irish Carriers Ordered to Repay Illegal Aid

Both Ryanair and Aer Lingus have been told that they must pay back the higher rate of travel tax, despite the fact that neither benefited from the lower tax rate.

It has been decreed by the Court of Justice of the European Union (ECJ) that illegal aid received by two Irish airlines over the course of a number of years must now be repaid. The ruling will affect both Aer Lingus – Ireland’s flag carrier – as well as low-cost airline Ryanair.

In its decision, the court explained that the issue had originally been brought to its attention by Ryanair back in 2009. The budget carrier had protested that the country’s air travel tax gave its competitors an unfair advantage over its operations.

This tax equated to €2 ($2.09) for flights traveling a distance of under 300 kilometers (186 miles) from Dublin. This compared to €10 ($10.44) for all other departing flights, a point that Ryanair felt benefited airlines with a high number of shorter routes.

It then asked the European Commission, the executive body of the European Union (EU), to investigate the matter. In 2012, the commission found that the lower rate of travel tax did represent illegal aid and it then ordered the government of Ireland to recover the difference of €8 ($8.35) from both Aer Lingus and Ryanair.

Both carriers appealed the ruling, protesting that they had not actually profited from the monies. While their appeals were partially upheld back in the winter of 2015, the ECJ said on Thursday that all monies must be repaid.

The court was quoted by Air Transport World as saying that, “The difference between the lower and normal rates of the Irish air travel tax constitutes unlawful aid, which must be recovered regardless of the benefit the airlines actually derived from the aid.”

The court further explained that, while the carrier did not actually pass on the air travel tax fees to its passengers, Ryanair did pay less than the standard tax rate but could have theoretically charged the full €10 ($10.44).

Ryanair told the outlet that the ruling would now mean that it would have to pay €12 million ($12.5) to the Irish government and promised that it would pursue legal action over the matter.

Aer Lingus did not offer comment.

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