jefi99

Ryanair wouldn't survive without subsidies. Taxpayers pay:

http://airobserver.wordpress.com/201...os-in-the-red/

colmc

"the Association of European Airlines"

Well indeed. I wonder how much in subsidies the combined members obtain

irishguy28

Aer Lingus used to be an AEA member, but it's no longer listed.

The AEA lobbied hard after the introduction of the the Dutch flight tax in 2008, which was abolished after a year.

stifle

This should probably be in Budget Travel.

NickB

While I hate FR with a vengeance, I have to say, however, that the argument is fallacious. If the subsidies weren't there, FR would not have started those services in the first place and would have gone for other routes.

The subsidies are allowed for a reason: they are there to enable an airline to start a route that would otherwise be unlikely to be profitable.

Bluestar

I understand your point, but I am not sure that Ryanair would have been able to find so many profitable-yet-unsubsidised route opportunities.

And you comment that "the subsidies are allowed...". Actually, subsidies for new air routes are allowed in the EU only under fairly strict conditions. The situation you mention where a route is not going to be profitable without a subsidy is a specific case, a Public Service Obligation, which goes through a specified public bidding process, and I don't think that Ryanair still operates any PSOs (they had one route in Ireland for a while). The vast majority of airport subsidies to airlines such as Ryanair are not PSOs, just "ordinary" start-up aid for new routes, and there are specific conditions under which this aid is allowed (e.g. the funding is open to any carrier, it diminishes over time, it's for a maximum of 3 or 5 years depending on the region, the route has a realistic prospect of sustainability after the aid runs out, etc.) The European Commission currently has, IIRC, 16 open investigations into airport subsidies, mostly to Ryanair, and seems to be opening another one every month or two. Recent progress reports from the Commission in respect of Altenburg and Angouleme airports seem to suggest pretty clearly that the subsidies to Ryanair were in flagrant contravention of the rules and - if this is confirmed in the final judgements - they'll have to be paid back. Much fun awaits!

NickB

I think that this is an exaggeration. In any event, this changes nothing to the fact that the starting premise of the article is misconceived.


Nope.This is not what I had in mind but rather route start-up subsidies (hence why my post referred to "start a route"), which the Commission regards as acceptable under certain conditions.
But I would certainly agree with you that there are quite a few which are dubious. Some were in fact found by the Commission to be incompatible with EU law when it first developed its policy on this. Ryanair huffed and puffed in its usual manner but had no choice but to comply. I also agree that we can expect more fun on that front and more howling by FR how all of this is so unfair and crocodile tears at to the pain inflicted on consumers or some such.

chx1975

Malév folded when the EU said they needed to pay the unlawful subsidies back. Just watch...

Xandrios

I am not sure if that can be compared, as I believe that Malev had received a huge sum from the Hungarian government. Not subsidies for specific routes.

colmc

Indeed, it's an entirely different situation.

soy

FR's biggest challenge is what to do now that their great aircraft deal with Boeing is about to end.
They have made serious money as an aircraft trading company over the past decade and this is aobut to end. Soon it will just be down to what profits they can make as a regular airline

irishguy28

You make it sound like Ryanair and Boeing can't or won't continue working in the future.

True, Ryanair have been talking with Comac and Irkut, but they are nowhere near getting any planes from either. And as one of Boeing's better customers, Ryanair can expect even sweeter deals as a result.

bankops

While I hate Ryanair with a passion and refuse to set foot on a plane operated by them. I cannot but consider such articles as nothing less than a waste of time and even a waste of the electricity used to keep them saved on a disk somehwere.

I negotiate special rates with a hotel because I am planning on spending the next year in a city. Now I could do this two ways. I could say that at the end of each quarter, they will pay back to me 40% of my spend with them OR I could just negotiate a 40% reduction. Now which one of these is a subsidy? Neither in my opinion. They are both volume discounts.

Now, most of what Ryanair does is the same. They take a small airport that will charge them various fees of X, Y and Z. They then negotiate that the owner of the airport (local or regional government) will pay them back an amount of A based on traffic. Now, they derive A by looking at the extra money and jobs that their traffic will bring, so it isn't just a % reduction of the airport fees.

This is the whole premise that caused them to win the Charelroi lawsuit. ANY airline or other airport related business has the right to negotiate fees and tarrifs being charged by another company (or government).

To say that Ryanair would be bankrupt without subsidies is just simply sensationalism. I find most of Ryanair's practices absolutely reprehensible, but on this particular point I cannot see anything wrong.

NickB

Hang on a minute. FR did win the case. However, the Court did NOT say that there was no unlawful state aid. It merely said that the Commission had misapplied the private investor principle. The issue is still open with Charleroi, as it is with Angouleme and Dortmund.

Yes, a business has a right to negotiate fees but the issue is whether the transactions are the kind that could reasonably be expected to have been entered into by a private investor. If they are, then fine. If not, then there could be illegal state aid. The question is still open in these three cases and the Commission has not yet taken a decision. Ultimately, I guess it will hover around the size of the discounts. If they are within the range that looks commercially sensible, that will be OK. If they are excessive, we will be in state aid territory.

kirkpt

Had planned to fly Ryan Air between Dublin and Edinburgh in August. I am concerned after reading this? Is there a better alternative? Aer Lingus seems to fly but is a lot more $$$ and the schedule is not as good.

Any advise appreciated.