European Court of Justice rules against Ryanair over airlines’ COVID bailouts

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    European Court of Justice  rules against Ryanair over airlines' COVID bailouts

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Credit: AP

The European Court of Justice (ECJ) ruled against Ryanair on Wednesday, stating that COVID-19 support granted to the airline’s competitors by their home countries was not illegal.

The Irish airline had argued that the bailout cash EU countries gave to their flag carriers to weather the pandemic was in breach of EU state aid rules.

The ECJ’s General Court upheld that it was not.

It said that Finland’s guarantee to help Finnair obtain a €600 million loan “was necessary in order to remedy the serious disturbance in the Finnish economy in view of the importance of Finnair for that economy”.

It added that Ryanair “has not established how the exclusive nature of the grant of the state guarantee is capable of dissuading it from establishing itself in Finland or from providing services to and from Finland.”

A spokesperson for Ryanair said in response that “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.”

“We will now ask the EU Court of Justice to overturn these unfair subsidies in the interests of competition and consumers.

“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,” they added in a statement.

Finland’s government has offered a lifeline to Finnair to the tune of €1.2 billion while SAS has benefitted from €1.3 billion in support from Denmark and Sweden.

Other carriers to have received support from national governments include Air France (€10.6 billion), Germany’s Lufthansa (€11 billion), Italy’s Alitalia (€3.5bn), and Portugal’s TAP (€1.2 billion) among others.

The European Union prohibits most state aid because it says it gives companies an unfair advantage and distorts competition.

But Brussels relaxed some of its rules in the face of the economic havoc wreaked by the global health crisis.

As nations around the world closed their borders and imposed strict lockdowns to curb the spread of the deadly virus, the travel and aviation industries were hit particularly hard.

According to Eurocontrol, the European organisation for the Safety of Air Navigation, intra-European air traffic was down 54 per cent last year while traffic with the rest of the world fell by 59 per cent.

This led to European airlines registering net losses of €22.2 billion in 2020. Airports have meanwhile lost 33.6 billion in revenues.

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