Ryanair will be challenging the European Union's General Court and appealing to the European Court of Justice after losing its legal battle against state bailouts, which were granted to rival flag carriers, including Air France-KLM and SAS during COVID-19. Michael O'Leary, the CEO of the Irish-based airline, has accused nations of the E.U. of "selectively gifting billions of euros to their inefficient flag carriers."
O'Leary has been critical of governments' response to the Coronavirus. During the summer, when asked by BBC if Ryanair would cancel flights if the U.K. quarantine order continued, he responded by saying "No, because the flights are full outbound of the UK. British people are ignoring this quarantine, they know it's rubbish." He has also said "These are the crack-cocaine junkies of the state-aid world because their first instinct is to always go to the government for state aid. We believe that any state aid in this crisis should be transparent and provided to everybody."
Ryanair has taken up the issue with the European Commission for "clearing a French scheme allowing airlines to defer certain aeronautical taxes and Sweden’s loan guarantee scheme for airlines." Both of these schemes benefit the flag carrier.
Ryanair has already filed over 16 lawsuits against the European Commission, as well as several airlines, including Lufthansa, KLM, Austrian Airlines, and TAP, as well as national government schemes that mainly benefit flag carriers, over state-aid granted by European governments. Because the Irish low-cost carrier is a private company and not a flag carrier* (that would be Aer Lingus), they are not a government priority, even when it comes to financial aid.
The General Court, based in Luxembourg, ruled against Ryanair, and said, in reference to France's aid scheme, "That aid scheme is appropriate for making good the economic damage caused by the Covid-19 pandemic and does not constitute discrimination." They also said "The scheme at issue is presumed to have been adopted in the interest of the European Union" about the Swiss scheme.
The Dublin-based airline now plans to appeal the decision to the European Union's highest court, making the argument that the French and Swedish programs mainly benefited Air France/KLM (who are close partners) and SAS, while unfairly discriminated against other European carriers. The basis of Ryanair's defense is that over 30 million Euros, or 36 million US, "in discriminatory State subsidies has been gifted to EU flag carriers and, if allowed to stand, this will distort the level playing field in EU aviation for decades to come, giving chronically inefficient national airlines a leg up on their efficient low-fare competitors." Under E.U. law, "member-state governments are allowed to provide state aid only with approval from the European Commission," and in order to receive approval, the Commission must determine that the state aid is "genuinely in the wider public interest - if it aims to benefit society or the economy as a whole," which, as mentioned above, was deemed to be true for the schemes. Read more about the E.U. state aid guidelines here.
Ryanair said that ultimate victory would "give airlines and consumers a glimmer of hope that national politicians obsessed with their flag carriers will be sent back to the drawing board and required to use state aid wisely to assist the recovery of traffic in the post-Covid world instead of bailing out their favored airline at the expense of fair competition and consumers."
It is unlikely Ryanair will be successful, as airlines bring people, goods, supplies, and business around the E.U. and world, and providing state aid to support the airlines will almost certainly benefit society/the economy. While Ryanair has the right to appeal, it will most likely be a waste of time, money, and resources, causing the airline to only further hurt itself, financially and reputation-wise. Unless an underlying detail or loophole is found, the European Court of Justice will likely uphold the General Court's ruling.
How do you feel about the schemes? Do you agree with Ryanair? Do you think Ryanair will be ok? If you have any questions, comments, or insights, please feel free to leave them below!
*Flag carrier- "A flag carrier is a transportation company, such as an airline or shipping company, that, being locally registered in a given state, enjoys preferential rights or privileges, accorded by the government, for international operations. It may be a state-run, state-owned, or private but state-designated company or organization. Flag carriers may be known as such due to maritime law requiring all aircraft or ships to display the state flag of the country of their registry. A flag carrier may also be known as a national airline or a national carrier, although this can have different legal meanings in some countries." (https://www.definitions.net/definition/flag%20carrier)
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