Ryanair slams EU subsidy ruling

Low-cost airline Ryanair has been ordered to repay millions of euros in Belgian subsidies, a decision its CEO slammed as a budget travel disaster.

    Clipped wings? Some analysts call repayment a ''slap on the wrist''

    The European Commission on Tuesday decided some of the hand-outs paid to use Charleroi airport broke EU law.

    Ryanair will now have to return about four million of €15 million it received in state aid, a move the airline chief said also affected traffic-starved regional airports.

    Transport Commissioner Loyola de Palacio said the airline had to respect the rules of the game, but insisted the decision would still favour the low-cost industry. 
       

    Stock markets were more positive than Ryanair chief Michael O'Leary, at one point sending the firm's shares up more than 10%.

    One trader said Brussels had only given the company a "slap on the wrist".
       
    But O'Leary said he would appeal to the European courts, and the Walloon region which owns Charleroi said it could follow suit.

    Rivals EasyJet and Virgin Express welcomed the ruling as creating a more level and competitive competition. 
      
    Boss defiant

    "Am I the good guy? Absolutely. Are they the bad guys? They're the evil empire if this is the kind of decision they come up with," O'Leary told a news conference. 

    "Am I the good guy? Absolutely. Are they the bad guys? They're the evil empire if this is the kind of decision they come up with"

    Michael O'Leary,
    CEO Ryanair

    "This decision confirms that the European Commission intends to increase costs and air fares for consumers," he declared, sitting in front of a yellow backdrop emblazoned with "EU bans low fares!" in black letters to hammer home his point. 
       
    Ryanair and other low-cost carriers have changed the face of European travel, flying to obscure airports at rock bottom fares.

    Charleroi airport, in a declining steel town south of Brussels with 20% unemployment, gets a million passengers a year.
       
    "The result of this decision is that the European Commission will prevent publicly owned airports competing with privately owned airports," he said. 
     
    Commission defence

    But the Commission mounted a fierce defence. De Palacio said the Commission was allowing the carrier to keep up to 75% of the money it got from Charleroi, though O'Leary described the amount of the repayment as "immaterial".
       
    De Palacio estimated the decision could force Ryanair to increase ticket prices by six to eight euros for a return fare, but O'Leary said the rise would be double that amount.
       
    The conservative Spanish commissioner rejected suggestions Brussels was seeking to hit the pockets of budget travellers.
       
    "Yes, of course, it has been beneficial to consumers. Any company... if given state aid will also be able to reduce prices," she told a news conference.
       
    "The question is: should we start handing out this aid left, right and centre to promote travel. This is not something we are ready to do."

    SOURCE: Reuters


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