EU Court Annuls EC Approval Of COVID Subsidies To Italian Carriers

Credit: ALBERTO PIZZOLI / AFP / Getty Images

ULCC Ryanair has won another legal case in its long-running series of complaints against airline compensation packages approved by the European Union (EU) during the pandemic.

The EU General Court announced May 24 that it was annulling a decision by the European Commission (EC), the EU’s executive arm, to allow the Italian government to pay subsidies to Italian airlines during the pandemic. 

The money came from a €130 million ($140 million) Italian state fund created to compensate airlines that had been affected by travel restrictions during the pandemic. 

Ireland-based Ryanair, which is Italy’s largest airline in numbers of passengers carried, argued that the Italian government’s action was discriminatory, as the aid package was granted only to airlines holding an operating license issued by Italy. 

“While the COVID-19 crisis caused serious damage to all airlines, many national governments, including Italy, rushed through discriminatory subsidy schemes limited to their own former flag carriers, ignoring other airlines that contribute to the economy and the connectivity of the European Union,” Ryanair said in a statement. “Ryanair is Italy’s largest airline yet was excluded by the Italian government from these schemes.” 

Despite the Italian government’s aid package being discriminatory against all non-Italian airlines, Ryanair claimed, it was waved through by the EC.

The General Court, in its judgment, said that the EC “failed to provide a statement of reasons for its finding that the measure at issue was not contrary to EU law provisions other than those governing State aid. Without opening the formal investigation procedure ... the Commission decided not to raise objections to the measure at issue, on the grounds that it was compatible with the internal market.” 

The judgment follows a May 10 ruling by the same court in an action brought by Ryanair and German airline Condor. In that case, the court annulled the EC’s clearances of a €6 billion aid package to Lufthansa and €1 billion to Scandinavian Airlines (SAS).

Ryanair said the verdicts “are a victory for the EU internal market and are damning of the European Commission’s head-in-the-sand approach to massive and discriminatory bailouts of ailing flag-carriers by EU member states.”

A Ryanair spokesperson described the creation of a single market for air transport as one of the EU’s greatest achievements, but said, “the EC’s approval of the aid scheme limited to airlines with an operating license issued by the Italian state went against the fundamental principles of EU law.”

“Today’s judgment confirms that the Commission must act as a guardian of the level playing field in air transport and cannot sign-off discriminatory state aid under political pressure by national governments,” the spokesperson said. “The Court’s intervention is a triumph for fair competition and consumers across the EU.”

Alan Dron

Based in London, Alan is Europe & Middle East correspondent at Air Transport World.