EU General Court deems Netherlands State aid to Air France-KLM illegal in landmark ruling

The EU General Court has delivered a significant ruling, declaring the €3.4 billion Covid-19 State aid granted by the Netherlands to Air France-KLM in 2020 as illegal. This marks the second time the court has deemed the aid package illegal, highlighting errors in the European Commission’s original decision.

The ruling follows a legal challenge by Ryanair, which has consistently opposed Covid-19 State aid to airlines. The court found the Commission erred in defining the aid’s beneficiaries, including the Air France-KLM holding and Air France, both part of the same group. Ryanair now urges the European Commission to prompt the recovery of the illegal State aid and implement remedies to address competition concerns.

Key Points:

1. General Court’s Decision: The General Court annuls the approval of the €3.4 billion State aid to KLM, emphasizing errors in defining beneficiaries and the exclusion of certain companies within the Air France-KLM group.
2. Ryanair’s Response: Ryanair welcomes the court ruling, emphasising that this is the second time the aid package has been deemed illegal. The airline calls on the European Commission to instruct the Netherlands to recover the illegal State aid and impose remedies to address competition concerns.
3. EU Commission’s Handling: Ryanair criticises the EU Commission’s approach to State aid during the Covid-19 crisis, accusing it of allowing discriminatory subsidies to inefficient flag carriers, undermining fair competition principles.
4. Broader Impact: The ruling highlights broader challenges in addressing Covid-19 State aid across the EU aviation sector, with the General Court having previously ruled against aid to airlines such as SAS, Lufthansa, and certain Italian carriers.
5. Competition Concerns: Ryanair stresses the need for the European Commission to act swiftly to recover illegal State aid packages and implement measures to remedy damage to competition. The airline contends that such subsidies harm consumers and distort competition within the aviation market.

The EU General Court’s ruling represents a pivotal development in the ongoing scrutiny of Covid-19 State aid to airlines, particularly within the Air France-KLM group. Ryanair’s call for immediate action underscores the significance of addressing competition concerns and ensuring a level playing field in the aviation sector.