State aid to Austrian Airlines in conformity with EU law
• European General Court (EGC) dismisses complaint by Ryanair and Laudamotion
• State aid not a case of discrimination
• Judgment is not yet final
Today, the European General Court (EGC) dismissed the complaint brought by Ryanair and Laudamotion against the state aid approval for Austrian Airlines. The two airlines sued against the state aid of 150 million euros to Austrian Airlines approved by the European Commission last year. According to the EGC ruling, this measure does not discriminate against Ryanair and Laudamotion. The state aid to Austrian Airlines for the damage caused during the pandemic, therefore, complies with EU law. Ryanair and Laudamotion can still challenge this ruling before the European Court of Justice (ECJ).
The state aid of 150 million euros last year was part of a total financing package worth 600 million euros. This also included an equity grant of 150 million euros from Austrian Airlines’ parent company Lufthansa and a state-guaranteed bank loan of 300 million euros.
The ruling by the European General Court allows Austrian Airlines to continue flying high. The aid of 150 million euros approved in July 2020 was and is still necessary to safeguard Austria’s largest aviation company with more than 6,000 employees and to maintain Austria’s international connections via the Vienna hub in the long term.
Ryanair noted the EU General Court’s ruling on discriminatory State aid favouring Austrian Airlines, a subsidiary of the Lufthansa Group which in June 2020 was granted €150m aid by the Austrian government. Since the start of the Covid-19 pandemic, Austrian Airlines has received €600m in State aid and the Lufthansa Group more than €11bn.
While the Covid-19 crisis has caused damage to all airlines that contribute to the economy and the connectivity of Austria, the Austrian government decided to support only its inefficient former “national” airline (now German-owned), discriminating against all others in clear breach of the fundamental principles of EU law. Ryanair subsequently referred the European Commission’s approval of this €150m illegal subsidy to Austrian Airlines to the EU General Court in November 2020. Ryanair will appeal today’s General Court judgment to the Court of Justice of the EU.
A Ryanair spokesperson said:
“One of the EU’s greatest achievements is the creation of a single market for air transport. The European Commission’s approval of State aid to Austrian Airlines went against the fundamental principles of EU law and have turned back the clock on the process of liberalisation in air transport by rewarding inefficiency and encouraging unfair competition.
Ryanair is a truly European airline and a champion of competition and consumers. Our instinct in a crisis is to seek efficiencies and cost savings, to offer more routes at lower fares – while remaining Europe’s greenest airline. We will now ask the EU Court of Justice to overturn this unfair subsidy.
If Europe is to emerge from this crisis with a single market that serves the consumers and the economy, airlines must be allowed to compete on a level playing field. Undistorted competition weeds out inefficiency and drives low fares and choice. Subsidies, on the other hand, encourage inefficiency and will harm consumers for decades to come.”