Ryanair today (Tues 26 May) condemned the German Government’s decision to award €9bn of State Aid to Lufthansa on top of the extensive payroll support already given to the German airline, which will further strengthen Lufthansa’s monopoly-like grip on the German air travel market.
The German and French governments continue to provide enormous State Aid to their companies, many of whom do not need it, which distorts competition with other providers across Europe. Non-State Aided airlines like Ryanair, EasyJet, British Airways and others, will now have to compete with Lufthansa in both the short-haul and long-haul markets without equivalent State Aid, whereas Lufthansa can use this latest €9bn subsidy from the German Govt to engage in below-cost selling on its short-haul intra-EU routes and its long-haul routes.
Ryanair’s Group CEO Michael O’Leary said:
“Lufthansa is addicted to State Aid. Whenever there is a crisis, Lufthansa’s first reflex is to put its hand in the German Government’s pocket. While most other EU airlines can survive on just payroll support schemes (for which we are extremely grateful), Lufthansa claims it needs another €9bn from the German Govt, €1bn from the Swiss Govt, €800m from the Austrian Govt, and €500m from the Belgian Govt as it stumbles around Europe sucking up as much State Aid as it can possibly gather.
How can airlines like Ryanair, EasyJet and Laudamotion be expected to compete with Lufthansa in the short-haul market to and from Germany, now that it has €9bn worth of German Govt subsidies to allow it to engage in below-cost selling or buy up even more competition for the next number of years.
It is deeply ironic that the German Govt, which lectures all other EU countries about respecting EU rules, has no difficulty breaking the State Aid rules when it comes to Lufthansa. It waved through Lufthansa’s purchase of Air Berlin 2 years ago, which gave Lufthansa a monopoly in the German domestic market, and now when Lufthansa claims it needs even more State subsidies, the German Government writes a cheque for €9bn, at a time when its competitors Ryanair, EasyJet, BA, among others, do not need such State subsidies to survive.
The German Govt continues to ignore EU rules when it suits them to subsidise large German companies, but then lectures every other EU Govt about respecting the rules when they ignore them.
Ryanair will appeal against this latest example of illegal State Aid to Lufthansa, which will massively distort competition and level playing field into the provision of flights to and from Germany for the next 5 years.”
Comment: it is strange that Ryanair complains about state aid when itself just received £600 million aid from the UK government. Furthermore, Ryanair often asks for subsidies from local communities in order to serve less-known airports.
The state aid to Lufthansa has not yet been approved by the European Commission, which will certainly ask for some compensations before granting its authorisation.