NYTimes.com Article: Ryanair in Pact to Remain at Belgian Airport

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Ryanair in Pact to Remain at Belgian Airport

April 10, 2004
 By ERIC PFANNER





The International Herald Tribune

Defusing a regulatory dispute that threatened to block its
expansion on the Continent, Ryanair, the rapidly growing
European low-fare airline, said yesterday that it had
reached an agreement to keep using the airport at
Charleroi, Belgium, for its Brussels flights.

Ryanair, based in Dublin, threatened to withdraw service
from Charleroi in February after the European Commission
voided its previous agreement with the Wallonia regional
government, which owns the airport. The commission said
that the discount landing fees charged to Ryanair by the
airport amounted to an illegal subsidy under European law.

Under the new agreement, the airport will extend the same
favorable terms to any other airline using the field, in an
effort to make the arrangement pass regulatory muster.
Ryanair, which uses Charleroi as a hub, accounts for more
than 90 percent of passenger traffic there.

Ryanair is one of the biggest and most successful of the
new breed of airlines that have shaken up the European
travel market by sharply cutting fares and opening new
routes. A major part of its strategy has been to make use
of secondary airports within about an hour's drive of large
cities, where costs can often be kept much lower than at
major airports. Ryanair said in February that the
commission's ruling would oblige the company either to
raise fares or to shift service out of Charleroi.

After the agreement on Friday, "fares for passengers will
not go up, and we look forward to further extension of our
route network from the center of Europe," said David
Gering, Ryanair's sales and marketing manager for Belgium,
the Netherlands and Luxembourg.

The new agreement is subject to approval by the European
Commission; its office was closed yesterday. Both Ryanair
and the Wallonia government said that they were confident
that the new accord answered the commission's main
objection to the earlier deal: that it gave Ryanair unfair
advantages over other carriers. A spokesman for the
commission told Bloomberg News that it had not yet seen the
agreement and that he could not comment on it.

The airport will now charge all airlines, not just Ryanair,
a fee of 5 euros ($6.05) for each passenger. The
commission's February ruling would have instead required
that Ryanair pay the higher fees that had formerly been
charged to other carriers, adding an estimated 6 to 8 euros
($7.25 to $9.70) to the average Ryanair ticket price.

"Ryanair is very hard in negotiations," said Françoise
Zonemberg, a spokeswoman for the Wallonia government. "It
was not easy to have an agreement, but finally they said
they wanted to stay in Charleroi."

Ms. Zonemberg said the government decided the loss of
revenue from reducing the fees charged to other carriers
would be less of a blow than losing the two million Ryanair
passengers a year who pass through Charleroi, which is
about 28 miles from central Brussels.

A formal announcement of the agreement is scheduled for
Tuesday, after a few final details are resolved, Mr. Gering
said.

Ryanair and its chief executive, Michael O'Leary, have
often clashed with regulators as the company has fought to
penetrate protected national aviation markets and compete
with national "flag carrier" airlines through low fares.

In February, Mr. O'Leary called the European Commission an
"evil empire" after it ruled that Ryanair should repay
about $4.8 million in fee discounts to Charleroi airport.
Ryanair has appealed the decision to the European Court of
Justice in Luxembourg, saying it threatens the growth of
low-fare travel in Europe.

http://www.nytimes.com/2004/04/10/business/worldbusiness/10ryan.html?ex=1082605599&ei=1&en=1f8dac1b7ebfb7a9


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