SFGate: EU court backs Ryanair in airport subsidy battle

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Wednesday, December 17, 2008 (AP)
EU court backs Ryanair in airport subsidy battle
By AOIFE WHITE, AP Business Writer


   (12-17) 08:51 PST BRUSSELS, Belgium (AP) --
   An EU court on Wednesday backed budget airline Ryanair in a battle with
state aid regulators on how far small airports can use public money to
attract low-cost carriers.
   The ruling from the European Union's appeals court allows Ryanair to keep
a discount of more than euro4 million ($5.48 million) that it received
from the Belgian Walloon regional government to help run flights out of
the state-owned Charleroi airport.
   Charleroi originally gave the Irish airline up to 90 percent of its costs
over 15 years in a deal that Ryanair has mimicked with regional airports
across Europe.
   The EU Court of First Instance said the European Commission was wrong to
demand Ryanair refund the sum in 2004, saying antitrust regulators had
made a mistake in deciding the payments were an illegal state subsidy and
not checking whether private investors would also have offered Ryanair low
fees to start using the airport.
   Ryanair Chief Executive Michael O'Leary said there was "no doubt" that t=
he
court decision also made meaningless other EU investigations into claims
that Ryanair received illegal subsidies at eight other airports in
Denmark, Finland, France, Germany, Italy and Slovakia
   "A public authority like the Walloon Region or Charleroi is allowed to
behave like a private airport behaves and that is to enter into long-term
low-cost arrangements with an airline like Ryanair which in return
guarantees very rapid traffic growth," he told reporters.
   EU spokeswoman Pia Ahrenkilde Hansen insisted that the judgment "does not
have an immediate impact on the other cases" and said it was too early to
say if regulators would appeal.
   O'Leary claimed there weren't much grounds for appeal in the court rulin=
g.
   Ryanair Holdings PLC, Europe's largest low-cost carrier, triggered a
revolution in air travel by offering bargain fares that saw millions more
Europeans take to the skies — even if that meant an hour-long trip
from a regional airport to their city destination.
   O'Leary said Charleroi had boomed after it struck its pact with Ryanair,
pulling in other airlines and nearly 2 million passengers a year —
and becoming a valuable business worth some euro100 million ($137
million).
   "The Ryanair partnership with Charleroi has transformed an airport that
was in 2001 effectively unused and empty. Today it is a growing, thriving,
profitable international airport," he said.
   But other airlines and Brussels' main airport, Zaventem, had complained
that Ryanair's special treatment from the Walloon government was unfair.
EU regulators ruled in February 2004 that parts of the Ryanair contract
were illegal state aid and must be changed.
   Ryanair struck deals in 2000 with the airport's owner — the Walloon
Region — and the Brussels South Charleroi Airport company, or BSCA
— also owned by the Walloon Region — which operates the
airport, 42 kilometers (26 miles) south of the Belgian capital Brussels.
   The Walloon Region gave Ryanair a half-price deal on landing charges that
are usually fixed by regulation and promised to compensate the airline if
it lost money on any changes to airport charges.
   In return, Ryanair pledged to base two to four aircraft at the airport a=
nd
turn each around at least three times a day. The deal was for 15 years.
   The BSCA also said it would help fund Ryanair's costs and pay it euro1
($1.37) per passenger for ground handling — rather than the euro10
($13.69) it charges other airlines.
   The EU ordered the Belgian government to retrieve the discount that
Ryanair got. The money was frozen in a bank account until Wednesday's
appeal. Ryanair said it would now get that money back plus interest and
some of the costs of legal action.
   Ryanair's deal with Charleroi was renegotiated in 2005 and extended at
lower cost, the company said.
   O'Leary said Ryanair was now in talks with starting services at 47
airports that it doesn't fly to, including Brussels Zaventem, Copenhagen
and several in Italy following a rash of airline cutbacks and collapses in
recent months. ------------------------------------------------------------=
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Copyright 2008 AP

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