Ryanair has been ordered to repay around €4.5 million in subsidies today in a landmark European Commission decision that is likely to have significant repercussions in the low-fare airline industry.
The Commission said cut-priced rates offered exclusively to Ryanair for using Charleroi Airport in southern Belgium were illegal.
But the airline will not have to repay all its subsidies from the Belgian regional government. Some of the rebates for Ryanair were permissible as part of regional development support for the airport, the Commission found.
The company could have been forced to pay around €7 million plus a fine, but the figure is likely to be around €4.5 million. The Commission said the subsidies, such as cut-price landing charges and ground-handling fees were "incompatible with the proper functioning of the internal market".
However, the Commission took consideration of the benefits that low-cost airlines bring to small European airports, saying certain cost breaks were permissible if limited in time and justified by a plan that foresees profitable services within three years.
"One-shot" subsidies to get Ryanair up and running at Charleroi were also legal if proportional to actual start-up costs, the Commission found.
Ryanair must repay only that part of these subsidies that exceed "the above criteria and the end of the three-year phase," said the draft ruling.
The entirety of the incentive scheme granted in favour of a new route shall never go beyond 50 per cent" of the costs of launching a route to and from publicly owned Charleroi, it added.
The ruling is bound to be seen as a guide for future contracts between low-cost carriers and small regional airports.
PA