European Union regulators have started a formal investigation into alleged German subsidies for the Frankfurt-Hahn airport that may have benefited Ryanair, Europe's biggest discount airline.
The alleged aid came through fee agreements between the airport and Ryanair starting in 1999, the European Commission, the EU's antitrust authority, said in a statement last night.
The Brussels-based regulator said it will "scrutinize the airport charges applicable at Frankfurt-Hahn as well as individual contracts the airport has concluded with the Irish airline Ryanair."
Ryanair is Frankfurt-Hahn's largest customer in the passenger business and operates as many as 40 flights a day at the airport. Dublin-based Ryanair and Lufthansa have clashed in the past over the Irish carrier's strategy at Frankfurt-Hahn, Lufthansa's main airport.
Kai Krischnak, spokesman for the Rhineland-Palatine Economy Ministry, said the probe won't show that unlawful state aid was granted. An auditor's review of the issue showed that Fraport and Frankfurt Hahn acted like private investors, ruling out any unlawful state aid, he said.
Christoph Zoerb, spokesman for the Hesse Economy Ministry declined to comment. The commission's probe, its ninth into alleged state subsidies involving Ryanair, is a "politically motivated vendetta to block competition from low fares airlines at low cost regional and secondary airports," Jim Callaghan, Ryanair's legal director, said in a statement.
Mr Callaghan said the Commission should "take action" against governments' "blatant abuses" of state aid rules, such as Italy's €300 million ($465 million) loan to Alitalia SpA. The EU began an in-depth probe of the loan on June 11th.
The probe of alleged aid by the Hessen and Rheinland-Pfalz regional authorities and the airport's parent company, Fraport AG, follows complaints from competitors and an association of airlines, the commission said.
A German court rejected a complaint in May 2007 by Deutsche Lufthansa AG, Europe's second-biggest airline, against the Frankfurt-Hahn airport over alleged subsidies for Ryanair, saying there was no legal basis for the claim.
Lufthansa told the court that Hahn's arrangement amounted to a subsidy because Fraport is majority controlled by German federal and state governments. Lufthansa asked the court to order Frankfurt-Hahn to recover the alleged subsidies from Ryanair and to cease the practice, the court said.
Bloomberg