The requirement that civil servants travel exclusively on Aer Lingus is an unlawful State aid to the national airline and contrary to the Treaty establishing the EEC, the High Court has ruled.
Mr Justice Costello, President of the High Court, found yesterday that agreements between the State, Club Travel Ltd, Aer Lingus and Sabena SA, which oblige the independent airline Cityjet to pay a 29 per cent commission to Club Travel Ltd for any bookings on flights on the Dublin/Brussels route, infringe both the EEC Treaty and the 1991 Competition Act.
The judge further declared that contracts awarded by the State to Club Travel Ltd in 1995 were unlawful because they failed to comply with a European Council directive covering the co-ordination of procedures for the award of public service contracts.
He granted a mandatory injunction to Cityjet requiring the State, its servants and agents to comply with the provisions of the European directive in awarding public service contracts.
He granted a further injunction restraining the State or its agents, including Club Travel Ltd, from purchasing any airline ticket for passenger flights between Dublin and Brussels and/or London except under a contract awarded in line with the provisions of the directive.
The judge also directed that details of the volume and value of all airline passenger services purchased by the State and individual Ministers of State in the years 1994, 1995 and 1996 be ascertained.
The proceedings arose out of the decision of the State in 1995 to award to Club Travel Ltd a six-month contract for the supply of travel agency services, including the purchase of flight tickets, for civil servants travelling on the Dublin/London and Dublin/ Brussels routes.
Cityjet contended the contract was a public service contract within the meaning of Council Directive 92/50/EEC and that, in awarding the contract to Club Travel, the State failed to comply with the directive.
The company claimed the State failed to advertise the intention to award the contract and failed to comply with the prohibition against discrimination between different service providers. Because of the failure to comply with the directive, the 1995 contract was unlawful and void, it said.
Cityjet further claimed that the State, by favouring Aer Lingus services exclusively, practises arrangements and agreements which operate as a State aid for Aer Lingus and distort competition.
It claimed that an arrangement between Sabena SA and Aer Lingus involved predatory prices and had led to a situation where the two companies are dominant carriers on the Dublin/Brussels route.
All the arrangements cited had led to Cityjet sustaining extensive loss and damage and it would continue to do so unless the situation was rectified, the company claimed.
There was no appearance for the State when the action was called yesterday. Mr John Gleeson, counsel for Cityjet, said the State had not filed a defence.
Mr Justice Costello granted the declarations and injunctions sought, awarded costs to Cityjet and directed that damages should be assessed by a judge.