Low-cost airlines successfully challenge billions of euros in support
Background: European Union’s support for airlines during the pandemic
Brussels — Ryanair and Malta Air, two low-cost airlines, emerged triumphant on Wednesday as they won a court case against the European Union’s decision to approve substantial state aid to Air France and its holding company, Air France-KLM. The aid, totaling billions of euros, was provided by the French government to help the struggling airlines cope with the repercussions of the COVID-19 pandemic.
Ryanair, known for its legal challenges against COVID-19 support measures introduced by EU countries, has been at the forefront in opposing financial aid granted to airlines. According to EU regulations, member states are required to seek approval from the European Commission when providing financial support to companies. Many countries across Europe availed themselves of this provision to assist their airlines during the challenging times brought about by the pandemic.
Court ruling: A setback for Air France-KLM
The court ruling by the European General Court declared that the aid provided to Air France-KLM and its subsidiary, KLM, could indirectly benefit the holding company. As a result, the European Commission’s approvals for the aid were annulled.
The court emphasized the need for the European Commission to be vigilant in examining the relationships between companies within the same group and the potential competition implications arising from the accumulation of state aid.
It is worth noting that this ruling can be appealed.
European Commission’s response and support measures during the crisis
The European Commission, acting as the EU’s anti-trust watchdog, is responsible for approving state aid and ensuring fair competition within the market. In response to the pandemic, the commission relaxed its policies and swiftly authorized billions of euros in support for national flag carriers, including Air France.
Brussels established a fast-track system to address the unprecedented crisis, resulting in the approval of approximately 3 trillion euros in state support across various sectors in EU member nations. Ryanair claims that Europe’s airline sector alone received 40 billion euros in aid.
As the case concludes, the ruling signifies a significant setback for Air France and highlights the ongoing challenges faced by airlines seeking financial assistance to navigate the turbulent waters of the COVID-19 pandemic.