Monday, February 23, 2009

A Momentary Victory for Ryanair

Irish low-cost carrier Ryanair had some cause to celebrate last week.  The European Commission announced that it would not appeal last year's judgment by the Court of First Instance (CFI) which nullified the Commission's decision that Ryanair had been the recipient of illegal State aid on account of advantages authorized to the carrier by Belgium's Walloon Region and Brussels South Charleroi Airport (BCSA).  In an official press release, Ryanair CEO Michael O'Leary stated, "We are happy but not surprised at the Commission's decision not to appeal what was a thorough vindication of the low cost airport model and Ryanair's agreement with Charleroi Airport.  The Commission simply got it wrong, as has been subsequently proven by the huge success of Charleroi Airport."

What ought to be kept in mind is where the Commission "got it wrong."  As discussed previously on the blog, the CFI held that the Commission had incorrectly applied European Community State aid rules to the Ryanair/BSCA arrangement.  The CFI by no means provided a "thorough vindication of the low cost airport model" in its decision.  In fact, it made no comment on whether the deal could have survived under the State aid rules had the Commission applied them properly.  With eight other investigations into its arrangements with secondary airports in Alghero, Aarhus, Bratislava, Frankfurt Hahn, Hamburg Lubeck, Pau, Berlin Schonefeld, and Tampere, Ryanair's tangle with the Commission is far from over.  The CFI decision provides an ample roadmap for the Commission to avoid future legal pitfalls when applying State aid rules to comparable arrangements between Ryanair and the aforementioned airports.  It seems that Europe's largest low-cost carrier will have to be ever more dogged in the fight to vindicate its business model.

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