In the highly sensitive area of European state aid, Irish independent Ryanair has decided enough is enough and aims to set a precedent when it takes the EC to court.
Ryanair's action follows the Commission's decision to award Aer Lingus its second tranche of state aid despite the failure of Aer Lingus Group to meet all the conditions set out in the original decision (see p76).
The Commission acknowledges that 'this target so far has not been achieved by the group but only by the airline'. But Ryanair chief executive Michael O'Leary questions how this aids fair competition. 'The second tranche permits Aer Lingus to get a subsidy of I£25 per passenger and we are expected to compete on level terms' he says.
Ryanair is likely to argue that when the Commission has doubts over granting state aid it normally opens a formal procedure which requires public consultation. Aer Lingus's failure to meet specific conditions should have given cause for doubt.
However, one London-based EU law specialist says the Commission may have decided the second tranche did not distort competition and therefore it was not obliged to open a formal proceeding. The Commission may have covered itself by clarifying the reasons behind its view that market conditions adversely affected Aer Lingus' attempts to restructure, he says. 'It has discretion in this area so it is difficult for others to attack its decisions.'
Should Ryanair win, however, there could well be implications for other state-aided carriers that have conditions to meet before receiving the remaining tranches.
Source: Airline Business
