The General Court of the European Union has upheld a Ryanair challenge to billions of euros in state aid given to KLM and TAP Air Portugal, overturning European Commission decisions.
Last year the Commission gave the go-ahead to a bailout worth €3.4 billion to KLM and of €1.2 billion for TAP Air Portugal.
“The General Court annuls the Commission’s decision to approve the Netherlands financial aid for the airline KLM amid the Covid-19 pandemic on the grounds of inadequate reasoning,” the Court said.
The Luxembourg-based court ruled that regulators had failed to justify the huge cash injections. In KLM’s case, it pointed out that the French government had already handed its sister company Air France €7 billion and ruled as inadmissible the commission’s argument that this would not also benefit the Dutch carrier.
As for TAP, the court agreed with Ryanair that the commission had failed to properly justify its decision to greenlight the aid. It argued that “the commission failed to state the reasons for the contested decision to the requisite legal standard and that this inadequacy of the statement of reasons requires the annulment of the decision.”
António Costa, Portugal’s prime minister, told reporters that “the crisis that has hit civil aviation around the world, it would have been unthinkable for the European Commission not to lift restrictions on state aid, which virtually all European airlines have resorted to, and even more significantly than TAP”.
This decision, which is not against TAP, is against our country. It is a foreign company that wants to win business to other companies and that has initiated an action against an aid decided by a GovernmentPedro Nuno Santos, Portugal’s Transport Minister
Ryanair welcomes the EU Court rulings
Ryanair welcomed the rulings, arguing that “the European Commission’s approvals of state aid to Air France-KLM and TAP went against the fundamental principles of EU law and reversed the clock on the process of liberalisation in air transport by rewarding inefficiency and encouraging unfair competition.”
It stressed that “During the Covid-19 pandemic over €30 billion in discriminatory State subsidies has been gifted to EU flag carriers. Unless halted by the EU Courts in line with today’s rulings, this State aid spree will distort the market for decades to come. If Europe is to emerge from this crisis with a functioning single market, airlines must be allowed to compete on a level playing field”.
In two other cases, the court rejected Ryanair’s challenge to a Spanish fund worth €10 billion for companies hit by the coronavirus. And it backed Lufthansa’s challenge to a 2017 Commission decision allowing state aid to the Frankfurt Hahn airport – aid that principally benefited Ryanair.