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Ryanair Wins Legal Battle Over State Aid to Air France-KLM

 |  February 7, 2024

In another legal victory, budget airline Ryanair has emerged triumphant as Europe’s second-highest court annulled the European Commission’s decision to approve state aid to Air France-KLM’s Dutch unit. The ruling highlights the failure of EU competition regulators to consider the broader beneficiaries within the Air France-KLM airline group.

The Luxembourg-based General Court’s decision, reported by Reuters, overturns the Commission’s revised 2021 approval of state aid to Air France-KLM, citing the exclusion of Air France-KLM holding and Air France as potential beneficiaries. The court’s ruling was based on a comprehensive analysis of the interconnectedness between companies within the Air France-KLM group, examining various factors such as capital, organic, functional, and economic links, as well as the contractual framework and context of the aid.

This legal saga began when Ryanair successfully challenged state aid granted by the Dutch government to Air France-KLM’s Dutch unit. Despite the European Commission’s subsequent re-evaluation and clearance of the aid, citing its necessity and proportionality, Ryanair remained dissatisfied. The budget carrier pursued its grievance, leading to the recent annulment of the Commission’s revised approval by the General Court.

Read more: Italy’s Watchdog Probes Ryanair for Alleged Abuse of Dominant Position

Following the court’s decision, Dutch carrier KLM acknowledged the ruling and expressed intent to study the verdict before determining further actions. KLM had previously repaid the loans related to the state aid in June 2022, with the credit facility ending in April 2023.

Ryanair’s persistence in challenging state aid to its competitors underscores the intense competition within the European aviation industry, particularly amidst the economic challenges posed by the COVID-19 pandemic. The ruling also highlights the significance of fair competition regulations in ensuring a level playing field among airlines operating within the European Union.

As the legal battle continues, the outcome may have broader implications for the regulation of state aid to airlines across the European Union, shaping the competitive landscape of the aviation industry in the region.

Source: Econo Times