Ryanair 2011 Annual Report Download - page 105

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The European Commission issued its decision on February 12, 2004. As regards the majority of the
arrangements between Ryanair, the airport and the region, the European Commission found that although they
constituted state aid, they were nevertheless compatible with the EC Treaty provisions and therefore did not
require repayment. However, the European Commission also found that certain other arrangements did
constitute illegal state aid and therefore ordered Ryanair to repay the amount of the benefit received in
connection with those arrangements. On April 20, 2004, the Walloon Region wrote to Ryanair requesting
repayment of such state aid, although it acknowledged that Ryanair could offset against the amount of such state
aid certain costs incurred in relation to the establishment of the base, in accordance with the European
Commission’s decision. Ryanair made the requested repayment.
On May 25, 2004, Ryanair appealed the decision of the European Commission to the CFI, requesting
the court to annul the decision because:
• the European Commission infringed Article 253 of the EC Treaty by failing to provide adequate
reasons for its decision; and
• the European Commission misapplied Article 87 of the EC Treaty by failing to properly apply the
Market Economy Investor Principle (MEIP), which generally holds that an investment made by a
public entity that would have been made on the same basis by a private entity does not constitute
state aid.
In March 2008, Ryanair had its hearing before the CFI, and in December 2008, the CFI annulled the
European Commission’s decision, and Ryanair was repaid the 14 million that the Commission had claimed was
illegal state aid. The Belgian government has also withdrawn a separate 12.3 million action against Ryanair
arising from the same transaction.
Ryanair is facing similar legal challenges with respect to agreements with certain other airports. In
2007 and 2008, the European Commission announced that it had begun investigations of airport agreements at
the Hamburg (Lubeck), Tampere, Berlin (Schonefeld), Alghero, Pau, Aarhus, Bratislava and Dortmund airports;
however, Ryanair has only limited flights to and from the first seven of such airports and does not operate
flights to or from Dortmund. On June 17, 2008, the European Commission launched a further investigation into
Ryanair’s agreements at Frankfurt (Hahn) airport, which is a significant base for Ryanair. The European
Commission announced in a public statement that its initial investigation had found that the airport might have
acted like a private market investor but that it had insufficient evidence to reach a conclusion and therefore had
elected to open a formal investigation. In January 2010, the European commission concluded the Bratislava state
aid investigation with a finding that Ryanair’s agreement with Bratislava airport involved no aid. The remaining
seven investigations involving Ryanair are ongoing and the European Commission is also considering whether
or not it should issue a fresh decision in the Charleroi case, based on the findings of the EU Court in December
2008.
State aid complaints by Lufthansa about Ryanair’s cost base at Frankfurt (Hahn) have been rejected by
German courts, as have similar complaints by Air Berlin in relation to Ryanair’s arrangement with Lubeck
airport, but following a German Supreme Court ruling on a procedural issue in early 2011, these cases will be
re-heard by lower courts. In addition, Ryanair has been involved in legal challenges including allegations of
state aid at Alghero and Marseille airports. The Alghero case (initiated by Air One) has been dismissed in its
entirety in April 2011. The Marseille case has been withdrawn by the plaintiffs (subsidiaries of Air France) in
May 2011.
In September 2005, the European Commission announced new guidelines on the financing of airports
and the provision of start-up aid to airlines departing from regional airports, based on the Commission’s finding
in the Brussels (Charleroi) case, which Ryanair successfully appealed. The guidelines apply only to publicly
owned regional airports, and place restrictions on the incentives these airports can offer airlines to deliver
traffic. The guidelines apply only in cases in which the terms offered by a public airport are in excess of what a
similar private airport would have offered. Ryanair deals with airports, both public and private, on an equal
basis and receives the same cost agreements from both. The guidelines have therefore had no impact on
Ryanair’s business, although they have caused significant uncertainty in the industry in relation to what public
airports may or may not do in order to attract traffic.