EU Court dismisses Ryanair challenge: The General Court of the European Union has delivered a significant blow to Ryanair’s ongoing campaign against state aid granted to struggling airlines during the COVID-19 pandemic.
In their recent ruling on Wednesday 5 February, the court dismissed Ryanair’s challenge against the aid package provided to Portugal’s flag carrier, TAP Air Portugal.
This decision offers crucial clarity for TAP and reinforces the European Commission’s authority in approving state support during times of crisis.
State Aid and the COVID-19 Crisis
The COVID-19 pandemic devastated the aviation industry, bringing travel to a near standstill. Many airlines faced existential threats, requiring substantial government intervention to avoid collapse. Portugal, like many other EU member states, stepped in to support its national airline, TAP, approving a rescue package of up to €1.2 billion in June 2020.
Ryanair, a prominent low-cost carrier, has consistently argued that such state aid distorts competition within the European aviation market. They contend that government bailouts give flag carriers an unfair advantage, hindering the growth of more efficient airlines.
In this instance, Ryanair challenged the European Commission’s approval of the Portuguese aid package, initially succeeding in 2021 due to procedural irregularities.
EU Upholds State Aid Decision for TAP
However, this initial victory was short-lived. The European Commission addressed the procedural issues raised by the court and re-approved the aid. Ryanair subsequently launched another legal challenge.
The airline argued that the Commission’s assessment of the aid’s necessity and proportionality was flawed. They claimed the Commission’s analysis was incomplete and that the aid unfairly benefited TAP at the expense of other airlines.
The General Court, however, firmly rejected Ryanair’s arguments. In its ruling, the court stated that the Commission’s decision was justified and that the aid was indeed necessary for TAP’s survival during the unprecedented crisis.
The court emphasized that the aid package was “appropriate and proportionate,” aligning with EU rules governing state support. This crucial finding underscores the court’s agreement with the Commission’s evaluation of the extraordinary circumstances surrounding the pandemic and its impact on the aviation sector.
A Setback for Ryanair…
This decision represents a significant setback for Ryanair, which has pursued numerous legal challenges against state aid granted to various European airlines.
While Ryanair champions free competition, its aggressive legal strategy has been viewed by some as an attempt to stifle competition and consolidate its own market position.
…and Certainty for TAP Air Portugal
For TAP Air Portugal, the court’s decision offers much-needed legal certainty. The airline can now focus on its restructuring efforts without the looming threat of further legal challenges to the vital financial support it received.
This allows TAP to plan for its long-term recovery and contribute to Portugal’s economic rebound.
The ruling also provides important guidance for the European Commission. It reinforces the Commission’s role in assessing and approving state aid during crises, confirming its authority to intervene when necessary to safeguard essential industries and maintain market stability.
Conclusion
The dismissal of Ryanair’s challenge against the state aid granted to TAP Air Portugal is a significant development in the ongoing debate surrounding government support for airlines.
It underscores the court’s recognition of the extraordinary circumstances created by the pandemic and its validation of the Commission’s approach to regulating state intervention in the aviation sector.
This decision offers clarity for TAP, strengthens the Commission’s hand, and serves as a reminder that even in a competitive market, exceptional situations may require exceptional measures.
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