French gov’t, Ryanair quarrel over Air France’s slots

After Ryanair (FR, Dublin Int’l) reiterated its opposition to any further state aid to Air France (AF, Paris CDG), French Transport Minister Jean-Baptiste Djebbari has hit back and said that any conditions imposed by the European Commission should entail reforms to eliminate opportunities for low-cost carriers to “distort the market”. In an interview with Bloomberg TV, Djebbari, who is himself a licenced pilot, pointed in particular to LCC’s employment practices, namely hiring cabin crew and pilots as independent contractors rather than as full-time salaried staff. “During the last ten years, we didn’t regulate the aviation sector from a social point of view. We still have some low-cost carriers well-positioned for recovery from the COVID era that use independent workers,” he said. Djebbari underlined that plans for the further recapitalisation of Air France have not yet been firmed. Last year, the French carrier received a EUR7 billion euro (USD8.4 billion) bailout, of which EUR3 billion (USD3.6 billion) was a direct loan from the government, and the remainder was in state guarantees for commercial loans. According to recent media reports, the state is now contemplating converting the loan into repayable hybrid bonds due to the protracted effects of the COVID-19 pandemic. That would be considered an equity injection under European Union state aid rules. As a new form of state aid, even though the actual amount available to the airline will not increase, the conversion would need to be approved by the European Commission. Ryanair has been vehement in its opposition to any form of state bailouts to flag carriers in the EU. In the case of Air France, the Irish LCC said that at the very least, the airline should be required to rescind some of its slots at Paris Orly. “Should yet another enormous and illegal state aid bailout occur, then effective remedies must be applied to ensure fair competition in the French market and to protect the interests of the French consumer/visitor,” Ryanair said in a statement. Djebbari also rejected comparisons with Lufthansa (LH, Frankfurt Int’l) which was last year forced by the European Commission to relinquish 12 slot pairs at each of Frankfurt Int’l and Munich airports in return for its EUR9 billion euro (USD10.9 billion) aid package. “We want something proportionate that addresses not only competition but the social reality of the sector,” he underlined. Djebbari added that the French ministries were in talks with their Dutch counterparts to coordinate more aid to Air France with decisions regarding its sister carrier KLM Royal Dutch Airlines (KL, Amsterdam Schiphol).