EU Court Sides with Ryanair in Case Against Air France’s Covid Bailout

The European General Court has ruled in favor of Ryanair in a significant legal battle over state aid granted to Air France during the Covid-19 pandemic. The court annulled the European Commission’s decisions from 2020 and 2021 that approved French state aid for Air France, citing concerns that the Air France-KLM group, including KLM Royal Dutch Airlines, unfairly benefited over competitors.

This case is part of a series of legal challenges initiated by Ryanair and its subsidiary Malta Air against pandemic-related state aid provided to airlines by EU member states. The aid, often directed at flag carriers, was criticized for disadvantaging low-cost carriers like Ryanair.

In its December 20 judgment, the Luxembourg-based court stated that the European Commission failed to properly define the aid’s beneficiaries, erroneously excluding the Air France-KLM holding and KLM. The court emphasized the necessity for the Commission to exercise vigilance in assessing the connections between companies within a group receiving state aid.

The ruling stems from a EUR 7 billion aid package announced by France for Air France in April 2020, where the European Commission initially declared Air France as the sole beneficiary. A subsequent EUR 4 billion recapitalization in March 2021, excluding KLM, was also quickly approved by the Commission. Ryanair and Malta Air contested these decisions, arguing they were contrary to EU law and incorrectly defined the beneficiaries of the aid.

The court’s decision opens the possibility for an appeal within two months and ten days. Following the ruling, Air France stated that it complied with state aid exit regulations and is considering an appeal to the Court of Justice of the European Union.

Ryanair hailed the court’s decision as a victory for fair competition and consumers across the EU. The airline urged the European Commission to demand immediate recovery of the illegal state aid from Air France-KLM and to implement measures to mitigate the impact of the bailout on market competition.

This ruling represents a significant development in the ongoing debate over state aid to airlines during the pandemic, underscoring the complexities of ensuring fair competition in the aviation sector.