An EU court has annulled, for a second time, a European Commission decision to approve €3.4bn Covid-19 State aid granted by the Netherlands to Air France-KLM in 2020.
The package consisted of a State loan and a State guarantee for a bank loan.
In the first case taken by Ryanair, the General Court had annulled the commission’s initial approval, citing concerns about which subsidiaries would benefit, but had suspended the annulment to allow the commission to revise its decision.
In 2021, the commission again found that the proposed State aid was compatible with the internal market, and that KLM and its subsidiaries were the sole beneficiaries of the aid, to the exclusion of the other companies in the wider Air France-KLM group.
The court found that the commission had erred in defining the beneficiaries of the aid, by excluding the Air France-KLM holding and Air France, two companies forming part of the Air France-KLM group.
It said that it had examined the “capital, organic, functional, and economic links” between the companies in the Air France-KLM group, as well as the contractual framework linked to the measure.
“It concludes, on that basis, that the Air France-KLM holding and Air France were capable of benefiting, at least indirectly, from the advantage granted by the State aid in question.”
Responding in a written statement, Ryanair called on the European Commission to order the Netherlands to recover the illegal State aid and impose remedies to repair the damage to competition caused by the bailout.
Ryanair CEO Michael O’Leary said: “One of the EU’s greatest achievements is the creation of a true single market for air transport. The European Commission’s approval of the Dutch State aid to Air France-KLM went against the fundamental principles of EU law, like the principle of non-discrimination on the basis of nationality. Today’s judgment confirms that the Commission must act as a guardian of the level playing field in air transport and cannot sign-off discriminatory State aid issued by national governments. The Court’s intervention is a triumph for fair competition and consumers across the EU.
The EU Commission’s spineless approach to State aid since the beginning of the Covid-19 crisis allowed Member States to write open-ended cheques to their inefficient zombie flag carriers in the name of faded national prestige.
During the Covid-19 pandemic over €40bn in discriminatory State subsidies was gifted to EU flag carriers. The EU General Court has already ruled in other cases concerning Covid-19 State aid thatbns of euros in aid received by SAS, Lufthansa, Air France-KLM, and certain Italian airlines were unlawful.
The European Commission’s Directorate General for Competition has still not acted to force recovery of the unlawful aid, nor has it imposed any measures to remedy the damage to competition caused by the Swedish, Danish, German, French, and Italian governments favouring their local airlines over other EU airlines, in breach of EU law. Today’s judgment underlines the need for the European Commission to immediately act to recover these illegal State aid packages and order remedies to restore at least some of the damage done to competition.
Undistorted competition eliminates inefficiency and benefits consumers through low fares and choice. Unjustified subsidies, on the other hand, encourage ineffectiveness and will harm consumers for decades to come”.
