European Commission launches probe into state aid at French airport

UNDER SCRUTINY: The European Commission has concluded on a preliminary basis that the agreements with Ryanair are financed through State resources and attributable to the State

The European Commission has opened an investigation assessing whether a marketing agreement between Ryanair and a French tourism body broke state aid rules.

The probe was triggered when the Commission received a complaint regarding the deal between Association for the Promotion of Touristic and Economic Flows (Association de Promotion des Flux Touristiques et Economiques, “APFTE”) and Ryanair. The complainant alleged that the arrangements amounted to illegal State aid in favour of the Irish carrier.

Since 2010, the APFTE has completed various contracts with Ryanair, under which the airline has received substantial payments in exchange for promoting Montpellier and the surrounding area as a tourist destination on its website. The APFTE is an independent association, unrelated to the airport operator, and is funded almost entirely by regional and local public entities.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Competition in air transport is of fundamental importance for consumers, growth and jobs. We will investigate whether regional and local authorities in France granted an undue economic advantage to Ryanair over its competitors, potentially harming other European airlines and having spill-over effects to other European regions “.

The Commission’s guidelines on state aid to airports and airlines state publicly-owned regional airports may offer attractive conditions to airlines to encourage them to operate there and thereby boost their traffic. However, such conditions must in principle not go beyond what a profit-driven airport operator would be prepared to offer under the same circumstances (the market economy operator principle – MEOP).

In the last few years, the Commission has ruled on a number of cases regarding aid to airlines aimed at attracting or maintaining airlines’ aircraft capacity at certain airports, finding that they were not in line with State aid rules, for example regarding the airports of Nîmes, Pau, and Angoulême in France, Zweibrücken and Altenburg-Nobitz in Germany, Klagenfurt in Austria, and the Sardinian airports of Cagliari, Olbiaand Alghero in Italy.

The non-confidential version of the decision will be made available under the case number SA.47867 in the State Aid Register on the Commission’s competition website once any confidentiality issues have been resolved. More information on the Commission’s state aid policy in the air transport sector is available in this policy brief.