Ryanair EU ruling !?

[brownstar]

Just heard on the radio that they EU have ruled against Ryanair in the EU courts. ( i had a look but couldn't find it on the BBC website ).
From what i could hear it sounded like ' Ryanair will have to payback monies to Charleoir airport '. There was something else mentioned but i missed what was said.
If any of you news guru's have any links to the story it would be appreciated

[Flight Level Zero]

From EUBusiness.com

Brussels to seek repayment of aid by Ryanair, says airline

27 January 2004

Irish no-frills airline Ryanair said Tuesday it expects the European Commission to seek repayment of millions of euros in aid it received for setting up at Belgium's Charleroi airport.

The carrier, which has helped change the landscape of European air travel in recent years, slammed such a decision as bad for the whole low-cost air travel industry, and reiterated that it could pull out of Charleroi.

"There are portions of the arrangement (with Charleroi airport) that are going to be repaid. It's going to be in millions of euros," said a Ryanair official, Jim Callaghan.

The commission, the EU's executive arm, is due to announce next week its decision on whether Ryanair breached EU competition law over Charleroi. The airline has warned a negative ruling could harm low-cost air travel in Europe.

EU officials remain tight-lipped about the commission's impending decision on the case, with one source indicating only that it is likely to be a "balanced" decision.

But Callaghan, Ryanair's head of regulatory affairs, said after talks in Brussels that the commission was set to make "a negative decision, not only for Ryanair but also for the whole industry."

He also reiterated that the carrier could pull out of Charleroi, although indicated that a decision on this would depend on exactly what the Commission decides.

"If this thing goes horribly wrong that is still a possibility," he said. "If the result of the Commission investigation is to increase our cost base in Charleroi, we will have no option."

Ryanair has helped transform air travel in Europe by pioneering low-cost point-to-point flights using smaller and cheaper regional airports and avoiding national hubs.

The airline's boss Michael O'Leary reiterated this month that he believed the decision will go against him, warning that it could "devastate Charleroi, will be bad for consumers and bad for low-cost air travel."

The decision has been awaited for months, and was at one stage expected before Christmas. Commission officials regularly rebuff questions about the case.

Coincidentally, 10 no-frills airlines launched a new association Tuesday to press governments and authorities to open the way for further development of cut-price air travel.

The European Low Fares Airline Association (ELFAA) said it would lobby hard "to ensure that European policy and legislation promote free and equal competition to enable the continued growth and development of low fares.

"Low fares airlines have made a direct contribution to the European integration process by making air travel possible to price-sensitive consumers," said Wolfgang Kurth of German low-cost airline Hapag-Lloyd Express.

The 10 ELFAA members, from nine EU member states, are: Air Berlin (Germany), Basiqair/Transavia (Netherlands), Flybe (Britain), Flying Finn (Finland), Hapag-Lloyd Express (Germany), Ryanair (Ireland), Sky Europe (Slovakia), Sterling (Denmark), Sverige Flyg (Sweden) and Volareweb (Italy) .

[akerosid]

This is a very disappointing move and has to call into question the free market intentions of the EU. Sure, they can ask FR to repay the monies (although if the airport is subsequently privatised, it doesn't preclude the newly privatised company from giving the money back in another way?), but the Court also needs to set out the extent to which a state/publicly owned enterprise can compete against a private (or indeed another state owned) enterprise. Obviously we don't know the specifics of the ruling, but it would be appalling if limitations had to be placed on the efforts of a small airport to gain new services.

If the court orders the repayment of monies, how is this monitored?

While this may appear to be a spike in FR's plans, it could well provide an opportunity, in the long term, to get its own (including its money!) back. I'm not often a MO'L supporter, but in this case, I make a strong exception.

[lod]

THE RULING WILL BE MADE ON TUE 3rd FEB. LETS HOPE 500 PEOPLE GET TO KEEP THERE JOBS FROM THE EU

[Dewdrop]

The one's that will suffer are the great bunch of people at Charleroi who have worked so hard to make the airport a runaway success. This was nothing of their doing well done EU score one for the flag carrying dinasours.

[No Mode Charlie]

Akerosid, you say "it has to call into question the free market intentions of the EU"

Isn't that what this whole thing is about, that the whole deal of Ryanair with Charleroi WASN'T done in a free market sort of way. That in a free market it shouldn't happen that one airline gets government subsedies?

[Cuillin]

I take it that the Commission will now look at unfair/illegal subsidies to other carriers ie Air France/Alitalia etc.

If it works against Ryanair then it should apply equally to companies such as those as well.

[Hotel Charlie]

Excellent news! About time Fraudair gets to pay for themselvs like everybody else!

[Lou Scannon]

Ryanair share price down by 23% on ceefax at 0930

[davethelimey]

HotelCharlie - I am of course willing to be corrected, but as I understand it a lot of major carriers receive discounts from airports. Secondly, I don't see any other carriers flying to Charleoir (that's a b***er to spell) - if another wanted to, couldn't the airport give them a discount as well, thus boosting business?

Edited to remove asterisks...

[Anti-ice]

Has the Ryanair bubble burst ?

For a guy who shouts at his passengers , and just shows the door to staff who wish to make a point, is he at last is being shown that sheer arrogance is unwelcome.

FT link (http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1073281363377&p=1012571727085)

Salient points:
* FR to re-examine the delivery schedule of new 737-800's
* Expecting average fares to decline by between 25 and 30 per cent year-on-year in the final quarter compared with a fall in yields of 10 to 15 per cent during the first nine months.
* Launching a "detailed review" of its cost base in order to halt the profits decline.
* Slowing growth from May onwards.
* Buzz to be closed

Is it byebye MOL?;)

[under_exposed]

Take off the exceptionals and the frofit was up 10% and with lines like
Ryanair's passenger volumes in the quarter rose by 54 per cent from 3.9m to 6.1m
I dont think they are about to disapear.

[Dewdrop]

Ryanair warned they will only make €215 million profit this year.
All airlines should be so run. The next couple of years are going to be tough for the industry with capacity shrinking everywhere, under these circumstances my money is still on MOL.

I think we need to spare a thought for the boys and girls at BA who are having to deal with today's real story !

[beaucaire]

The same rules that will apply to Low-Cost carriers should then also be applied to Cargo carriers like DHL in Belgium.
There have never been any complaints about indirect subsidies for freight-carriers in Liége and Brussels-they run into millions as well !!!!

[GWYN]

Maybe it's Charleroi???

[MPH]

It’s becoming highly suspicious that Brussels, has managed to put the nail into the coffin concerning aviation in Belgium. First SABENA then Sobelair and now they want Ryanair. Make’s you wonder what’s behind all these decisions. Belgium has been practically left without an aviation industry. No airlines and now, with one of the only airlines that is successful there, they also want them shoved out! Their must be some strong lobbying going on in the hall ways of the EU government!!!:confused:

[Diverse]

Maybe a few of the folk down in the EU offices have shares in railway rollingstock companies.

[Wing Commander Fowler]

Couldn't, by remote posibillity, be just that they're Belgian could it....?

:)

[Final 3 Greens]

The Belgians are good guys, most of the decisions made in Brussels are made by political giants from outside the country, including some Brits - leave the Belgies alone ..... they make great beer and chocolates, have the best 2 female tennis players in the world and have never declared war on anyone.

That's okay by me or in the bizarre French of Plastique Bertrand, Belgian punk rocker "Ca plan pour moi"

[spotted_flaps]

Looks like the unsinkable Titanic has finally hit the Iceberg!

[johnpilot]

It is very interesting to see that people think so highly of Ryanair. Ryanair at present has 1.2 Billion Euros in Cash, so they can operate their current operation for 3 years with 0 pax and not worry. Charleroi represents 3% of the whole network, so I do not think they can worry that much. They have no real investments in Belgium (just airplanes and crew) They can easily leave and put these aircraft somewhere else. But before doomsday comes, I am sure the European Union will bring a more balanced ruling for everyone involved. There is still the appeals court in Luxemburg if necessary.
I believe someone will make big bucks with the stock price fluctuations over the last few days as it is a very low price for a robust business model, with solid performances and a proven management team
JP:D

[Faire d'income]

I don't think Ryanair are going anywhere and while I can't stand MOL I don't particulary want to see the demise of his annoying but remarkable company. They have been good to a lot of employees ( yes I know about the exceptions ) and have refreshed the European industry as a whole.

While it is difficult to understand where the EU is going with this it is easy to see their problem with Charleroi. They ( FR ) are competing with the airlines that operate into EBBR. They recieve grants for going there and the other airlines get nothing near the same comparatively. That I'ma fraid is unfair competition.

People here have mentioned discounts for some of the national carriers but that is not comparing like with like.

FR will bounce back from this and anyone with a flair for this sort of thing could make a fortune, if you spot when the share price bottoms out. :ok:

[Daysleeper]

I'm amazed the gravey train riders have come up with this, considering they can spend €15 flying to Brussles with Ryans then claim a full first class fare back from us the taxpayers in cash.
Perhaps its because this particularly corrupt little practice is coming to an end that they are getting all huffy and taking the trainset away from everyone.

Anti EU rant over, normal service resumed.

[MPH]

Now, its Charleroi tomorrow, who knows? Without the operation and business that FR generates at this airport. It could, have ended up on the list of Belgium ex-assets in the aviation. Why doesn't anybody else fly there? I am sure competion would be more that welcome.
I never saw any investigation into the loans (financial aid) that Air France and Iberia…to name a few, have had in the past. And they go into the hundreds of millions!!
:*

[Saitek]

Ruling against Ryan today to pay back some of the deemed subsidies at Charleloi.

http://news.bbc.co.uk/1/hi/business/3453285.stm


Could this genuinely start a precedent that could see the LCC's locked in courtroom battles for all of the public airports they have concessionary rates with and having to pay back millions for each one.


Surely they could not survive having to repay back £ millions in concessions at all of the publicly owned airfields they operate to.

General public / regional development :{

[brabazon]

Not all low cost airlines are the same in terms of their choice of airports and the deals they have done with the. Ryanair have just added 50p to each ticket to "compensate" themselves for losing the disability case which should net them £12 million so making up the cost of paying back for Charleroi shouldn't take much - it could even come out of their cash - how much have they got now. The train had to slow down at some point, perhaps they will learn to be a bit more humbling from now on.

[Squak2002]

Ryanair has been ordered to pay back €4.5 million in illegal subsidies today in a landmark European Commission decision.

The Commission said cut-priced rates offered exclusively to Ryanair for using Charleroi Airport in southern Belgium were illegal. Belgium government are likely to appeal rhe ruling.

This can't be good news for an already bad month!

www.ireland.com at 11:35

[DamienB]

As losing a case for £1036 meant they said they'd put 50p on fares to compensate... a quick calculation shows that they need add only £1483 onto each ticket to make up for this one. :E

[GlueBall]

Soon many of Ryan's new jets will become due for heavy checks. Needless to say, O'Leary will have to part with big chunks of his cash hoard to start paying for real maintenace. :{

[FlapsOne]

Interesting the MOL's PR machine is desparately trying to tar all lo-cost operators with the same brush when FR are the only one guilty of this practice.

[LightTwin Driver]

A very sad day for Ryanair.

http://www.click-smilies.de/sammlung0903/lachen/laughing-smiley-014.gif

[fokker]

In Windsor Davies' inimitable words:

"Oh dear. How sad. Never mind."


;)





Actually, bit sad for all the Frogs and Belgiques whose jobs depend on Ryan, though. Mind you, MOL wouldn't give a flying fark about them, anyway. Bas :mad:

[akerosid]

Okay, before we all start dancing on FR's grave, let's put this into perspective. The fact that the court took so long to come to a judgment only serves to underline the confusion which surrounds this whole area.

Before FR came to CRL, that airport - in a high unemployment area, was going nowhere; the odd Sobelair charter and SN training flight, but that was the size of it. They took a risk, FR pushed a hard bargain and were entitled to believe that CRL was legally in a position to offer what they offered and a deal was done. It brought jobs, access and economic growth to a depressed region. Everyone's happy except for poor Zaventem, which had already lost Sabena - a spectacularly poorly run airline - and didn't want this upstart airport cutting across it.

The EU is supposed to stand for free trade, regional development and free movement of persons; this ruling suggests they've completely missed the point. Personally, I hope FR takes this all the way.

As for FR itself, this is a setback; of more concern, I would think, is the load factor for last month. Okay, January is a bad month, but 71% is very poor for FR. But they'll recover; they already have a low cost base and they can get over this. Don't count them out yet.

[no sig]

I thought the same thing FlapsOne, I'd expect a comment from Ray Webster sometime about now...

[Sensible]

What a bunch of sad people some of you are. Wake up and get real, the likes of Ryanair provide jobs not only for aircrew by encouraging people who would otherwise not fly to fly as well as bringing much needed jobs to places and people who would otherwise not have jobs. The ruling in question is a victory for nobody and certainly not for common sense.

It's simple really, losers just hate to see winners winning and for sure, O’Leary and Ryanair are winners whether the losers amongst us want to face it or not. Some of you had best get used to successful businesses run by people like O’Leary or you will have to get used to the dole queues, it’s really really that simple!

[The Scarlet Pimpernel]

......and so is the principle of competing on a level playing field. Perhaps if the airline I worked for negotiated a few deals like this one, they too would be able to expand at the same frenetic rate as FR, which would mean more jobs.....blah blah blah

:)

[View From The Ground]

Whatever you may think of FR, this is another bad day for the consumer. I would put this in the same category as the recent record industry stitch up of CD-WOW.

[MPH]

Not only is this ruling questionable but ridiculous. Why don’t any of the other airlines start flying to theses airports? It’s meant to be an open market or is competition not welcome?
The commission seems to forget about the subsidies that Air France, Iberia and Alitalia have had in the past decade with no subsequent investigations. I think there has been a lot of lobbying going on in the hall ways of the EU parliament.
Oh well, I guess that will just have to go back and start paying higher prices again. So much for fairness in trade and protecting the consumer!
Goodby Charleroi and the rest.....maybe you could start up a fairground, zoo or something similar? I wonder what airline would take all those people to come and visit you?
:confused:

[Baron buzz]

Another case of Europe throwing their unwanted weight around.

Again, I emphasise what was said earlier in the forum, Ryanair are a big success story and whatever we may think of them, this is fact. They have re shaped European air travel, and given many airlines a wake up call. They have also allowed millions who couldnt afford to travel to places, the freedom to do so.

Maybe its my ignorance, but I think this is very unfair. Typical Europe.

[Young Paul]

Hmm. At the end of the day "the market" was prepared to pay Ryanair that amount of money for the privilege of it flying to CRL. Whilst my airline may have lost out as a result, I have to say that if that's what the market will pay, then the EC is trying to "buck the market" - to not allow it is a distortion of the market place. For other established carriers to grumble about this is a bit "dog-in-the-manger"-ish. I notice that the senior levels of management in many companies haven't criticised these "grants"/"subsidies" - one wonders what support some of their routes are receiving!

I think this opposition is basically a (French?) non-free-market knee-jerk reaction to free-market forces - and if CRL (or Strasbourg or any other airport) is prepared to stump up money to bring in passengers, then more the fool those airlines who don't capitalise on a business opportunity.

Incidentally, this doesn't imply approval - I am actually pro-fair-trade and anti-selfish-business. However, you can't claim to have a free market and then forbid this sort of practice.

[FOZ]

Maybe the Eurocrats are worried that their expense claim rates might be based on the FR fare levels..............................

[Shamrogue]

What a pile of rubbish!!!

YOu really start to wonder about Europe!......and the whole issue of the EU. Here is a subject most of us vaguely understand. IMagine what's going on in areas we have no clue of.

IMHO! This decision is a political decision. In the public domain the usual flag carriers did all the arm waving they could! God knows what went on behind closed doors. I think FR were brilliant in their ability to negotiate their rates. Every shaggin airline grabs a few quid of one nature or another to enter a route. This is the free market in full flight. FR are just particularly good at using it!

I wonder where we could get a copy of the full report.....I'm sure it would make some classic reading.

Shamrogue

[GlueBall]

The larger question is: Why should the majority of ordinary non-flying taxpayers subsidize FR at CRL to benefit the convenience of few flyers? If FR can't make money at CRL without taxpayer subsidies, then there is no market for a B737. Maybe somebody with smaller equipment can make money.

[The_Bean_Counter]

The issue is not whether or not they make money at Charleroi but if they can make more money elsewhere. If they are trying to sell a s**t hole destination like Charleroi (or Brussels for that matter) they need to have a good deal at the airport to get the same return on investment / capital as they would by flying to a private airport with a similar deal at the airport. Now that the deal is broken at Charleroi the attractiveness of the airport is lessened and because the aircraft and people can be moved quickly the prosepects are not good. The commission have removed the "competitive" nature from the business.

[Yarpy]

Worth reading the view from the Economist . . .

http://www.economist.com/agenda/displayStory.cfm?story_id=2403309

Classic case of too rapid expansion?

[Young Paul]

!!! Look, this isn't the sort of subsidy that Air France has lived on for I don't know how many years - in one tranche alone £5 for every citizen of the European Union - and yes, they were EU funds, I understand. These were declared to be illegal, but nothing was done about them, and Air France has used (and is using) its position to seriously inhibit competition.

This is the sort of subsidy from a local authority that is keen to attract more tourism and work. If you think it only happens at CRL, why do you think the Scottish Executive is giving grants to airlines to start new routes from Scotland? And do you think it's only Ryanair that is gaining there? I don't think so!

Anybody could have gone to CRL to negotiate such a deal. Only MOL had the nerve to do so, in this case. Yes, it's a gravy train for him - although he does have to bring passengers in to make money - but really, friends, is this more of a gravy train than the flag carriers have had through bilateral restrictions on carriers, restrictions on the levels of fares that could be charged, etc? My airline stopped flying to ZRH because they weren't able to set a fare at a level they wanted to. And don't forget, despite incredibly restrictive practices, two flag carriers are now gone, others are looking for ways to combine forces to survive and so on - whereas FR is making money through what it is doing.

Again, let me make it clear that I don't particularly approve - but in a supposedly "free market", people will take what opportunities they can find - and I really think it's hypocrisy of the flag carriers to grumble about MOL's practices.

[The_Bean_Counter]

Yarpy, you've got to laugh at the Economist bit where it tells us that Ryanair have a crisis on their hands because almost one third of seats are empty in January. Are they going to write a piece on BA saying almost half of seats were empty in January (UK-Europe load factor in January was 54%). BA had a year round load factor of close to 70% and I have yet to see an airline operating with a 100% load factor. Journalists and stockbrokers still dont understand the airline business.