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Last Updated: Tuesday, 3 February, 2004, 14:11 GMT
Q&A: Ryanair's Charleroi knock-back
Ryanair plane on the tarmac
Will Ryanair services to Charleroi now be grounded?

Budget airline Ryanair faces a bill of more than 4m euros after the European Commission found it had received "illegal state aid". BBC News Online looks at what the ruling means the budget airline industry and its passengers.

What has happened today?

The European Commission, the EU executive, has said that incentives Ryanair received to set up a hub at Belgium's Charleroi airport amounted to illegal state aid.

Ryanair will have to repay about 4m euros to Belgium's Wallonia regional government, which owns the airport.

Ryanair had argued that the incentives were discounts that the airport was perfectly entitled to offer.

It had been granted cut-price landing fees and discount office space and training facilities.

The Commission decided that this was an inappropriate use of taxpayers' money that damaged competition among airlines and airports and was bad for consumers.

Ryanair said it was the ruling that was bad for consumers.

Will Ryanair's prices be going up?

Chief executive Michael O'Leary said the decision was a "disaster". He said it would lead to higher air fares "all over Europe" and warned that Ryanair would consider cutting some routes.

It would mean publicly-owned airports, like Charleroi, could not compete with privately-owned rivals, he said.

Henk Potts of Barclays Stockbrokers said some profitable Ryanair routes "may now become unprofitable ones, and prices on those may have to rise in the short term".

EU transport commissioner Loyola de Palacio said: "The translation that we have made is that this might affect rates by six or eight euros per ticket."

Mr O'Leary said adding six-eight euros would double prices for many of the tickets Ryanair sold to and from Charleroi.

Are other budget airlines affected?

Many are not convinced that Tuesday's ruling will have the dramatic impact that Mr O'Leary is predicting.

Mr Potts said other budget carriers do not fly to as many publicly-owned airports as Ryanair, and so they are less exposed to "state aid" investigations and demands for repayment of any incentives.

They, and their passengers, will be much less affected by Tuesday's ruling, he said.

Simon Evans of the Air Transport Users Council said most air passengers were unlikely to face ticket price rises.

It's 'as you were' then?

Not necessarily. Some individual deals have been thrown into the spotlight, including Easyjet's 20-year contract with Berlin's publicly-owned Schoenefeld airport.

Easyjet has said that 20 of the 39 airports it serves are state-owned and that they all offer some sort of discount. But it insists that these are not as lucrative as those enjoyed by Ryanair.

Illegal state aid comes into play only if the incentives are deemed to go beyond what a privately-owned commercial airport could offer.

Ryanair has said that some of Lufthansa's deals with German state-owned airports need closer investigation.

British-based budget airline Flybe said it did not expect Europe's low-cost airline industry to suffer any great harm.

It welcomed the ruling as contributing to greater "transparency and equality" in deals struck between airlines and airports.


SEE ALSO:
Ryanair slates Charleroi ruling
03 Feb 04  |  Business
Ryanair vows fight over subsidies
01 Feb 04  |  Business
Ryanair to appeal over wheelchair
01 Feb 04  |  Business


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