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Last Updated: Tuesday, 3 February, 2004, 18:30 GMT
Ruling could affect Derry airport
Ryanair has thrived by cutting costs and quick turnarounds
Ryanair flies out of City of Derry airport
A ruling against budget airline Ryanair that it received illegal incentives to use a small Belgian airport could have implications for the City of Derry Airport.

The Irish airline has been ordered to pay back almost 3m of subsidies it received to fly to Charleroi airport, south of Brussels.

It was given discounts on landing fees and other perks to use the airport but the European Commission has now said that amounted to an illegal subsidy from the Walloon authorities.

City of Derry airport is the only Northern Ireland airport that Ryanair uses with almost 60,000 passengers during its first year of operation in 1999.

By 2,003 that figure had increased to more than 134,000 people travelling with Ryanair.

The ruling is to be studied carefully by Derry City Council's Airport Committee because the council helps pay to advertise Ryanair flights and gives them reduced landing charges.

Airport Committee Chairman William Hay said: "Ryanair are very comfortable to be here.

Michael O'Leary
Ryanair's Michael O'Leary warns the decision will increase prices
"They've operated a very profitable service out of our airport in Londonderry and I have no doubt his ruling will not stop them from being in the airport and operating their services out of the airport."

In its ruling, the European Commission said Ryanair would have to repay a "reasonable" sum, which it implied would be about 4m euros(2.7m).

But Michael O'Leary, chief executive of Ryanair, said: "We consider this decision to be a disaster for consumers, and for low-cost air fares all over Europe.

"And it is a disaster for publicly-owned airports which can no longer compete with [private] airports all over Europe."

He said the decision interfered with the free market, and that the subsidies were "not illegal".

EU transport commissioner Loyola de Palacio had earlier said: "This decision means that we are going to declare as incompatible a large part of the elements of the arrangement between Ryanair and Charleroi."

Some of the rebates for Ryanair were permissible as part of regional development support for the airport.

But some of the subsidies will have to be returned, the Commissioner said, because it was "incompatible with the proper functioning of the internal market".

She said the ruling would bring "greater transparency into contractual relations between airlines and airports, especially regional airports".

"It will also help the development of low-cost operations which are very clearly what consumers want, while also ensuring equitable conditions of competition for all airlines," she continued.

Knock-on

A final repayment figure has yet to be declared.

But Ms de Palacio said the EU executive estimated Ryanair received 15m euros in subsidies for using Charleroi.

She said 70-75% of the aid had been authorised, leaving Ryanair facing a repayment request of 25-30% of its subsidies.

That would imply a sum of about 4.1m euros (2.8m, $5.15m), well below the top-end figure of 7m euros some had initially feared.

Ryanair shares rose 10% following the decision.

Now the firm, the Walloon authorities, and the European Parliament are examining any possible knock-on effects.




WATCH AND LISTEN
The BBC's Quentin Sommerville
"The impact of today's decision will be felt far beyond Brussels"



SEE ALSO:
Ruling could affect Derry airport
03 Feb 04  |  Northern Ireland
Q&A: Ryanair's Charleroi knock-back
03 Feb 04  |  Business
Ryanair vows fight over subsidies
01 Feb 04  |  Business


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