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Air France Launches Complaint Against Ryanair

Tuesday 16 March 2010

The dogfight between Ryanair and Air France over French skies continues, with a complaint by the French airline to the European Commission.

Air France has protested that the assistance that Ryanair receives by way of reduced airport taxes, preferential ground handling rates and marketing support at regional airports in France amounts to unfair competition.

Under EU rules assistance of this type is permitted, but only on the basis that it is temporary and digressive in nature.

The French airlline argues that Ryanair has made the assistance a permanent condition of their use of particular French regional airports. Where the airport owners and local authorities have not been willing to pay up (or pay enough) they have threatened to go elsewhere.

Indeed, if reports in the French press are to be believed, it seems that Ryanair pulled their Angouleme-Stansted route recently precisely because additional marketing support they requested was not forthcoming.

A number of French regional public account bodies have queried the ‘marketing’ assistance given to Ryanair, a subject on which we carried an extensive article in our Newsletter in 2008.

The French newspaper Le Figaro calculates that Ryanair receives some €660 million in such subsidies throughout Europe each year, of which €35 million is granted by French airport owners.

They claim that without the subsidies Ryanair would have incurred losses last year of around €829 million, rather than the €169 million losses that it did report.

In response, Ryanair deny they receive subsidies and that it is Air France who receive illegal assistance through the reduction in airport landing taxes on domestic routes in France. This assistance is given by way of 'public service' support for so-called 'uneconomic' routes.

In 2005 and 2007 Ryanair itself made complaints to the European Commission about the preferential treatment given to the French carrier, so the riposte from Air France may well be something of a tit for tat. These complaints by Ryanair remain buried in the Commission bureaucracy.

Those with longer memories will also recollect that in the early 1990s the French government paid out around 20 billion French francs to bail out Air France. This subsidy was later ruled illegal by the European Court, but Air France was not forced to repay it.

Alongside Ryanair, Easyjet are also trying to take on Air France on their own turf, and finding resistance on some routes from the regulatory authorities, who consider they are satisfactorily served by Air France.

Easyjet argue Air France make handsome profits on these routes, and they are prepared to run them without subsidy and offer lower prices to passengers.

While the French authorities may well like to run their national airline as if it was an Aeroflot monopoly, Air France is not a company that receives a great deal of sympathy from French air passengers. A huge number of complaints are made against the airline each year, and judging by reader comments and blogs in the French press over this recent row, there is widespread support for Ryanair.

The new low cost airlines also bring much needed jobs and tourists to rural areas in need of economic development and that is why so many local councils and Chambers of Commerce are anxious to support them.

A suivre………

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