Transport & Environment – €8.5m Ruling against Ryanair State-Aid just the Tip of the Iceberg

The EU has ordered €8.5 million in illegal state aid to be recovered from Ryanair in the latest indication of how extensive public subsidies are to aviation, one of the fastest growing sources of carbon emissions. The low-fares carrier received the handout from the French state to use Montpellier airport.

Transport & Environment’s mission is to promote, at EU and global level, a transport policy based on the principles of sustainable development. Transport policy should minimise harmful impacts on the environment and health, maximise efficiency of resources, including energy and land, and guarantee safety and sufficient access for all.

Cross-posted from Transport & Environment

Deals struck between the airlines and a publicly-funded association between 2010 and 2017 ‘gave Ryanair an unfair and selective advantage over its competitors and harmed other regions and regional airports,’ EU competition commissioner Margrethe Vestager said.

The Commission said the deals were struck with Ryanair ‘in return for promoting Montpellier and the surrounding region as a tourist destination on the Ryanair [web]site.’ But, it added, the contracts ‘served only as an incentive for Ryanair to maintain its activities at Montpellier airport’. In April of this year, Ryanair moved operations from Montpellier to nearby Beziers airport.

Last month a T&E report found that almost a quarter of the EU airports served by Ryanair are likely to be loss-making and propped up by taxpayers’ money. It concluded that 52 of its 214 airports are either documented to be receiving subsidies (35) or have fewer than 500,000 passengers a year (17) – a conservative estimate of the threshold for profitability. T&E said the state aid effectively allows airports to subsidise airlines’ rapidly growing emissions. It called on the Commission to end state aid for loss-making airports in its upcoming review of state aid, like it did for coal mines earlier this decade.

Almost half of Ryanair’s struggling airports are in France (16) and Italy (7), according to the report. They receive state aid from governments and local authorities through direct payments, like the deals to promote Montpellier on the Ryanair website, or tax exemptions. Paris Vatry served just 108,000 passengers in 2017 yet received €3 million in public subsidies – just under €30 per passenger.

T&E’s aviation manager, Andrew Murphy, said: ‘This report paints a clear picture of public money subsidising Ryanair’s operating costs and inflating its bumper earnings and record breaking emissions. With governments struggling to rein in the sector’s climate impact, the first step should be calling a halt to subsidies which are only adding more fuel to the fire.

The report is a conservative estimate of high-ranking polluter Ryanair’s loss-making European airports. Airports with greater passenger numbers, such as Charleroi in Belgium, are not counted but are still heavily reliant on public subsidies every year. 

T&E said the report provides a snapshot of an aviation sector with rapid emissions growth fueled by state aid. Ryanair was chosen due to its status as a leading emitter in the EU emissions trading system (ETS) and its history of benefiting from state aid to its airports. 

Andrew Murphy added: ‘The European elections produced a consensus that much more needs to be done to cut aviation emissions. Ending state aid is a start but we also need to end aviation’s tax holiday and encourage the uptake of zero emission aviation fuels.’ 

Aviation CO2 emissions grew 3.9% within Europe last year – while emissions from all other industries in the emissions trading system (ETS) fell 4.1%. CO2 from flying in Europe has soared 26.3% in the last five years – far outstripping any other EU emissions source.

While EU regulators have been slow to address the contradiction of taxpayers’ money being used to expand a highly-polluting form of transport, there are signs that some national authorities will step in. Earlier this month, France’s environment authority blocked a planned expansion of Marseille Provence Airport as it would not fit with national climate targets.

The authority said developers had underestimated the environmental impacts and overestimated the economic benefits of proposed facilities to handle up to 7.5 million extra passengers a year. It cited the 2050 net zero emissions target adopted by the French parliament in June.

It told developers to go back and ‘demonstrate the compatibility of the project with France’s commitment to achieve carbon neutrality by 2050’. This could include details of how carbon offsets could be used to address extra emissions, it said, despite major concerns over how effective offsetting programmes are.

The ruling could call into question plans elsewhere to construct new airports or expand existing ones – such as the proposed third runway at London’s Heathrow.

The Marseille ruling shows the importance of setting net zero emissions targets and ensuring they include international aviation,’ Andrew Murphy said. ‘A failure to do so is essentially cheating the climate. The environment authority is right to question the assumptions that airport expansion is based on.

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