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Leskova
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German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 7:15 pm

A court in Kiel has released a ruling that declares the subsidies given to Ryanair by the airport in Lübeck as illegal - the airport must now disclose all incentives and price-reductions that are given to FR, after which the court will decide whether or how much FR has to pay back.

Link (in German): http://www.handelsblatt.com/pshb?fn=TT&sfn=GO&id=1286407

I'm still somewhat undecided - I think airports and airlines should be permitted to negotiate contracts that they consider mutually beneficial; but if the airport is publicly owned then, obviously, some special provisions apply - as I would consider it highly inappropriate if, for example, LH employees living in Lübeck would suddenly be paying - through their taxes - for FR flying there...
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RJ100
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RE: German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 7:43 pm

Interesting. Unfortunately the report does not mention what kind of subsidies Lübeck airport has made an what amounts. Therefore we will not be able to see if it is legal (according to superior European law). If I remember correctly, the European Commission has made a leading case with the Charleroi decision and there explained what kind of subsidies are allowed and which are not.

I don't have a problem with subsidies in general (taking over start-up costs in weak regions etc.), especially if it is open to any airline. If Air Berlin would have got the same conditions in Lübeck then there is no discrimination.

Regards,
RJ100
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HT
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RE: German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 9:36 pm

Quoting RJ100 (Reply 1):
I don't have a problem with subsidies in general (taking over start-up costs in weak regions etc.), especially if it is open to any airline. If Air Berlin would have got the same conditions in Lübeck then there is no discrimination.

In the article there are the words "individuelle Regelungen mit erheblichen Preisnachlässen " which translates into individual discounts for FR. With this, AB indeed should have a good case against LBC & FR ...

I recall a discussion about EZY and FR eyeing HAJ about 2 years ago and airport-management was not inclined to give any special benefits (discounts) to EZY and FR; just the normal discounts for new routes for the first 3 years that are available to every airline were available, but this (in combination with some other factors) was rendered to be "unsuitable" by EZY and FR.
-HT
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DAL767400ER
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RE: German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 10:38 pm

Quoting HT (Reply 2):
I recall a discussion about EZY and FR eyeing HAJ about 2 years ago and airport-management was not inclined to give any special benefits (discounts) to EZY and FR; just the normal discounts for new routes for the first 3 years that are available to every airline were available, but this (in combination with some other factors) was rendered to be "unsuitable" by EZY and FR.

Wasn't the case there that HAJ was willing to give these benefits and Hapag-Lloyd throw a major tantrum?

Anyway, you wanna rule subsidies for Ryanair illegal, okay, if the court thinks so, it's their decision. Too bad the subsidies for airports like Schwerin or Erfurt can't be ruled illegal  Yeah sure .
 
HT
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RE: German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 10:48 pm

Quoting DAL767400ER (Reply 3):
Wasn't the case there that HAJ was willing to give these benefits

I do not recall that.

Quoting DAL767400ER (Reply 3):
Hapag-Lloyd throw a major tantrum?

That was one of the "other factors" I mentioned. HF, HLX and AB threatened to pull out of HAJ with HF/HLX also pulling off all maintenance & call-center activities, but only in case that EZY/FR would receive special discounts.
Carpe diem ! Life is too short to waste your time ! Keep in mind, that today is the first day of the rest of your life !
 
RJ100
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RE: German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 11:19 pm

Quoting HT (Reply 2):
In the article there are the words "individuelle Regelungen mit erheblichen Preisnachlässen " which translates into individual discounts for FR. With this, AB indeed should have a good case against LBC & FR ...

Exactly. This is the important question and it remains a bit unclear to me how to understand this sentence. Does it mean that only Ryanair gets these subsidies offered or is it generally open to others (Air Berlin etc.)? And then there is the big problem because only Ryanair (if I remember correctly) uses Lübeck. So of course they receive better conditions in Lübeck than AB in Hamburg but I guess AB was never interested in Lübeck anyway. Why should Lübeck airport care about the Hamburg airport fees? If they can offer cheaper fares then they should be allowed to (if this offer is open to everyone and if the decision is made according to German laws).

If the offer is only available to Ryanair then it is indeed a discrimination however.

Will be interesting to see FR's reaction. Will they move out of LBC? Maybe the talks about the BRE base have something to do with this?

Regards,
RJ100
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LTU932
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RE: German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 11:30 pm

Quoting RJ100 (Reply 5):
Will they move out of LBC? Maybe the talks about the BRE base have something to do with this?

Or maybe they'll finally decide to fly to Hamburg, like U2, AB, X3 and 4U do, through HAM, not LBC?

Quoting Leskova (Thread starter):
I would consider it highly inappropriate if, for example, LH employees living in Lübeck would suddenly be paying - through their taxes - for FR flying there...

Is LBC a publicly owned airport? And what would be the implications for FR if they see themselves forced to move to BRE, HAJ or HAM as a result of the investigation results (in case FR has to pay back all or part of those subsidies)?
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ryanairCRL
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RE: German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 11:46 pm

Quoting RJ100 (Reply 1):
Charleroi decision

I don't know about LBC, but in the case of CRL, the airport always said they would give the same benefit to any airline who would use CRL. And the complain came from BIAC, Brussels Intl Airport governing body.

my question is : how much has LH received from the German government ? AF from the French ? and so on. In the case of CRL, the Belgian government kept putting money into Sabena for years but it still went bankrupt. Alitalia keeps getting money from the Italian government.

At least putting money into FR seems a good investment, especially for the airport and the region.
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Humberside
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RE: German Court: Ryanair Subsidies Illegal

Tue Aug 08, 2006 11:50 pm

Quoting LTU932 (Reply 6):
Is LBC a publicly owned airport?

Got sold to Infratil - a New Zealand business that also owns PIK, MSE and some New Zealand Airports
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RJ100
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RE: German Court: Ryanair Subsidies Illegal

Wed Aug 09, 2006 12:02 am

That's pretty strange if LBC would be privately owned. Because then the airport can discriminate airlines (like it happens everywhere in the business world) and I would have no understanding for the court decision. "Non discrimnination" is a right that people have towards the government and governmental institutions. Discrimination in the business world happens everywhere. That's what we call free market.

@RyanairCRL: I agree with most of your points. As far as I remember in case Charleroi there were different kind of subsidies involved and Ryanair could even keep some of them.

Like I have said, nothing against subsidies in general but I think the European Commission has made a clear statement on what is allowed and what not.

Regards,
RJ100
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ryanairCRL
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RE: German Court: Ryanair Subsidies Illegal

Wed Aug 09, 2006 12:08 am

Quoting Humberside (Reply 8):
Got sold to Infratil



Quoting Humberside (Reply 8):
if LBC would be privately owned. Because then the airport can discriminate airlines

maybe it's for subsidies given BEFORE it became privately owned. anyone knows when LBC was sold to Infratil ?
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StarFlyer
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RE: German Court: Ryanair Subsidies Illegal

Wed Aug 09, 2006 12:12 am

Quoting RJ100 (Reply 9):
That's pretty strange if LBC would be privately owned. Because then the airport can discriminate airlines (like it happens everywhere in the business world) and I would have no understanding for the court decision. "Non discrimnination" is a right that people have towards the government and governmental institutions. Discrimination in the business world happens everywhere. That's what we call free market.

Obviously the airport receives public subsidies even though it is privately owned. I can't image that LBC can be operated profitably without subsidies. This is why it must not discriminate against other airlines.

Btw, I doubt any other airline would set up an operation at LBC anyway, the fares would need to be extremly low to attract passengers that would otherwise have departed from HAM.
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Leskova
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RE: German Court: Ryanair Subsidies Illegal

Wed Aug 09, 2006 2:57 am

Quoting RyanairCRL (Reply 7):
how much has LH received from the German government ?

Nothing for quite a while now - LH was privatized in the 90s; in fact, Germany got quite a huge amount out of the sale back then, using the proceeds to fill up some holes in the constantly deficitary state budget...

Quoting RyanairCRL (Reply 10):
maybe it's for subsidies given BEFORE it became privately owned. anyone knows when LBC was sold to Infratil ?

According to the press release on LBC's website, the council of the City of Lübeck was supposed to aprove the plan during its meeting on 28 April 2005 - so it's been roughly a year since; Infratil was then expected to announce it's acceptance of the contract by 30 September 2005.

Incidentally, there's nothing newer than that on the airport's website...

Nonetheless, at that time it was not supposed to be a full privatization, but "only" a 90% sale to Infratil.

In any case, I can certainly agree with the verdict if it's for sums paid before that time, and since FR started its ops at LBC in 2000 (1 June 2000), there is still quite a timeframe that falls under public ownership.
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HT
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RE: German Court: Ryanair Subsidies Illegal

Wed Aug 09, 2006 3:23 am

Quoting RJ100 (Reply 5):
Will they move out of LBC? Maybe the talks about the BRE base have something to do with this?

Isn't there still the problem with the rather short runway at LBC and somehow I recall that expansion plans were denied ?
So, a move of FR from LBC to BRE indeed might be an option.
-HT
Carpe diem ! Life is too short to waste your time ! Keep in mind, that today is the first day of the rest of your life !
 
vfw614
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RE: German Court: Ryanair Subsidies Illegal

Wed Aug 09, 2006 4:01 am

My understanding is that we are talking about discounts rather than straightforward subsidies. Ryanair obviously paid lower fees than other airlines for the same service. Technically, it apparently was tailored in a way that in theory everybody could apply but in reality the conditions only suited Ryanair (correct me if I am wrong).

A different story generally are "marketing subsidies". These are usually not paid by the airport and also not to Ryanair, but by third parties - like publicly funded tourist organizations - to a Isle Of Man-based Ryanair subsidy that more or less funds Ryanair's marketing (again, I could be wrong, so correct me).

Ryanair and the airports are much too smart to do straightforward subsidies. It is usually all well covered and hidden in complex structures.
 
N1120A
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RE: German Court: Ryanair Subsidies Illegal

Wed Aug 09, 2006 7:06 am

Here is my issue with the whole thing. There should be no such thing as publicly and privately owned major airports. Ports (including airports) are inherently governmental in nature and should not exist in these odd public private partnerships where profits are essentially subsidized by BOTH users and taxpayers. Further, if these kinds of arangements are allowed, the publicly owned airports should not be kept from competing on an even field with the private ones.
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