The European Commission (EC) was wrong when it approved a multi-million euro aid package to help Italy’s airlines deal with the impact of COVID-19 restrictions, the EU’s general court declared on Wednesday. According to the ruling, the EC had failed to establish “that the measure at issue was not contrary to EU law provisions other than those governing state aid.”
EU member states must have the Commission’s approval in order to grant financial support to companies. Many did so in 2020 just to keep their airlines in the air during the pandemic.
Back in October 2020, the EC raised no objections when the Italian authorities informed Brussels of their plans to make 130 million euros available to certain Italian-licensed airlines. To qualify for assistance, recipient airlines were required to pay their Italy-based employees and the employees of associated third-party companies at no less than the minimum rate set for the air transport sector by the country’s national collective agreement.
The case challenging that decision by the EC was brought before the general court by Ryanair, whose operations had been similarly impacted by the pandemic. Wednesday’s outcome was the low-cost Irish airline’s latest win, having successfully challenged previous EC decisions that had cleared the way for massive bailouts for Lufthansa and SAS.
With travel more or less brought travel to a standstill because of the 2020 pandemic restrictions, and the future of airlines in jeopardy, the EC, the EU’s anti-trust watchdog, opted to ease its policies, and went ahead to approve billions of euros in support for national flag-carriers.
Tackling what it termed “an unprecedented crisis”, the EC set up a fast-track system and approved some 3 trillion euros in state support across all sectors in the 27-member EU. Ryanair contends that 40 billion euros of this went to the EU’s airline sector alone.
