A European court has annulled the decision by the European Commission to approve a €130 million state bailout for Italian carriers during the Covid-19 pandemic.
Low-cost carrier Ryanair launched legal action against the commission for approving the Italian government’s rescue package in 2020, which at the time was limited to its former flag carrier Alitalia, which was closed in 2021 following years of financial woes and has since been replaced by ITA Airways.
The EU General Court ruled against the European Commission in a judgement published on Wednesday (24 May) after finding that regulators failed to explain why the funding didn’t distort competition.
The decision “failed to set out in a clear and transparent manner” the reasons for the EU’s approval decision, EU judges said.
The ruling represents another win for the Irish budget carrier, which recently won a similar battle to overturn the German government’s €6 billion aid package for Lufthansa as well as a €1 billion package for Sweden’s SAS.
Ryanair said the Italian government's “discriminatory” subsidy scheme was restricted to airlines holding an operating licence issued by Italy. The carrier, which claims to be Italy’s largest airline, appealed the European Commission’s approval of the €130 million subsidy in 2021.
In a statement, a Ryanair spokesperson described the ruling as a “triumph for fair competition and consumers across the EU”.
“During the Covid-19 pandemic over €40 billion in discriminatory state subsidies has been gifted to EU flag carriers. Unless halted by the EU Courts in line with today’s ruling, this state aid spree will distort the market for decades to come,” the spokesperson continued.
“Europe’s emergence from the Covid-19 crisis with a functioning single market depends on airlines being allowed to compete on a level playing field. Undistorted competition eliminates inefficiency and benefits consumers through low fares and choice. Unjustified subsidies, on the other hand, encourage ineffectiveness and will harm consumers for decades to come.”