EU rules against Ryanair in state aid fight

Low-cost airline Ryanair was ordered yesterday to repay millions of euros in Belgian subsidies, a decision its combative CEO slammed as a disaster for budget travel and traffic-starved regional airports.

The European Commission decided some of the hand-outs paid to use Charleroi airport broke EU law and Ryanair will have to return about four million of €15 million in state aid.

Transport Commissioner Loyola de Palacio said the airline had to respect the rules of the game but insisted the decision would favour the low-cost industry.

Stock markets were more positive than Ryanair chief Michael O'Leary, at one point sending the firm's shares up more than 10 per cent. One trader said Brussels had only given the company a "slap on the wrist".

Mr O'Leary said he would appeal to the European courts, and the Walloon region which owns Charleroi said it could follow suit. But rivals EasyJet and Virgin Express welcomed the ruling as creating a more level airfield.

"Am I the good guy? Absolutely. Are they the bad guys? They're the evil empire if this is the kind of decision they come up with," Mr O'Leary told a news conference.

"This decision confirms that the European Commission intends to increase costs and air fares for consumers," he declared, sitting in front of a day-glo yellow backdrop emblazoned with "EU bans low fares!" in black letters to hammer home his point.

Ryanair and other low-cost carriers have changed the face of European travel flying to obscure airports at rock bottom fares. Charleroi airport, in a declining steel town south of Brussels with 20 per cent unemployment, gets a million passengers a year.

Mr O'Leary said the EU ruling would stymie this trend. "The result of this decision is that the European Commission will prevent publicly owned airports competing with privately owned airports," he said.

The Commission mounted a fierce defence. De Palacio said the Commission was allowing the carrier to keep up to 75 per cent of the money it got from Charleroi. Mr O'Leary described the amount of the repayment in a Reuters interview as "immaterial".

De Palacio estimated the decision could force Ryanair to increase ticket prices by six to eight euros for a return fare, but Mr O'Leary said the rise would be double that amount.