The aid granted to Ryanair is illegal under EU State aid rules

On 2 August 2019, the European Commission found that the aid granted to Ryanair through the marketing agreements concluded by the Association for the Promotion of Touristic and Economic Flows (APFTE) with the airline, aimed at supporting the airline’s air transport operations from the Montpellier airport, is illegal under EU State aid rules. The Commission opened the in-depth investigation in July 2018.

The APFTE is an association composed by representatives of various public regional and local entities, as well as private entities operating in the tourism sector, which is mainly financed by public entities through voluntary contributions. Since 2010, the APFTE has been signing agreements with Ryanair and its subsidiary Airport Marketing Services (AMS), purchasing marketing services intended to promote the Montpellier area on Ryanair‘s website. Other agreements involve obligations for the latter to provide air transport services to Montpellier from various European airports with specific flight frequencies. In exchange for the supply of marketing services, Ryanair and its subsidiary AMS received payments worth around 8.5 million euro.

The Commission’s investigation revealed that the agreements with Ryanair were financed through State resources and were attributable to the State. APFTE isfunded almost entirely by regional and local French public entities, which closely control the use of the association’s budget. Moreover, the Commission found that the payments in favour of Ryanair did not correspond to effective marketing needs of APFTE but only served as an incentive for the former to maintain its operations at Montpellier airport. Finally, APFTE either concluded the agreements directly with Ryanair and AMS and not with other airlines or organised public tenders that were biased towards Ryanair.

According to the Commission, the marketing agreements gave an undue and selective advantage to Ryanair over its competitors and, therefore, they amounted to illegal and incompatible aid under EU State aid rules,which France must now recover.

Sara Capruzzi