Subsidise that

3 February 2004 By Fiona Maharg-Bravo

Or at least that s how it appears, judging by the euphoric market reaction. But watch out the ruling is ambiguous and even Ryanair is confused about the ruling’s impact on its finances.

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The European Commission ruled that the Walloon regional government and Charleroi Airport in Belgium extended unfair state aid to Ryanair. The nofrills carrier will have to repay at least E4m of the benefits it received relating to subsidised ground handling fees. But the commission stated it would keep around 75% of the total subsidies it had received from the Belgian airport.

Going forward, the Commission prohibited reduced airport and ground handling charges and oneshot incentives for opening routes, but said it would allow the airport to help fund startup costs for new routes. The aid must be limited to five years and correspond to a maximum of 50% of the net startup costs. The Commission estimated the ruling would add about E3E4 to the Ryanair's tickets. Michael O'Leary, Ryanair's chief executive, estimated it would be at least twice that, but that the exact financial implications were unclear.

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