Byrne likely to defend airline over deal

IRELAND’S Commissioner David Byrne will defend Ryanair’s deal with regional airports, including Charleroi, when it comes before the European Commission this morning.

The former Attorney General is expected to point up a number of legal weaknesses in the case being presented by Transport Commissioner Loyola de Palacio.

But an official admitted that Mr Byrne will find himself in a minority with the support possibly of just the British Commissioners.

"There will be a substantial majority that will support Ms de Palacio and she is expected to get it through without difficulty," he said.

Commissioner Byrne's cabinet believes however that the arguments being put forward in the document are not adequately justified on legal or economic grounds.

For instance the document argues that a rational investor would not have handed over substantial subsidies worth over €30m to Ryanair were the airport privately owned.

This ignores the fact that Charleroi, despite providing services to Ryanair at up to 90% discount, is making money and is more profitable than before they did the deal with Ryanair.

It also does not take into account the fact that the privately-owned Prestwick airport in Britain concluded a similar deal with Ryanair almost ten years ago.

One recommendation to be made by Ms de Palacio today is expected to cause a major row between member states when the whole issue comes up at the next Transport Ministers' meeting in March, chaired by Minister Seamus Brennan.

This concerns giving money for marketing, offices and new routes, which the Commission finds is not state aid, but has said it must be confined to 50% of the total cost and be agreed for just three years.

"This sets out new guidelines without consulting the member states or the interested parties. It will not be well accepted", said an official.

The exact sum to be repaid by Ryanair will have to be agreed between the airport company and the Walloon regional government. It will have to be paid by Ryanair even if the company makes an appeal to the courts as they have said they will do.

Any follow on case involving airports with similar deals with Ryanair or other airlines will have to be dealt with separately and this could take some time.