Ryanair ruling - Low-fare travel faces turbulence

If, as expected, the decision today from the European Commission in relation to subsidies goes against Ryanair, it will have far-reaching effects on the industry generally, but especially on low-fare travel.

The company has anticipated the inevitable already by stating in strong terms what it intends to do by way of retaliation, including action against competitors that fly into state-owned airports.

It is anticipated that the commission will rule the discount received by Ryanair on landing charges at Charleroi airport in Belgium were illegal, which will, prompt the aggressive reaction from the Irish airline.

Basically, the European Commission says that governments are prevented from using taxpayers’ money to support airlines, a point which the same taxpayers would consider moot, given that they are beneficiaries of such deals through lower fares.

It is incontrovertible that Ryanair heralded the era of budget, no-frills passenger air transport and thereby made affordable travel within the reach of most people.

Their policy was soon imitated by other airlines, a development welcomed by air travellers who, up to then, were at the mercy of the bigger carriers.

Passengers were not the only beneficiaries of deals with airlines; so too were regions which could attract an airline to establish a service there. Charleroi is just a case in point and not the only airport in Europe which would not survive too close a scrutiny by the European Commission.

The arrival of such an airline to a region can transform the local economy. Given the dramatic positive effects, there should be a balance between what is good for a region and the clinical enforcement of EU policy. Without any doubt, Irish tourism has developed and grown in recent years because of the deregulation of air routes and the introduction of low-fare air travel which has expanded access into the regions.

There has been a prodigious growth in travel within the EU which can largely be ascribed to the fact that people can afford to travel by air, the opening up of new routes and the convenience of booking on the internet.

Indeed, that expansion coincides with EU policy of opening up borders between member states, something that should be further encouraged rather than discouraged by regressive bureaucratic decisions.

The implications of the Ryanair case may prompt a reappraisal of regulations governing low-cost airlines but their impact has been such that to threaten their survival would be ludicrously short-sighted.

Ryanair’s deal with Charleroi is for a 50% discount on standard landing charges over 15 years, while one of its competitors, EasyJet, has a 25-year contract with Berlin Schoenefeld airport.

An adjustment of those arrangements and others would be logical, rather than a sweeping, inflexible finding that would reduce the concept of low-fare flying to a nonsense.

It is ironic that the law which Ryanair may be deemed to have breached is one aimed at protecting new airlines, given that last week saw the multi-million euro collapse here of Jetmagic.