- The Washington Times - Tuesday, February 3, 2004

BRUSSELS (AP) — The European Union’s head office yesterday told Ryanair to repay about $5 million to Belgian authorities, about 30 percent of the subsidies that the Irish discount airline received for using the state-owned Charleroi airport south of Brussels.

By disallowing some subsidies and permitting others, the European Commission said it struck a balance between the need to respect antitrust rules and the need to encourage competition among low-cost carriers that are a lifeline for small regional airports.

Officials estimated that Ryanair will have to repay about $5 million of the $19 million it has received from the regional government in Wallonia, Belgium’s Francophone southern half, which owns 95 percent of Charleroi airport.

The subsidies for Ryanair took in the form of cuts in landing and ground-handling fees and injections of funds for hiring staff, marketing new routes, office space and hotel accommodation.

Michael O’Leary, Ryanair’s chief executive officer, said he would appeal the ruling.

“The European Commission should not be interfering in the operation of a free market,” he said.

The only beneficiary of the EU decision, he added, was Brussels’ main airport in the suburb of Zaventem, which lodged a complaint against Ryanair last year.

EU officials estimated that Ryanair will have to raise fares by between $7.40 and $9.95. Mr. O’Leary said it would be double that.

The financial breaks for Ryanair were contained in a 15-year contract with the Charleroi airport, a duration that European Transport Commissioner Loyola de Palacio termed excessive. She said the contract must be brought back to five years and be made public.

The European Low Fares Airline Association welcomed the Ryanair ruling saying it “recognizes the need for low-fares operations at underutilized airports.”

However, it complained that the European Union’s “lack of consultation with the industry on this issue has resulted in much uncertainty as to the impact across Europe.”

With Ryanair in a lead role, low-cost airlines have boomed in Europe in recent years, rescuing small regional airports and promoting tourism in previously neglected areas.

The Ryanair deal has been good for the Charleroi airport and the traveling public that has been attracted by Ryanair deals such flights to London or Milan, Italy, for less than $1.20 .

The Charleroi airport handled 1.8 million passengers — the vast majority of them Ryanair clients — in 2003, seven times more than in 2000.

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