EU support for flag carriers risks catastrophe

The writer is chief executive officer of Ryanair

Covid-19 is a catastrophe for Europe, its citizens and its businesses. Few industries have been hit as hard as the airline sector. Carriers that are essential for Europe’s connectivity and are the lifeblood of business activity and tourism have seen demand collapse and their viability jeopardised.

With the right response, we can keep the catastrophe short-term. But by letting the richest European countries once again prop up their bloated flag carriers, with no or inadequate conditions attached, the EU risks damaging the health of European aviation and the single market long after the pandemic has gone. This would be a betrayal of the EU’s historic success in building a dynamic single market in air travel.

Of course, European companies and employees need short term support. And there are some good examples of schemes open to all airlines, such as the UK’s Covid Corporate Financing Facility. Germany has allowed all airlines to defer payment of air travel taxes.

Sadly, though, these are exceptions. Italy’s €500m Covid-19 fund is limited to airlines with a licence issued by Italy, in breach of EU rules. France will only defer taxes for French flag carriers. And Sweden has excluded all airlines based outside its territory from its €455m loan guarantee scheme.

An eye-watering €9bn has already been approved without conditions to prop up Air France, SAS, Condor and Finnair; over the weekend, the commission dropped its original demands and agreed a much-diluted package of commitments in exchange for a record €9bn in state aid to Lufthansa; more is on the way such as the pledged €2-4bn aid package from the Netherlands for KLM.

Ryanair has not received any aid granted to country-of-origin airlines. Nor are we asking for it. But we do want a level playing field. We are a truly European airline, not a national one. We have always responded to crises by tightening our belt and innovating. This is the way forward for European aviation.

The EU needs to rediscover the courage it had when it took on vested interests and created the single aviation regime: for the first time airlines could fly to and from anywhere in Europe. This was a regulatory revolution. We and other low-fare airlines turned it into commercial reality, creating new routes at affordable prices, changing the mindset of European travellers and transforming the economic fortunes of isolated regions and depressed cities across the continent.

Today’s bailouts are regressive, unfair and unlawful. They will set the clock back, threatening the future of European aviation at least as much as the pandemic itself. The commission must defend its independence, stand firm against powerful member states, uphold the law, and build a single, coherent framework that promotes competitiveness, connectivity and a cleaner environment.

State support must be allowed only on strict conditions: it must not be reserved for airlines originating in the country granting the aid, it must be accessible to all, time-limited, and targeted on relieving cash flow issues, like payroll support and suspension or deferral of aviation taxes, airport fees and air traffic control charges. The commission must tackle the biggest distortion of all: the bias in favour of national airlines from big countries with deep pockets.

Covid-19 is receding to the point where we can prepare to resume flying in time for summer. With the right health measures in place, this will kick-start the tourist industry. Now is not the time to unwind the single market and undo its enormous benefits. After all we have been through, it would be a tragedy if European air transport emerges from the pandemic less competitive than before, with inefficient monopolies effectively renationalised and free to increase fares, reduce choice and engage in predatory conduct that drives low-cost competitors from the market.

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