Economy Transport

Air travel: Ryanair flies high on subsidies

20 May 2010
The Irish Times Dublin

Subsidies can do funny things to people. Ryanair chairman Michael O'Leary at press conference in Frankfurt, Germany.

Subsidies can do funny things to people. Ryanair chairman Michael O'Leary at press conference in Frankfurt, Germany.

Ryanair enjoys huge subsidies at many of Europe’s 200 or more regional airports. A number of competitors, Lufthansa and Air France among them, suggest that these subsidies low-cost Irish airline receive are not only questionable, but that it couldn’t survive without them.

To the fury of Lufthansa, and the delight of Ryanair, the citizens of the north German city of Lübeck last weekend voted almost two to one in favour of continuing taxpayer subsidies to keep their airport (called Hamburg by Ryanair), open for at least another two years. The German airline had exhorted cash-strapped Lübeckians to put creches, classrooms and hospital beds before wealthy Irish carriers. As far as Lufthansa is concerned, the airport is just one of 200 regional EU airfields which Ryanair relies upon to funnel hundreds of millions of what Lufthansa calls “questionable subsidies” direct to its balance sheet.

Lufthansa says that if Ryanair was stripped of free or subsidised airport services in addition to cash, in the form of “marketing support”, it would lose money. “If all the airport subsidies and support paid to Ryanair were taken away, its economic situation would be very different,” says the Thomas Kropp, a spokesman for the German airline.

French newspapers recently cited figures ranging between €35 million for France alone, and €660 million across the EU, as the value to Ryanair of the subsidies it receives. Until EU investigations into several alleged illegal subsidies are concluded, as well as a case being taken in the European Court by Air France/KLM, only one figure can be relied upon. That is the €35 million of Ryanair subsidies uncovered by audits conducted on several French airports controlled by local authorities. The audits, carried out by France’s cour des comptes (its version of our Comptroller and Auditor General), are representative, say Lufthansa and Air France/KLM, of what Ryanair enjoys at many of Europe’s 200 or so regional airports.

In the audits it conducted in 2008, mostly on 2006 accounts, the cour highlighted €35 million of subsidies paid to Ryanair which it said were very poor value for the French taxpayer. Airports funded by municipal and regional taxpayers provided so many subsidies and free services that the net cash flow was usually all in Ryanair’s direction. Read full article in the Irish Times...