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September 27, 2023

European Court Annuls Commission’s Aid for Italian Airlines in COVID Context

European Court Annuls Commission’s Aid for Italian Airlines in COVID Context

The General Court of the European Union’s Court of Justice has annulled a Commission’s decision to approve an aid measure regarding subsidies paid by Italy to Italian airlines in the context of the Coronavirus pandemic.

Ryanair has been backed by Europe’s second-top court against Italian state aid that was approved by the EU for airlines affected by COVID-19.

Based on the decision, the EU Commission didn’t provide a statement citing backing its decisions and presenting arguments behind the measure in order to protect its stance that the aid was not against the EU law provisions, SchengenVisaInfo.com reports.

Earlier this month, the court also ruled in Ryanair’s favour in two other cases related to pandemic state aid measures for competitors SAS and Lufthansa.

Back in 2020, authorities in Italy notified the Commission it needed a total of €130 million in state aid for specific airlines that hold an Italian license.

Such a measure was aimed at helping Italy to recover from the damages caused by eligible airlines as a result of travel restrictions as well as other containment measures introduced in an effort to contain the further spread of COVID-19 and its new variants.

“According to settled case law, a decision not to initiate the formal investigation procedure in respect of notified aid must set out the reasons for which the European Commission takes the view that it is not faced with serious difficulties in assessing the compatibility of the aid at issue with the internal market,” the statement reads.

It notes that despite the fact that a succinct statement of reasons is sufficient for such a purpose, emphasising that it must show the reasons for which the European Commission considered it was not subject to such difficulties.

Among the requirements for airlines to benefit from the aid was to pay their Italy-based employees and employees of third-party companies involved in their activities.

Following the significant difficulties with which it was dealing, the case was brought by Ryanair, accounting for the second judicial win in a month for the low-cost Irish carrier.
It was unclear what impact the ruling might have and if the airlines would have to pay the money back. The Commission stressed that it would carefully study the judgment and reflect on possible next steps.

“The General Court finds that that has not been done here,” the statement of the Court of Justice of the European Union notes.

Through a statement, Ryanair welcomed the decision of the EU General Court on discriminatory State aid favouring Italian airlines over European Union airlines. A spokesperson from Ryanair considered it one of the EU’s most significant achievements in the creation of a single market for air transport.

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