The largest European airline has finally broken its silence about Ryanair. After a discreet press release in March, a Lufthansa spokesman has taken it one step further this week end. Indeed, after Lübeck city, (a city about 60 kilometers from Hamburg in Germany) decided to renew a contract with Ryanair, Lufthansa has denounced it as an unfair deal. Hamburg Lübeck is a secondary airport with a dynamic passenger increase. However its traffic figures have remained limited due to Hamburg-Fuhlsbüttel Airport‘s leadership.
Even if no figures have yet been published, a recent Irish Times article clearly mentions that the renewed agreement between Lübeck Airport and Ryanair involves subsidies. Lufthansa’s spokesmanad has affirmed 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 and “if all the airport subsidies and support paid to Ryanair were taken away, its economic situation would be very different”. Interestingly enough, Lübeck Airport had already made the headlines when Air Berlin filed a complaint against Ryanair back in 2008 in a similar case.
Lübeck Airport seems to be one case among hundreds. As The Irish Times outlines, The Cour des Comptes’ audits (a public body that inspects the finances of public authorities in France) revealed that Ryanair received about €35M from French public authorities in 2008.
Air France KLM has scrutinized the 25 audits, allowing the French carrier to recently file a complaint with the EU Competition Authority. According to Air France, Ryanair is not only earning illegal public aids in France, but all over Europe. The French national carrier affirms that Ryanair would have received €660M all over Europe in 2008. This means that Ryanair would have posted about €150M of losses in 2008. As The Irish Times underlines, the amount of €660M worth in subsidies has not yet been confirmed by an independent body. However, it seems to be a reliable source as so many other similar cases have been reported across Europe.
This is not a war between low cost and regular airlines, but a crusade against unfair competition:
Complaints against Ryanair are not only lead by regular airlines. Others airlines, which include low costs are complaining. This simple fact proves that this is not simply a fight between regular and budget airlines. The real issue at hand is a wide and open European aviation market where competitors have a fair chance, one where rules are clear and respected. Complaints over Ryanair’s subsidies is not about two “loser” and “over-subsidized” national carriers that want to eliminate a most ambitious, talented and honest airline, one that discovered a new way of doing business. Indeed, for the last decade, Michael O’Leary has tried to make us all believe this picture in an attempt to hide Ryanair’s real business model. What regular airlines are up in arms against is therefore unfair competition. The best example is the fact that other low cost airlines have also complained about Ryanair’s subsidies. Vueling, Air Berlin are two of Ryanair’s competitors, but they are also two airlines based on the low cost model. However, there models respect European Law. When Air Berlin’s CEO for Portugal and Spain said that Ryanair’s opaque subsidies create artificial traffic and the Vueling union calls upon the Catalan government to refuse to subsidize Ryanair, they are simply pointing out the fact that Ryanair’s subsidies are unfair.
Here’s a little bio from the author:
Roman, also known as Air Observer discusses and analyses the low cost business model on his blog. He is also a contributor for Airline Post, providing news on lowcost airlines, as well as insightful information and studies about flying on a budget.
Links to his blog and twitter account
http://airobserver.wordpress.com/
http://twitter.com/AirObserver
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