What was this case about?
At the centre of the controversy was a deal under which Ryanair received subsidies to use Charleroi, an airport 25 miles south of Brussels, plus help with training and staff accommodation, incentives to set up additional routes, free offices and cut-price landing charges. The Walloonian government justified the package as a way of attracting visitors and investment to an area of high unemployment and deprivation. But Brussels' main city airport, Zaventem, complained to the European commission, claiming Charleroi's use of public funds amounted to unfair competition.
What did the European commission decide?
Ryanair was ordered to pay back some, but not all, of the subsidies it received. The commission said discounts on landing fees and ground-handling services at the publicly owned Charleroi airport were illegal under EU antitrust rules and must be repaid. However, subsidies to help marketing and opening an office at the airport were permissible if limited in time and justified by a business plan that foresaw profit within three years.
How much will Ryanair have to pay?
About €4.3m (£3m), which means that Ryanair has escaped relatively lightly. Since it struck its deal with Charleroi in 2001, Ryanair has received at least €12m in all manner of subsidies at the airport.
How badly will the ruling hurt Ryanair?
Michael O'Leary, Ryanair's chief executive, said the ruling undermined his competitive edge and will force up fares. Before the verdict, the outspoken Ryanair boss had warned that the decision could be devastating for budget carriers, forcing them to rip up dozens of deals with publicly owned airports. Anticipating an adverse ruling, Mr O'Leary said the decision was a "a complete cock-up by bureaucrats in Brussels designed to overturn 20 years of deregulation".
What did other discount carriers say?
They accused Ryanair of hyping up the threat to low-cost airlines in the hope of getting the proposals watered down. Ryanair's rivals, such as EasyJet, are not as dependent as the Irish company on favourable deals struck with airports. EasyJet has only one such arrangement - in Berlin.
How extensive are Ryanair's deals with airports?
Ryanair has deals with 19 state-owned French regional airports, beloved by British second-home owners, so the ruling will mean higher prices "for all the chateau-owners in the shires", as Mr O'Leary put it. As far as Ryanair is concerned, 20% of its traffic goes through publicly owned airports. If these deals unravel, there will be an increase in airport costs, which form about one-fifth of total costs.
What else ails Ryanair?
Ryanair last month disclosed its first fall in profits since 1989 and admitted it had been forced to slash its fares by up to 30% to fill its aircraft. Ryanair admitted it was suffering from price cuts by traditional carriers such as British Airways and Air France. The airline is considering a pay freeze for its 2,000 employees and is delaying the delivery of five new aircraft.
Did Ryanair expand too fast?
Yes. Ryanair developed faster than any other airline in Europe, becoming its biggest low-cost carrier. It aggressively marketed low fares to increase the numbers of passengers, and numbers quadrupled from 4 million in 1998 to 16 million in 2003. It kept costs low by using only one type of aircraft, flying to outlying airports where landing fees are low and taking 90% of bookings on the internet. But BA and Air France have hit back with their own discounts and demand has not kept up with Ryanair's breakneck expansion.
Is Ryanair still growing?
Mr O'Leary has told everyone who wanted to hear that he wants Ryanair to be Europe's biggest airline. Ryanair has orders with Boeing to at least double its fleet to 120 aircraft by 2009. Yet the airline is halving its proposed capacity growth this year to 22%.
