Ryanair must pay £3.5m to EC

EUROPE'S battalions of low-fare airlines were given the ammunition for a fair fight with industry leader Ryanair today after the European Commission ordered a clampdown on the 'private and secret' agreements signed by the Irish carrier with Continental airports.

The Commission today handed Ryanair fines and orders for compensation totalling up to e5m (£3.5m) for 'improperly receiving' direct state aid and subsidised landing fees at Belgium's publicly owned Charleroi Airport.

However, European Union Transport Commissioner Loyola de Palacio also ordered new rules governing the extent to which publicly owned airports can make one-off payments to entice airlines, offer discounted landing fees and contribute to flight-marketing costs.

Ruling that Charleroi's offer of discounts went further than European competition rules allow, de Palacio said: 'All players in the same arena must be able to play by the same ground rules. There will be a level playing field for all in order to ensure fair competition.'

She added: 'In the case of Charleroi, the Commission concluded that no private operator in the same circumstances as Charleroi would have granted the same advantages. Since the private market-investor principle had not been adhered to in this case, the advantages granted to Ryanair constitute state aid which could distort competition in favour of Ryanair.'

That decision is likely to mean operating costs for Ryanair soaring with EU officials saying it was likely to put up to e8, or more than 20%, on Ryanair fares, which currently cost an average of about e35. De Palacio revealed the extent to which Ryanair had secured a golden deal with Charleroi that allows the airline to offer such cheap tickets across its network starting, according to its website, at £1.99 a flight.

She said Ryanair was paying e1 per passenger in landing fees against the airport's normal tariff of e10. She added that the cost of handling each passenger at Charleroi was between e3 and e4.

In Brussels to hear the judgment, Ryanair chief Michael O'Leary said: 'The ramifications for the industry are huge. It confirms the EU wants customers to pay higher fares and wants to stop publicly-owned airports from competing with privately-owned ones.

'This affects not just us but also easyJet flying to Berlin Schoenefeld and FlyBE flying to regional French airports. Will our customers wear us putting up our prices? No, they won't and nor should they.

'It would double loads of our fares. We will withdraw services rather than raise prices and we are immediately looking at the future of some services at Charleroi. We and a number of other airlines will be appealing this.'

Ryanair shares, which had fallen 40% in the past month, rallied 37 cents to e5.03. EasyJet rose 16 1/4p to 331p.