The multi-billion dollar programme of state aid for European airlines by France, Germany and Italy is a case of, “providing crack cocaine…to the usual addicts”, says Ryanair’s Michael O’Leary.
The Ryanair chief executive was speaking on live web interview yesterday when he was asked whether the UK government was an outlier in not providing the same level of state support for airlines as France, Germany and Italy.
He instead criticised the three largest EU economies for providing funds to support airlines when the majority of European countries were not. O’Leary drew a line between using payroll support schemes, which Ryanair has accessed, versus state supported loans or direct grants which it hasn’t.
“The outliers have been the French, the Germans and the Italians providing this crack cocaine of state aid to the usual addicts. I mean the Spanish, the Irish, most of the central Eastern Europeans are not providing these kinds of illegal state aid.
We stick our hands up. We have participated in payroll support schemes [in the UK]. That's not state aid because it's transparent and it's available to all operators. Equally, we're betting the French state starts giving back airport taxes but only to French airlines where they expect [Ryanair] needs to be at to keep paying French airport taxes.”
In addition to describing the state aid as “illegal” O’Leary said that it would be used to fund unfair pricing competition by carriers such as Air France-KLM and Alitalia, will enable them sell tickets at below cost level.
“The real challenge for well-run airlines, is when we do return to flying. We're now going to have both hands tied behind our back because we'd be competing now with the likes of Air France and Alitalia which are receiving enormous volumes of state aid.
[This state aid] - would allow them to engage in below cost selling for many years, if they don't use it to just buy up the competition anyway, they're going to try and put most of us out of the business over the next number of years.”
He described the nationalisation of Alitalia as being done on a whim and it was a case of “dumping” money on a company which “hasn't made a profit in 75 years”.
Ryanair has launched a number of legal challenges to these loans, including against Sweden with regard to the guaranteed loan for SAS, and another with regard to France’s refunding of airline taxes, and O’Leary said that there would be further moves by the LCC.
“We have about another six or seven state aid actions in the works against these airlines who are manifestly risk in receipt of what is illegal state aid. And that is also a breach of competition rules across Europe.”
The Ryanair chief executive did sense potential opportunities from COVID 19, saying that the drop in passenger traffic would increase competition among airports for airline business, with the same true for OEMs.
“There's going to be much more interesting airport growth incentives as airports have seen their traffic chopped for the next two or three years. And you know, Ryan air as an airline with 200 aircraft on order for the next four or five years, we'll be in a position to negotiate something very attractive.
We will need those kinds of growth incentives to [compete] against the state aid junkies of Air France and Alitalia.”