The European Commission (EC) has ordered France to recover €8.5 million ($9.4 million) of illegal aid from Ryanair after it found that marketing agreements between the Irish LCC and local tourist authorities at Montpellier Airport were illegal under European Union (EU) state aid rules. 

Commissioner Margrethe Vestager, who is in charge of competition policy, said: “Our investigation showed that certain payments by the French local authorities in favor of Ryanair to promote Montpellier airport gave Ryanair an unfair and selective advantage over its competitors, and caused harm to other regions and other regional airports. This is illegal under EU state aid rules. France must now recover the illegal state aid.”

Following a complaint by a competitor, in July 2018 the Commission opened an in-depth investigation into marketing agreements between the Association for the Promotion of Touristic and Economic Flows (Association de Promotion des Flux Touristiques et Economiques, “APFTE”) and Ryanair and its subsidiary AMS, it said. 

The investigation centered on marketing agreements between APFTE, Ryanair and AMS, under which the airline and its subsidiary received payments worth around €8.5 million in exchange for promoting Montpellier and the surrounding area as a tourist destination on Ryanair’s website.

The investigation revealed the agreements were financed through state resources and that APFTE is unrelated to the airport operator and funded almost entirely by regional and local French public entities, which control its budget.

It also found the payments to Ryanair did not correspond to APFTE’s marketing needs, but only served as an incentive for Ryanair to maintain operations at Montpellier Airport. It also found that APFTE either concluded the agreements directly with Ryanair and AMS, and not with other airlines or organized public tenders that were biased toward Ryanair.

“On this basis, the Commission found that the marketing agreements gave an undue and selective advantage to Ryanair over its competitors. The Commission therefore concluded that the agreements amounted to illegal and incompatible aid under EU state aid rules and that the advantage must be recovered,” the Commission said. “France must now recover the illegal state aid amounting to around €8.5 million from Ryanair.”

Helen Massy-Beresford, helen.massy-beresford@aviationweek.co.uk