EU ruling may force airlines to reimburse Government on tax

RYANAIR, AER Lingus and Aer Arann may be forced to reimburse the Government for an economic advantage they gained over rivals when they were not charged a higher air travel tax for flights from Irish airports, the European Commission has said.

EU regulators said the lower tariffs favoured flights within Ireland and to airports in parts of the UK. It did not, however, specify how much would need to be repaid by the airlines.

The air travel tax for flights departing from Irish airports was introduced in 2009. The tariff was set at €2 for destinations inside a radius of 300km from Dublin and at €10 for all others.

In its ruling published yesterday the commission said the lower rate favoured flights within Ireland and to nearby parts of the UK, giving the companies concerned an economic advantage over their competitors.

A Government spokesman said it would consider the impact of the ruling.

“It should be noted that there is no issue with the current flat-rate travel tax of €3 introduced in March 2011 and this decision will have no impact on the tax as it currently stands,” he said.

In a separate ruling, the commission found Ryanair’s financial arrangement with Finland’s Tampere airport did not constitute an illegal form of state subsidy.

The airport, operated by state-owned Finavia, refurbished a former cargo hangar in 2002 and signed an exclusive agreement with the Irish airline in 2003, which led to a complaint from a competitor four years later.

The commission said its investigation showed the arrangements made were not in breach of EU rules as Ryanair was not given an unfair advantage and Finavia, as well as its subsidiary Airpro, had benefited.

– Additional reporting by agencies