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EU H.U.B.S. and Ryanair (Read 184 times)
Jan 29th, 2004 at 6:19am

ozzy72   Offline
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Pretty scary huh?
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Well the EU Technocrats have once again proved they suffer from H.U.B.S. (Head Up Bum Syndrome).
It was, until recently, a little used airfield in a down-at-heel Belgian backwater surrounded by abandoned coalfields. But Brussels' Charleroi airport is at the centre of a titanic battle which is threatening the future of Europe's boom in low-cost flights.
After a two-year investigation, the European commission will next week declare illegal a controversial deal struck by the Wallonian local government to persuade Ryanair to use Charleroi as a base for international flights.
According to Ryanair, the commission's verdict could compromise low-cost travel across the continent, forcing budget carriers to rip up dozens of deals with publicly owned airports.
Ryanair's chairman, Michael O'Leary, yesterday delivered a vitriolic attack on the commission, claiming it had reached a "communist" view which amounted to "a complete cock-up by bureaucrats in Brussels designed to overturn 20 years of deregulation".
He said it would lead to higher fares, the withdrawal of routes and the abandonment of many regional airports: "This is not just an attack on Ryanair - it's an attack on all low fares everywhere."
The commission's findings emerged at the worst possible moment for Ryanair. The airline, which is the biggest low-cost carrier in Europe, yesterday revealed a catastrophic set of financial results which showed the clearest signs yet that its meteoric growth was faltering.
Ryanair disclosed its first fall in profits since 1989 and admitted it had been forced to slash its fares by up to 30% this month to fill its aircraft. Its shares collapsed by 25%, wiping more than £1bn off its market value.
In a trading statement which sparked fears for the future of budget airlines, 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.
At the centre of the controversy over Ryanair's future is a deal under which the airline received some €1.5m (about £1m) to fly from Charleroi, plus help with training and staff accommodation, incentives to set up additional routes, free offices and cut-price landing charges.
The Wallonian 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 commission, claiming Charleroi's use of public funds amounted to unfair competition.
Europe's transport commissioner, Loyola de Palacio, is likely to order Ryanair to pay back all the aid and discounts it has received from Charleroi - which is likely to be €5m-€10m (£3.4m-£6.8m).
But Ryanair claims she will go further by drawing up new rules preventing discounted landing charges at any airport which is either state-owned or has an element of public subsidy.
This could jeopardise Ryanair's deals with 19 state-owned French regional airports, beloved by British second-home owners. Mr O'Leary said: "At the very least, it will mean higher prices for all the chateau-owners in the shires." It could also affect British airports such as Luton, Liverpool and Manchester which are supported by local authority cash. EasyJet's recent deal with Berlin's Schonefeld airport could also be vulnerable.
Rival low-cost carriers yesterday attempted to distance themselves from Ryanair's doom-laden prophesies, insisting they were less reliant on rock-bottom deals with out-of-town airports.
An EasyJet spokesman accused the Irish carrier of playing brinkmanship with the commission by making the outlook sound as bad as possible in the hope of getting any proposals watered down.
"There's an enormous amount of misinformation being spread," said EasyJet's spokesman Toby Nicol. "They're trying to make people think this will affect everybody."
The boss of another budget airline said he found it difficult to believe that Ms de Palacio's findings would be as damning as Ryanair suggested. "They want everybody to come together and rush around saying 'Brussels keep your nose out, we need our cheap flights'."
Experts said that airports might be able to escape the verdict by privatising themselves, cutting off any state aid. Alternatively, they could cut their landing charges across the board so all carriers have access to the same rates.
Ryanair yesterday pledged to contest any adverse ruling by the commission by taking its fight to the European court. Mr O'Leary said: "We're here to fight. As Churchill said, 'in defeat, defiance'."
 

...
There are two types of aeroplane, Spitfires and everything else that wishes it was a Spitfire!
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Reply #1 - Jan 29th, 2004 at 7:45am

C   Offline
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...and sometimes I wonder why I hate the EU so much! Lining there own pockets. No doubt Loyola de Palacio has put all of his/her airline tickets on expenses in the last few years (and wouldn't dream of flying Ryanair...)

Aaaaaaaaaaaaaaaaaahhhh!

Its the UK all the way for me Roll Eyes

Charlie
 
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