The Case of Ryanair – EU State Aid Policy on the Wrong Runway
For the European Commission the case of Ryanair is a precedence decision about the application of state aid policy on agreements between regional airports and airlines. In a long-term contract with the regional airport of Charleroi (near Brussels), the Irish lowcost airline Ryanair received better conditions than other airlines. In return, it committed itself to transport a certain number of passengers to this airport for a period of fifteen years. This alleviates considerably the entry of the so far non-established Charleroi Airport into the market for international airports. The Commission interprets these better conditions as a discrimination, which distorts competition among airlines. Contrary to that, a thorough economic analysis shows that these conditions must be regarded as a normal form of price differentiation in effective competition. Any airlines would have received similar conditions, if they have offered similar advantages to the airport. Consequently, the decision of the Commission in the Ryanair case is wrong. Additionally, the principles of the Commission, which entail the danger of an all-encompassing regulation of prices for airport services, are misleading from an economic point of view, because they tend to impede effective competition in the aviation sector. The real state aid problem is, however, whether and under what conditions the public funding of airports leads to a distortion of competition among airports. This problem remains unsolved. This is also true for the problem of the slot-allocation on airports.
|Date of creation:||2004|
|Date of revision:|
|Publication status:||Forthcoming in ORDO – Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, Lucius & Lucius, Stuttgart, Bd. 55|
|Contact details of provider:|| Postal: Universitätsstraße 25, 35037 Marburg|
Web page: http://www.uni-marburg.de/fb02/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fritz Machlup, 1955. "Characteristics and Types of Price Discrimination," NBER Chapters, in: Business Concentration and Price Policy, pages 397-440 National Bureau of Economic Research, Inc.
- Barrett, Sean D, 2000. "Airport competition in the deregulated European aviation market," Journal of Air Transport Management, Elsevier, vol. 6(1), pages 13-27.
- Graham, Brian, 1997. "Regional airline services in the liberalized European Union single aviation market," Journal of Air Transport Management, Elsevier, vol. 3(4), pages 227-238.
- Gillen, David & Lall, Ashish, 2004. "Competitive advantage of low-cost carriers: some implications for airports," Journal of Air Transport Management, Elsevier, vol. 10(1), pages 41-50.
- Barrett, Sean D., 2004. "How do the demands for airport services differ between full-service carriers and low-cost carriers?," Journal of Air Transport Management, Elsevier, vol. 10(1), pages 33-39.
- Starkie, David, 2002. "Airport regulation and competition," Journal of Air Transport Management, Elsevier, vol. 8(1), pages 63-72.
- Wolfgang Kerber, 2003. "Wettbewerbsföderalismus als Integrationskonzept für die Europäische Union," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(1), pages 43-64, 02.
- Starkie, David, 1998. "Allocating airport slots: a role for the market?," Journal of Air Transport Management, Elsevier, vol. 4(2), pages 111-116.
- Friedrich Gröteke & Klaus Heine, 2004. "Regionale Steuerkompetenzen und europäische Beihilfenkontrolle am Beispiel des Baskenlandes," List Forum Chapter, in: List Forum Band 30, edition 1, volume 2, chapter 9, pages 137-152 List Gesellschaft e.V..
- Clayton, Edward, 1997. "A new approach to Airport User Charges," Journal of Air Transport Management, Elsevier, vol. 3(2), pages 95-98.
When requesting a correction, please mention this item's handle: RePEc:mar:volksw:200413. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bernd Hayo)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.