Irish Ryanair airline has won against Riga International Airport in International Court of Arbitration. Now the airport will have to pay more than EUR 1.5 million. On top of that, the airport will lose the debt owed by Ryanair worth more than EUR 2 million. The European Commission continues its investigation into the possibility of Ryanair receiving illegal state support at Riga International Airport.
Ryanair requested Riga District Court to comply with the ruling of the International Court of Arbitration.
Ryanair’s exclusive contract with Riga airport provided beneficial conditions to this airline for years. Now it seems this discount policy left from Ainars Slesers’ time has come back to bite the airport. Based on this contract, Ryanair secured victory against the airport in the International Court of Arbitration. Now the airport will have to pay the airline more than EUR 1.5 million from its own pocket. The payment has been put on hold until the European Commission concludes its investigation, as reported by Nekā personīga.
As member of the government of then the Prime Minister of Latvia Ainars Repse in 2003, Ainars Slesers had named the airport’s development as his main priority. He continued his ‘work’ in this field as Transport Minister for years. He decided it would be possible to attract more passengers by using lower fees and discount policy for selected airlines. Ryanair became one of them.
The secret contract dated 23 July 2004 guaranteed Ryanair low maintenance costs: one EUR 4.5 per passenger. Instead of EUR 500 per Ryanair aircraft, the airport charged only EUR 1.
This exclusive contract remained in force in 2012, when the airport introduced a new security fee for passengers. Slesers was no longer Transport Minister. Ryanair refused to pay this fee and stated that this fee would breach the previously signed contract. The airline turned against the airport in the International Court of Arbitration in London and won. Now the airport has to compensate EUR 802,000 to Ryanair and cover litigation costs. This week, Ryanair requested that Riga District Court complies with the ruling of the International Court of Arbitration.
Nekā personīga has information that the total amount the airport has to pay to Ryanair is EUR 1,569,086. Nevertheless, there are more losses in store for the airport. The court of arbitration has also ruled that the airport had no right to charge Ryanair for aero-navigation services. This means that the airport will never get back the debt of more than EUR 2 million from Ryanair.
It was Slesers who extended the offer to Ryanair in regards to the unified fee. This is proven by materials presented to the court. Judging from information in e-mail correspondence, the management of the airport had opposed multiple points of the contract, but Slesers had nevertheless politically intervened. He had personally met with Ryanair representatives and promised them to pay most of the fees on their behalf as long as the airline’s passenger count increases.
After some time, the airport had turned to the European Commission with a complaint, asking the European authorities to investigate as to whether or not Ryanair was being provided with illegal state support throughout 2004-2014. Latvia’s side actively provides calculations on losses caused by Slesers’ and Ryanair’s exclusive contract.
This is not the first such complaint. There have been 21 cases against Ryanair investigated so far. The European Commission has yet to find illegalities in most of those cases. Nevertheless, six of them have concluded with considerable fines for Ryanair. The total volume of compensations is more than EUR 10 million. The largest compensation – EUR 6,400,000 – Ryanair will have to pay to France in regards to its contract with Nîmes airport.
«If the European Commission declares that this support was being provided illegally, Latvia would enforce the return of this illegal state support from the airline. If the EC decides everything is alright, everything stays the same. The state does not risk much by submitting this complaint,» – comments Transport Ministry’s deputy state secretary Dzineta Innusa.
The complaint to the European Commission has provided some time for the airport to take a deep breath and put of the payment of the considerable fine to Ryanair. Following a request from the airport’s representatives, Riga District Court has halted the litigation in regards to the execution of the ruling. It is clear, however, that in a year or two, once the European Commission concludes its investigation, the litigation will be restored.
Ryanair and Riga International Airport had signed a new contract last year. This one, unlike the previous one, does not provide any unique benefits to the airline. In spite of Ryanair’s threats to leave the airport, the previous year was the most successful for the airline in terms of carried passengers.
In 2010, Corruption Prevention and Combating Bureau had begun an investigation of the consequences of the contract signed between Ryanair and Slesers. The case was closed shortly after. Only after the protest of the State Audit was this investigation restored.
Ainars Slesers, who currently works with businesses tied to ex-prime minister Andris Skele, still believes the contract with Ryanair was beneficial to the state: «Since I am no longer a politician, I would rather not comment on political processes. In regards to your question, I can say that in the time when I was Transport Minister, the aviation policy realized by the ministry was supported by the Cabinet of Ministers! As a result, Riga airport became the largest airport in Baltic States, increasing its passenger turnover from 650,000 to 5,000,000! Lowering airline ticket prices allowed more people in Latvia to travel by air! It is thanks to this policy Latvia kept increasing the number of tourists every year. Those tourists brought Latvia’s economy hundreds of million euros every year! I am sorry to see stagnation in Latvia’s aviation industry!»