BRUSSELS, Belgium (Reuters) --The future of no-frills flying is at stake, said Irish carrier Ryanair as it led furious lobbying of European regulators to avert or delay an order to repay millions of euros in subsidies.
The months-long battle comes to a head on Tuesday when the European Commission will rule against some of the subsidies Belgian regional airport Charleroi gave to Ryanair.
For outspoken Ryanair boss Michael O'Leary, the dead hand of Brussels bureaucracy is threatening a revolution in air travel, which brought rock-bottom ticket prices to millions.
From the perspective of European Transport Commissioner Loyola de Palacio, Ryanair and other low-cost operators must respect the rules of the free market, meaning that there must be no unfair aids by state-owned airports at taxpayers' expense.
In the runup, Ryanair, rival airlines, airport groups and politicians all put on the pressure.
"I am concerned that tomorrow's decision could have wide ranging implications which go far beyond the specific case of the use of Charleroi airport by Ryanair," said the Irish head of the European Parliament, Pat Cox, an unprecedented intervention from one of the EU's most senior figures over a specific firm.
Ryanair urged the Commission to delay its ruling for a month and threatened to unleash a flood of litigation against rival carriers if the EU executive rules against it.
"This decision will result in higher fares for consumers by forcing the low fares airlines generally to pay higher costs, and these costs will be reflected in higher fares for the travelling public," the group said in a statement.
But unless the Commission changes its mind at the last minute, EU officials expect it to rule Ryanair must repay around a quarter of the subsidies it received via cut price landing fees, ground handling charges and marketing aids.
The Commission estimates this amount to be a maximum seven million euros, adding three or four euros to the price of a ticket, an EU source told reporters in Dublin. It also stressed that Ryanair will keep some 75 percent of the subsidies it got.
The EU source also saw little chance of a delay in the decision.
Worrying precedent?
But Ryanair has warned the case will create a precedent that will force it and other cut-price carriers to raise prices and stop once-deserted airports in obscure European towns striking deals to attract budget airlines.
Charleroi, a declining post-industrial town around 40 km to the south of Brussels where unemployment of 20 percent is double the national average, has certainly got a boost from Ryanair.
But O'Leary could hasten the impact on regional airports if he makes good on a threat to launch complaints and state aid cases against every other airline flying into every publicly-owned airport that offers concessions and discounts.
The Commission has insisted it favours the low-cost industry and indeed helped to create it by promoting deregulation of the EU market and fighting state aid for bloated national carriers.
But its action is aimed at ensuring that everyone plays by the same rules, which ban subsidies unless they are on a purely commercial basis, as a private operator might award them.
The spokesman for EU parliament chief Cox stressed that the head of the chamber was expressing Europe-wide worries rather than speaking on a specific Irish issue.
Cox said he hoped the Commission had studied the possible impact of its decision on jobs, consumers and regional development. An EU body lobbying for regions echoed his remarks.
"The public will be astonished, when they see how many regions, in particular the periphery and in rural areas of Europe, are profiting from the concept of low-cost carriers by linking underused regional airports and providing inexpensive travel," the Assembly of European Regions said in a statement.
It listed 68 regions which it said had benefited from Ryanair launching a service to a local airport.
But Ryanair's rivals had a different point of view.
"From our perspective, we hope it (the decision) will be a justification for our complaints and that all illegal subsidies will be stopped," Virgin Express Managing Director Neil Burrows told Reuters in a phone interview.
Copyright 2004 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
