Ryanair Complains To EU Over Dutch 'Eco Tax' Exemption

by Ulrika Lomas, Tax-News.com, Brussels

03 March 2008

Ryanair, Europe’s largest budget airline, has filed a complaint with the European Commission against what it deems state aid of over EUR400 million per annum given by the Dutch authorities to Schiphol Airport and to airline KLM/Air France.

According to Ryanair, the state aid is being granted by the Dutch government in the form of an exemption of transfer passengers from the “eco-tax” on air travel.

In announcing the complaint, Ryanair’s Jim Callaghan stated:

“The Dutch government’s so-called 'eco-tax' on air travel is clearly a tax scam to fill a EUR350 million hole in Holland’s annual budget."

"Additionally, the Dutch government is exempting transfer passengers from this tax, which amounts to massive subsidy to Schiphol Airport and KLM/Air France. While Schiphol is effectively the only Dutch airport handling transfer passengers, KLM/Air France accounts for 95% of the transfer traffic at the airport."

"This tax exemption is almost exclusively benefiting Schiphol and the KLM/Air France monopoly. The Dutch Council of State in September 2007 confirmed that it should have been notified to the European Commission as State aid."

The EU's state rules seek to prevent member states from unilaterally granting tax breaks or subsidies to specific companies, industries or regions in the interest of maintaining a level competitive playing field across the single market.

Ryanair has launched several similar proceedings against European national carriers in recent years, including five in November 2007 alone, but the airline accuses the EC of ignoring its concerns, and tacitly accepting anti-competitive practices in the European aviation market.

Callaghan continued:

"At a time when the Commission’s biased application of the state aid rules is increasingly more apparent, we have little hope that the Commission will actually investigate this matter. Ryanair has lodged complaints regarding massive illegal subsidies to Air France, Lufthansa, Alitalia and other flag carriers, yet the Commission has failed to take any action whatsoever in these cases (some of which are almost 3 years old)."

"Instead the Commission is persecuting tiny regional airports like Alghero, Pau, Lübeck, Schönefeld, Aarhus and Tampere, for commercial deals with low fares airlines to grow their traffic and promote competition."

The Ryanair spokesman concluded:

"It is time the Commission got its priorities right and started promoting competition and consumer choice. We are calling on the Commission to stop ignoring blatant State aid to Air France, Alitalia, Olympic, Lufthansa, Volare and now KLM, and to finally take on national governments who continue to distort competition in Europe’s air transport market with billions of euro of illegal, back door State aid to their flag carrier airlines."

"The Commission should require the Dutch government to either scrap this tax or to apply it to all passengers, i.e., both point-to-point and transfer at Schiphol, and end this EUR400 million subsidy to KLM/Air France.”

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