April the 17th, 2021 - Croatia Airlines has already been dealt a significant blow by Ryanair arriving in Zagreb, but will Croatia Airlines incentive payments, which it has been being paid since long before the coronavirus crisis also pose an issue for the Irish carrier? It seems it could indeed.
As Poslovni Dnevnik/Darko Bicak writes, although the EU Court of Justice recently approved the incentives given by Finland, Denmark and Sweden to their respective air operators, Ryanair said it would appeal the ruling because it runs counter to the principles of the European Union and the free market.
This largest European airline, which is based in Ireland and operates throughout Europe and carried 152 million passengers in pre-pandemic 2019, explained that the Finnish Government has approved a loan of 600 million euros to Finnair, and the overall incentives for this carrier since the beginning of the crisis have now reached a whopping 1.2 billion euros.
The Danish and Swedish governments have respectively given a loan guarantee to SAS of 132m euros, bringing the total aid paid out to the company to over 1.3 billion euros in the last year alone.
Although Ryanair doesn't specifically mention Croatia, the fact is that Croatia Airlines incentive payments stood at around 1 billion kuna over the last 1.5 years alone (around 132 million euros) through several models of assistance, and as the Irish carrier has ambitious plans in Croatia, especially in Zagreb, where one of its main competitors is CA. Owing to that, it is possible that soon there will be questions asked and issues raised.
According to Ryanair's calculations, EU countries have granted a total of 30 billion euros in incentives to their national operators during the coronavirus crisis - The Lufthansa Group received a total of 11 billion euros in this period, as did Air France and multiple others. There are also Norwegian with 800 million, LOT with 650 million and Condor and Air Europa with 600 million euros of state incentives each.
Ryanair pointed out that although the ongoing coronavirus crisis has damaged all airlines that contribute to the economies and connectivity of Finland, Denmark and Sweden, the governments of those countries have decided to support only their carriers. Ryanair asked EU judicial and regulatory bodies to review these incentives as early as back in mid-2020, and they're also announcing an appeal against yesterday’s European Court ruling.
"One of the EU's greatest achievements is the creation of a true single market for air transport. The European Commission's approvals for Finnish, Danish and Swedish state aid were contrary to the fundamental principles of EU law.
These judgments establish a process of liberalisation in air transport back 30 years, allowing Finland, Denmark and Sweden to give their national carriers an advantage over more efficient competitors, based solely on nationality. We'll now ask the Court of Justice to abolish these unfair subsidies in the interests of competition and consumers.
If Europe is to emerge from this crisis with a functioning single market, airlines must be allowed to compete on a level playing field. Undistorted competition can eradicate inefficiency and benefit consumers with low prices and choice,'' they stated from Ryanair, indicating that Croatia Airlines incentive payments could indeed pose a problem.
It's worth noting that this week Croatia Airlines also complained about the conditions and incentives that Ryanair received in its new base in Zagreb from the concessionaire of the Zagreb International Airport (MZLZ).
CA said that they, as the largest long-term user of Franjo Tudjman Airport's services with more than a 50 percent share of its annual passenger traffic, are asking the concessionaire at the MZLZ airport to harmonise the agreed conditions of airport services with better commercial conditions than those received by the new competitor in Zagreb, Ryanair.
For more on travel to Croatia, make sure to check out our dedicated section.
