Ryanair is to suspend its London-Strasbourg service in a row over regional subsidies that it receives to fly to secondary airports on the Continent.
The airline said it had no choice but to halt the Strasbourg service, giving four weeks' notice to passengers, after it failed to win a stay of a lower court ruling that the aid Ryanair received was illegal. Ryanair said that, from September 24th, it would shift flights to Baden Airport in Germany, 40 km from Strasbourg.
It is the first time Ryanair has halted a service after being accused of securing unfair contracts to fly to smaller airports.
The European Commission is investigating such deals, in particular Ryanair's contract to use Charleroi Airport in Belgium. A ruling is expected in the autumn.
Analysts said the Strasbourg route represented just 1 per cent of Ryanair's network and was unlikely to affect the company.
The airline said it would recommence flights when the court bowed to its demands. "If and when we receive a stay on the judgment (or win the appeal), then Ryanair will make arrangements to recommence flights on the London-Strasbourg route," the airline said in a statement.
It attacked French flag carrier Air France for starting a court challenge to the Strasbourg deal.
The Bas-Rhin Chamber of Commerce and Industry, which manages the airport in eastern France, promised in June 2002 to give the carrier €1.4 million to run two daily round-trip flights between London's Stansted and the Alsace capital.
Air France subsidiary Brit Air was forced to cancel its London-Strasbourg service as a result and started an appeal, saying the aid distorted competition.
The decision to suspend the route was not a surprise, according to commentators.
"It's certainly been well flagged by the company," said Mr John Mattimoe, an analyst at Merrion Capital.
Meanwhile, Air France posted a sharp fall in net profit in its fiscal first-quarter to the end of June, hit by domestic strikes, SARS and the war in Iraq. It posted net profit of €4 million, versus a proforma profit of €146 million in the same period last year, and an operating loss before aircraft sales of €13 million.
