EU court rules in favour of Ryanair on travel tax inquiry

The European Commission will relaunch an investigation into claims that the Republic's travel tax was illegal State aid in a ruling that could further complicate a €19 million court battle between the Government and three airlines.

Minister for Finance Michael Noonan axed the €3 per passenger levy last year in a move that prompted a number of carriers, including Aer Lingus and Ryanair, step up flights to and from the Republic.

However, the airlines are gearing up for a court battle with the Government which is attempting to recoup €19 million from them following an EU Commission ruling on a complaint by Ryanair that the way the tax was originally implemented constituted an illegal State aid.

The EU General Court has now ordered the European Commission to reopen an investigation into a Ryanair complaint that an exemption from the tax for passengers transferring between flight at the Republic’s airports constituted an illegal State aid.

The company claimed that the measure discriminated in favour of Aer Lingus and Aer Arann – now Stobart Air – which both carry transfer passengers, while Rynair does not.

The commission originally found that the exemption did not constitute illegal aid. Ryanair appealed to the European Court, which has now ruled that the commission did not properly investigate the complaint and must reopen its inquiry.

The charge was originally levied at €2 for passengers travelling distances of less than 300km and €10 for those on longer trips. Ryanair also claimed that this discriminated against the company as it favoured airlines offering larger numbers of shorter journeys.

The commission upheld this and ordered the Government to recoup the difference between the lower and higher charges from the airlines, a figure believed to be about €19 million. The airlines have launched legal challenges in a bid to prevent this. Following the commission’s ruling, the Government changed the tax to a flat €3 per person charge.