Opinion of AG Mengozzi in Aer Lingus and Ryanair Cases – Irish tax on air passengers and state aid
News    ·   12-07-2016

AUTHOR: Mark Galea Salomone; Kyra Borg

On 30th March 2009, Ireland imposed an excise duty referred to as the Air Travel Tax (‘ATT’), payable by each passenger embarking an aircraft departing from Ireland, to be collected directly from the operating airlines. 

Although at present, the excise duty is inapplicable, at its time of application it was calculated according to the distance travelled by the particular flight. Where the distance was not more than 300km, an excise duty of €2 was charged to customers, whereas a €10 excise duty charge was levied on flights travelling distances further than 300km. Due to the advantage offered to airlines mainly engaged in short-distance flights, the Commission addressed the Irish authorities on the matter, resulting in a fixed €3 rate regardless of the distance travelled applicable as of 1st March 2011.

However, the Commission proceeded to investigate the compatibility of the application of the ATT applied between 30th March 2009 and 1st March 2011. During the investigations the Commission rendered the lower ATT that applied during the aforementioned dates, incompatible with the internal market. The Commission requested the recovery of the arbitrary aid and that the amount owed was to be the difference between the lower rate ATT of €2 and the standard rate of €10 from the beneficiaries including both Ryanair and Aer Lingus.

Ryanair complained, however the European Court confirmed that the lower duty applied during 2009 and 2011 constituted illegal state aid favouring airlines whose business was mainly over shorter trips to those engaged in longer journeys. Ryanair and Aer Lingus appealed, successfully convincing the General Court to overturn its initial ruling.

The Commission was not content with the reversal of the General Court’s decision and appealed to the CJEU asking for the original findings of the General Court to be retained and furthermore confirming the obligation of the airlines to pay their dues.

On 5th July, 2016, The Attorney General of the CJEU unequivocally stated that in his opinion,  the CJEU ought to reject the cross-appeals. These cross-appeals include the complaint that the General Court was incorrect in stating that the unlawful nature of a measure is not relevant for the classification of such as state aid, and that it was also incorrect when it dismissed the €3 fixed rate adopted in 2011 as irrelevant, among others. The Attorney General also further contends that the CJEU ought to set aside the judgements subject to appeal and refer such back to the General Court or, in default of such remittance, dismiss the actions entirely and order the airlines to pay the costs of both the proceedings before the General Court as well as those before the CJEU.  

This case is still subject to official determination however the opinion of the AG could be of essence in the outcome of the cases before the European Courts. 

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