The EU Court rejects Ryanair's actions and confirms Italy's aid for airlines affected by Covid-19
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The Court of Justice of the European Union has dismissed two actions by Ryanair against the decisions of the European Commission that approved Italy's aid scheme for airlines affected by Covid-19 restrictions. The scheme provided for an initial fund of 130 million euros, followed by an extension for 2021 with an additional 100 million euros, intended for carriers with an Italian license, such as Air Dolomiti, Blue Panorama, and Neos.
The Court of Justice of the European Union has dismissed two actions by Ryanair against the approval by the European Commission of an Italian aid scheme for airlines affected by the restrictions imposed during the Covid-19 pandemic. The court confirms that the support provided by Italy to carriers with an Italian license is compatible with European Union law.
In short
Italy created in 2020 a fund of 130 million euros to compensate some airlines affected by Covid-19 restrictions.
The scheme targeted companies with an Italian license, including Air Dolomiti, Blue Panorama, and Neos.
Italy later notified the extension of the scheme for 2021 and the increase of the budget by 100 million euros.
Ryanair challenged the Commission's approvals, citing discrimination, freedom to provide services, damage calculation, and the risk of overcompensation.
The EU Court dismissed the actions and ruled that Ryanair must bear the court costs.
The case concerns the support provided by Italy to airlines directly affected by travel restrictions and pandemic containment measures. In October 2020, Italy notified the European Commission regarding a subsidy scheme funded by a 130 million euro fund. The aid aimed to compensate for damages suffered between March 1 and June 15, 2020.
The Commission approved the scheme in December 2020, considering it compatible with the internal market under Article 107(2)(b) of the Treaty on the Functioning of the European Union. This provision allows state aid for the repair of damages caused by natural disasters or exceptional events.
The scheme was intended for airlines that met several conditions. They had to have an air operator certificate, an Italian license, aircraft with a capacity of more than 19 seats, and apply a minimum wage for employees whose base of origin was in Italy. The Commission indicated three companies that met the conditions: Air Dolomiti, Blue Panorama, and Neos.
Ryanair contested the Commission's approval, arguing that the scheme favored companies with an Italian license and disadvantaged carriers from other member states operating flights to and from Italy. The company also invoked the freedom to provide services, freedom of establishment, and the minimum wage requirement.
The court rejected the discrimination argument. The court stated that the difference in treatment produced by a state aid scheme can be permitted when the aid repairs damages caused by an exceptional event and does not exceed what is necessary to achieve the objective. In this case, the scheme targeted companies heavily affected by the restrictions on connections to, from, and within Italy.
The court noted that holding an Italian license implies that the main place of business is in Italy, which allows the Italian authorities to control how the aid is used. The court also found that the beneficiaries of the scheme were heavily affected by the restrictions applied during the targeted period, as they operated a significant proportion of flights in Italy, to Italy, and from Italy.
The court also dismissed the criticism regarding the minimum wage. The requirement applied to employees in the aviation sector whose base of origin was in Italy, regardless of the nationality of the airline. The court considered that this condition did not, by itself, produce a difference in treatment based on the nationality of the carrier.
Ryanair argued that this requirement could limit the freedom to provide services. However, the court ruled that the company did not demonstrate how the minimum wage obligation would make it more difficult to provide air services between member states or how it would discourage foreign carriers from operating in Italy.
The court emphasized that this requirement applies to employees with a base of origin in Italy, not to detached workers who work occasionally or for short periods in Italy. Moreover, the Air Services Regulation allows the application of national social legislation to service providers active in the territory of a member state.
Another contested point was the calculation of damages. Ryanair argued that Italy should not have compensated for the entire period from March 1 to June 15, 2020, as the restrictions were introduced and lifted gradually. The court rejected the argument and pointed out that the beginning of March 2020 was marked by a rapid deterioration of travel conditions, and after June 3, there were still significant restrictions, including closed airports and internal routes.
The court noted that the restrictions significantly affected the operations of the targeted carriers. According to the analyzed decision, Blue Panorama had to cancel all flights operated to and from Italy between March 1 and March 9, 2020, although in the same period in 2019 it operated 48 flights. The number of flights in Italy decreased by 95% in April 2020, by 97% in May 2020, and by 88% between March 1 and June 15, 2020, compared to the same period in 2019.
Ryanair also contested the risk of overcompensation, especially in the case of Air Dolomiti, part of the Lufthansa group. The court ruled that, in the case of an aid scheme, the Commission can examine the general characteristics of the scheme and is not obliged to analyze each individual aid or each group relationship. The court found that Italy had provided safeguards against overcompensation, including excluding damages already compensated from other sources, prohibiting cumulation for the same costs, and an ex post recovery mechanism.
The case also has a procedural dimension. The court annulled in 2023 the first decision of the Commission, considering that the reasoning was insufficient regarding the minimum wage requirement. However, the Court of Justice annulled that ruling in 2025 and sent the case back to the Court. In the ruling of July 8, 2026, the Court now dismisses Ryanair's action after retrial.
In a separate case regarding the extension of the scheme for 2021, the Court also dismissed Ryanair's action. Italy had notified on October 13, 2023, the extension and modification of the compensation measure for 2021, with an increase of the budget by 100 million euros. The Commission also approved this measure, and the Court upheld the approval.
The rulings confirm the margin of member states to use state aid to compensate for damages caused by exceptional events, provided that the support remains linked to direct damage, includes safeguards against overcompensation, and complies with EU law. Ryanair can challenge the Court's ruling at the Court of Justice, only on legal issues, within the time limit set by the procedure.
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