BRUSSELS — Ryanair has accused rivals Lufthansa and Air France-KLM of trying to ground the low-cost carrier by alleging that its ownership structure violates EU rules. The two legacy airlines, which face growing competition from budget carriers, belong to the European Network Airlines Association, a lobby group that has filed a legal challenge over Ryanair's share ownership. The association confirmed to POLITICO that it has spent months urging EU and Irish aviation authorities to investigate whether Ryanair complies with the bloc’s ownership and control rules.
Under those rules, airlines must be majority-owned and effectively controlled by EU nationals or entities to hold an EU operating license. ENAA argues that Ryanair no longer meets those requirements, pointing to the airline’s March announcement that only 30% of its shares are held by EU nationals. O'Leary, an Irish citizen, holds 4% of the stock.
When the Irish Aviation Authority seemed “reluctant to engage on the matter,” ENAA took the matter to court. If Ryanair loses the case, it could be forced to change its ownership structure. The carrier's operating license would only be suspended if it does not comply with the verdict.
Ryanair has rejected the allegations, arguing that its non-EU shareholders do not have voting rights, which means the airline is under EU control. In an emailed statement, Ryanair accused its rivals of attempting “to restrict competition and choice for EU air travel” by challenging its operating license. Augusto Viansson Ponte, a London-based director at Alton Aviation Consultancy, doubted that the legal case would be easily dismissed, but also said it was unlikely that Ryanair would lose its operating license.
Regardless of the legal outcome, Viansson Ponte said that a "likely first step would be corrective measures, not immediate grounding." Even if the court rules against the budget airline, Ryanair would have several options to address any compliance problems, the analyst said. Despite their spat, Ryanair, Lufthansa and Air France-KLM all belong to the Brussels-based Airlines for Europe (A4E) lobby, and all are pushing for a reform of the Air Services Regulation, which sets the rules for operating in the EU, including ownership and control. The lobby’s members jointly support providing “more flexibility … and tackle the risks linked to this change,” they said in feedback to the Commission.
If EU lawmakers adopt the proposal, “that would allow a greater access to liquidity in those markets for airlines,” said easyJet CEO Kenton Jarvis, whose company is set to be acquired by U.S. investment firm Apollo. However, the legal battle between the Irish budget airline and legacy carriers may fracture A4E. O’Leary threatened on Thursday at an A4E press conference to leave the lobby group unless the legal case is dropped by the end of the year.
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