ECJ Confirms Commission Decision Relating To Irish Air Travel Tax – Recovery Of Unlawful Aid

On 21 December 2016, the European Court of Justice ("ECJ") handed down a judgment confirming the decision of the European Commission relating to the recovery of the sum of € 8 per passenger from airlines benefiting from the "air travel tax" imposed by Ireland (Joined Cases C-164/15 P and C-165/15 P, Commission v Aer Lingus Ltd, Ryanair Designated Activity Company and Ireland).

The air travel tax is an excise duty which airline companies operating in Ireland must pay in respect of every passenger departing on an aircraft from an airport situated in Ireland. In July 2009, Ryanair requested the Commission to examine whether the air travel tax constituted unlawful state aid in favour of some of its competitors. The Commission concluded that the application of a lower rate of € 2 for short-haul flights, compared to a standard rate of € 10, constituted state aid incompatible with the internal market. Therefore, the Commission ordered the recovery of that aid from the beneficiaries in an amount which was set at € 8 per passenger, i.e., the difference between the lower rate of € 2 and the standard rate of € 10.

The judgment of the ECJ of 21 December 2016 stems from an appeal lodged by the Commission against two judgments of the General Court which partially annulled the Commission's decision on the ground that the Commission had failed to show that the advantage enjoyed by the airlines concerned was, in all cases, € 8 per passenger (see VBB on Competition Law, Volume 2015, No. 2, available at www.vbb.com).

The ECJ first recalled that the obligation on the Member States to abolish, through recovery, aid considered by the Commission to be incompatible with...