EU court upholds Ryanair and Aer Lingus travel tax challenge

The European Court has overturned a ruling demanding that Ryanair and Aer Lingus repay the Irish Government a total of €16 million in travel tax.

The ruling, which has saved Ryanair €12 million and Aer Lingus €4 million, is the latest twist in a series of cases sparked by the Government’s introduction of a now-defunct travel tax in 2009.

The court said on Thursday that it has annulled a European Commission order demanding that the Government collect €8 per head for millions of passengers carried by the two airlines between 2009 and 2011.

When it introduced the travel tax, the Government originally charged €2 for every passenger travelling up to 300 km and €10 for longer distances.

Following a complaint from Ryanair, the European Commission found that the lower rate constituted illegal state aid, as it favoured airlines whose business was mainly over shorter trips.

The Government switched to a flat €3 charge in 2011. However, the commission ordered it to collect the difference between the two rates, that is €8, from Ryanair and Aer Lingus, for each passenger charged at the lower rate, between 2009 and 2011.

The pair appealed this ruling in separate cases taken to the EU’s General Court, which upheld their claims.

Ryanair spokesman, Robin Kiely, welcomed the court's ruling. He said it confirmed that the airline does not have to pay around €12 million to the State in travel tax.

Aer Lingus confirmed that the commission’s ruling would have cost it €4 million had it stood and pointed out that the judgement remove the basis for legal proceedings taken against by the Government in April 2013.

The airline noted that it has consistently opposed the tax which it argued damaged the Republic’s aviation industry.

The coalition axed the levy last year. The move was partly responsible for stimulating the launch of new services from the Republic’s airports by a number of airlines, including Ryanair and Aer Lingus.