Ryanair suspends Strasbourg route

No-frills airline fails to win stay on court ruling that it receives an unfair subsidy from French airport

Ryanair is to suspend flights on its London to Strasbourg route, after it failed to get a stay on a court ruling that it was receiving an unfair subsidy.

The case is significant for the no-frills carrier as the kind of deal it struck at Strasbourg is used throughout its network. The end of the Stansted-Strasbourg route, from next month, will leave no scheduled air link between London and the French city, the seat of the European Parliament. Members of the European Parliament will have to make other arrangements to shuttle between the UK and Strasbourg.

The Irish airline is also under investigation by the European Commission over its flights to Charleroi airport in Belgium, where it is accused of receiving illegal state aid.

Ryanair's business model sees it demand help with marketing expenses from a small regional airport and low landing charges, in return for guaranteeing a certain level of traffic. This has threatened the full-service carriers and major airports, which cannot compete on price.

Michael O'Leary, the chief executive of Ryanair, was on the warpath yesterday, flying into Strasbourg to announce the end of that route. He then went on to the French town of Pau, to denounce the nearby airport of Tarbes, which has complained bitterly that it was not chosen for a new Ryanair route.

"We call on the French government to make its position clear in support of regional airports such as Strasbourg who wish to develop low fare, direct international routes from their airports," Mr O'Leary said.

Ryanair said the trip to Strasbourg was to show that it stood "shoulder to shoulder" with the airport and the local chamber of commerce that controls it. Air France successfully brought a case in the local courts in July, claiming the Irish carrier was being subsidised by the airport, leaving it unable to compete on the route to London. The ruling said that Ryanair derived all the benefit from the deal with Strasbourg airport.

The court ruled that Ryanair had to end its agreement with Strasbourg by 24 September. The Irish airline then appealed to a higher court, giving it until 24 August to stay the ruling, pending a full appeal. Ryanair said it needed to know by 24 August, to give it time to make other arrangements. As the stay was not granted within that deadline, Ryanair announced yesterday that it will instead fly to Baden Baden airport in Germany, 25 miles from Strasbourg.

Mr O'Leary said: "It is wrong that the anti-competitive court actions of Air France should result in Strasbourg and the Alsace region losing - even on a temporary basis - its only scheduled air service to London. It is wrong that the state aid rules can be misused by high-fare flag carriers to limit competition, consumer choice and lower fares."

Ryanair said a favourable court judgment could still see it reinstate the Strasbourg route but that would take four or five weeks from the time the ruling is made. It said the Alsace region was losing up to 130,000 visitors a year as a result of the move to Baden Baden. Customers who have a ticket to Strasbourg for after 24 September can either fly to Baden Baden to get a refund.

Mr O'Leary went to Pau yesterday to "shut up" officials from Tarbes. The airports of both towns in the Bearn region had competed for a new Ryanair route but this was awarded to Pau, where the carrier has been flying since May. Tarbes, led by its general manager of local Chamber of Commerce, Camille Denagiscarde, has complained that it lost out on the business because Pau was willing to offer much greater incentives to the Irish carrier. Ryanair said that, in fact, both towns offered similar deals, but Pau won as it had the more efficient airport.

Mr O'Leary said: "It is strange that Mr Denagiscarde would make such claims when he himself and Tarbes failed to admit that Tarbes airport also offered Ryanair a marketing support package similar to Pau."