Ryanair 'did not receive illegal state subsidies'

Ryanair, the low-cost Irish airline, yesterday rejected accusations it is receiving illegal state subsidies from Charleroi airport in Belgium after the European Commission launched a formal inquiry into the claims.

The Dublin-based carrier said it welcomed the inquiry, adding that it was confident the EU would give approval to its arrangements at Charleroi, a secondary airport about 35 miles outside Brussels.

Michael O'Leary, Ryanair's chief executive, said: "The arrangements at Brussels Charleroi airport are competitive, non-discriminatory and available to all."

Nevertheless, Ryanair shares fell 3 per cent as analysts warned the EU inquiry could be the start of a wider investigation into the charges Ryanair pays to fly into other state-owned airports around Europe.

The EU investigation has been sparked by a complaint from an unnamed competitor, thought to be BMI British Midland, that the discounts Ryanair receives from the Belgian region of Wallonia and from Charleroi for landing at the airport amount to unfair state aid.

Ryanair's business model is based on flying to cheaper, less congested secondary airports where it pays a fraction of the charges levied at major hubs and is also able to achieve much faster turnaround times for its aircraft.

The Commission said it had "doubts" about the terms Ryanair received at Charleroi and that this might "constitute aid incompatible with the proper functioning of the internal market".

The investigation into Ryanair is part of wider clampdown on state aid announced yesterday by Brussels. It is also demanding the repayment of €194m in state aid given to the Greek airline Olympic Airways.