O’Leary flies in for ‘Battle of Waterloo’, certain that Ryanair will ultimately win

By Karen Carstens

Date: 30/10/03

MICHAEL O'Leary was in top form at a recent European Policy Centre (EPC) debate on deregulation in the aviation sector.

Some were seriously irked by his fast-paced keynote speech peppered with expletives, others said it was the most “lively and exciting”.debate the Brussels-based think-tank had ever hosted.

The infamous Ryanair chief executive was even branded “a kind of bottom-feeder”.by one high-brow commentator who, in the same breath, said that the brash Irishman was creating a whole new aviation market for Europe.

“We're revolutionizing the way people travel, the way McDonald's revolutionized the way people eat,”.said O'Leary, who was casually clad in his trademark jeans, complemented by a pair of black suede loafers and a plain blue-on-white striped shirt with the sleeves rolled up.

“Now you don't have to eat at McDonald's every day but at least you have the choice,”.he added.

O'Leary, who has modeled the Dublin-based company on US low-cost carrier Southwest Airlines, also used the 23 October policy pow-wow to warn that “dark forces”.are desperately trying to prevent the “virus”.that is Ryanair from spreading into continental Europe.

And now it is up to the European Commission to determine the outcome of “the Waterloo”.for O'Leary's company - and the whole European airline industry.

The Commission is about to decide on whether or not Ryanair has received unfair state subsidies at Charleroi, a city some 40km south of Brussels whose airport (also known as Brussels South) acts as its European hub.

Due in late November or early December, the ruling will lay the groundwork for guidelines the Commission aims to publish for airlines operating in Europe.

“I'm absolutely confident that the Commission will rule in our favour,”.repeated O'Leary, adding that he has received positive signals from Commissioner Loyola de Palacio and other officials in DG TREN, the transport and energy directorate she oversees.

“Everything we've been seeing is in favour of more competition,”.he said.

At the same time, he slammed established long-haul carriers Lufthansa, Air France and British Airways as “rip-off merchants”.whom he accused of foisting extortionate ticket prices upon passengers and forcing them through their hubs.

Their motto, he quipped, is: “We're taking you where you don't want to go and ripping you off in the process.”

The Commission, O'Leary insisted, needs to give people a choice, enabling carriers such as Ryanair to take people directly to regional airports where they want to go and to allow passengers “to go from A to B without necessarily flying through C”.

Ryanair, which operates solely in western Europe, has profited from the deregulation of the continent's airlines that began in 1997 by offering rock-bottom fares on short-haul flights and flying to small airports.

But the company is increasingly coming under fire for the deals it has struck with many of these airports, with the spotlight now on Charleroi.

Under the terms of an agreement between Ryanair and the Walloon Region, which owns the airport, the Irish carrier pays a landing fee some 50% less than that set by the Belgian government for other airlines.

Ryanair is also charged only €1 per passenger for groundhandling services, or roughly one tenth the standard price, and the airport has set up a joint promotion and advertising service to finance the marketing of Ryanair's services to and from Charleroi.

“Regional airlines have always done deals with the regions and airports they serve in terms of getting some sort of contribution toward the cost of mounting a new service,”.said Andrew Clarke, director of air transport policy at the European Regions Airline Association. “What is new about the Ryanair approach is the extent and value of the deals [it] negotiates. Whether Ryanair is acting illegally, however, depends on whether this amounts to state aid.”

De Palacio's spokesman Gilles Gantelet refused to speculate on which way the Commission would rule. In an earlier invitation for comments, however, the EU's executive said granting a reduction in airport taxes to a single airline for a period of 15 years in a bilateral agreement “for which no publicity was made and which derogates from legal provisions, constitutes a fiscal derogation granted to a company”.

This puts Ryanair “in a more advantageous situation”.than its competitors and constitutes state aid.

But O'Leary told journalists on the sidelines of the EPC event that he expected the Commission to merely make some minor adjustments.

“The only thing the Commission will change will be some details designed to appease high-fare airlines, such as deals can only be for five years not 15 years,”.he said.

O'Leary also repeated that he would appeal against the Commission's decision if it ruled against Ryanair.

“If there is anything that is affecting our cost base in Charleroi, we are heading to court, but I don't think it will come to that.”

O'Leary was blasé about complaints by rival Virgin Express - received by the Commission in the form of an open letter - that the company had received an unfair subsidy from Charleroi.

“I try not to react to attacks from Virgin because it's a bit like being savaged by a dead sheep,”.he said.

Gantelet was equally dismissive, albeit for a different reason: “This is rubbish. We don't have to receive Virgin anymore than we receive any other airline.

“They could have made a formal complaint a long time ago - instead they write an open letter three years after the [Ryanair-Charleroi] agreement.”

The last time the Commission received O'Leary for talks was in early September, Gantelet said.

“Now we are finalizing our investigation and the Commission will be silent until the decision. I don't care what Ryanair or Virgin think about that. Clearly there is a need for guidelines and they will give a clearer view - the decision on Charleroi will already provide a huge part of these guidelines.”

But these are to be put forward at a later date, probably early next year, he added.

For his part, O'Leary claimed Charleroi was merely behaving “like a normal private airport operator.

“It's called competition - and no bureaucrat, lawyer or lobbyist in Brussels is going to block it.”

The Chief Executive of the budget airline, Ryanair, Michael O'Leary, took part in a European Policy Centre debate on deregulation in the aviation sector.