The European Union’s (EU) Court of Justice has ruled that the EU General Court erred when ruling that a 3.4 billion euro state aid package granted to Dutch flag carrier KLM Royal Dutch Airlines was unlawful. The aid had been granted in July 2020 at the height of the Covid-19 pandemic, when many airlines experienced a dramatic drop in revenue. The legality of the state aid had been challenged by Irish airline Ryanair, which believed flag carriers were unfairly advantaged during the pandemic.
What Has the EU Announced?
The EU’s highest court, the Court of Justice, ruled Nov. 5, 2026 that the EU’s lower court, the General Court, had “erred” when declaring KLM’s July 2020 aid package to have been delivered unlawfully.
The aid was granted by the Dutch government in July 2020, in order to protect the nation’s flag carrier during the financial difficulties caused by the Covid-19 pandemic.
This was approved by the EU Commission under temporary rules in place at the time which allowed the governments of EU member states to compensate companies, including airlines, for any loss of revenue caused by travel restrictions.
The case has been returned to the General Court for further examination, but the aid package is currently once again considered legal, pending further rulings.
Why Did Ryanair Begin a Legal Challenge?
Ryanair has brought legal challenges against a number of aid packages made by the governments of EU member states to airlines during the pandemic.
The airline alleges that the aid constituted anti-competitive interference by the governments, and disproportionately favoured flag carrier airlines such as KLM, which were more likely to receive the aid.
Following the General Court’s ruling Feb. 7, 2024, that the aid package to KLM had been delivered unlawfully, a spokesperson for Ryanair said that,
“The EU Commission’s spineless approach to state aid since the beginning of the Covid-19 crisis allowed member states to write open-ended cheques to their inefficient zombie flag carriers in the name of faded national prestige.”
Ryanair also estimated that a total of 40 billion euro was granted or loaned by EU member states to airlines during the pandemic.
Who Benefitted From State Aid?
KLM was one of the largest recipients of state aid during the pandemic.
The airline has however stated that the money granted by the Dutch government was paid back with interest by 2023, alongside the 4 billion euro loan granted by the French government to KLM’s partner airline Air France.
Despite this, the short-term injection of funds undoubtedly improved both airlines’ financial security during the height of the pandemic.
The German government granted an even bigger aid package of €6 billion to its national flag carrier, Deutsche Lufthansa AG, along with an additional 321 million euro to fellow German airline Condor.
The Court of Justice has also overturned the General Court’s ruling that the aid granted to Condor was unlawful, while Ryanair’s case against Lufthansa’s aid package is ongoing.
Was it fair for some airlines to receive state aid during the pandemic? Did it benefit KLM? Let us know what you think in the comments.
