On 21 December 2016, the European Court of Justice
("ECJ") handed down a judgment confirming the decision of
the European Commission relating to the recovery of the sum of
€ 8 per passenger from airlines benefiting from the "air
travel tax" imposed by Ireland (Joined Cases C-164/15 P and
C-165/15 P, Commission v Aer Lingus Ltd, Ryanair
Designated Activity Company and Ireland).
The air travel tax is an excise duty which airline companies
operating in Ireland must pay in respect of every passenger
departing on an aircraft from an airport situated in Ireland. In
July 2009, Ryanair requested the Commission to examine whether the
air travel tax constituted unlawful state aid in favour of some of
its competitors. The Commission concluded that the application of a
lower rate of € 2 for short-haul flights, compared to a
standard rate of € 10, constituted state aid incompatible with
the internal market. Therefore, the Commission ordered the recovery
of that aid from the beneficiaries in an amount which was set at
€ 8 per passenger, i.e., the difference between the
lower rate of € 2 and the standard rate of € 10.
The judgment of the ECJ of 21 December 2016 stems from an appeal
lodged by the Commission against two judgments of the General Court
which partially annulled the Commission's decision on the
ground that the Commission had failed to show that the advantage
enjoyed by the airlines concerned was, in all cases, € 8 per
passenger (see VBB on Competition Law, Volume 2015, No. 2,
The ECJ first recalled that the obligation on the Member States
to abolish, through recovery, aid considered by the Commission to
be incompatible with the single market has as its purpose to
restore the situation as it was before the aid was granted. That
objective is attained once the aid in question has been repaid by
the beneficiaries. Second, the ECJ pointed out that the restoration
of the situation as it was before the aid was granted does not
imply reconstructing past events differently on the basis of
hypothetical elements such as the choices which could have been
made by the operators concerned.
Consequently, the ECJ held, in accordance with the observations
made by the Advocate General, that recovery of unlawful aid entails
the restitution of the advantage procured by the aid for the
recipient, and not the restitution of any economic benefit the
recipient may have enjoyed as a result of exploiting the
Therefore, the ECJ ruled that restitution of the advantage
required, just as the Commission indicated in its decision, Ireland
to recover a sum of € 8 per passenger for each of the flights
concerned. Consequently, the ECJ set aside the part of the GC's
judgment ruling otherwise and dismissed, in their entirety, the
actions brought by Aer Lingus and Ryanair against the
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