EU General Court Upholds Italian COVID-19 Airline Subsidies

The General Court of the European Union has ruled that Italian state aid granted to airlines during the COVID-19 pandemic is compatible with EU law. In its July 8, 2026, judgments for cases T-268/21 RENV and T-538/24, the Court dismissed two challenges brought by Ryanair, confirming that the compensation schemes did not violate non-discrimination principles or internal market competition rules.

Background on the Italian Compensation Fund

In October 2020, the Italian government notified the European Commission of a subsidy scheme designed to support airlines holding an Italian operating license. The fund, initially endowed with €130 Mio., aimed to compensate carriers for losses incurred due to travel restrictions and lockdown measures between March 1 and June 15, 2020. The Commission approved the measure, concluding it was compatible with the internal market.

Ryanair initially challenged this approval. On May 24, 2023, the General Court annulled the Commission’s decision, citing a lack of sufficient reasoning regarding minimum remuneration criteria. However, following an appeal by the Commission, the Court of Justice of the European Union set aside that judgment on January 23, 2025, and referred the case back to the General Court for a new decision (Case T-268/21 RENV).

Expansion and Legal Challenges

Italy subsequently extended the compensation scheme to cover the period from June 16 to December 31, 2020, and later proposed a further extension for 2021 with an additional budget increase. The Commission approved these modifications. Ryanair filed a second legal challenge, Case T-538/24, contesting this subsequent approval.

In its July 2026 rulings, the General Court rejected both of Ryanair’s applications, affirming the Commission’s broad discretion in assessing state aid measures.

Court Findings on Non-Discrimination and Competition

The Court addressed several core arguments raised by Ryanair regarding the legality of the subsidies:

* Operating License Requirement: The Court determined that requiring an Italian operating license does not constitute unlawful discrimination. Under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), the differential treatment of non-Italian carriers is permissible because the measure specifically targets airlines most affected by the flight bans and restrictions imposed within Italy.
* Remuneration Criteria: The Court found that the minimum remuneration requirement does not lead to discrimination based on the nationality of the airline. Instead, the criteria are applied consistently based on the home base of the employees.
* Freedom of Services and Establishment: Ryanair failed to demonstrate that the Italian license requirement created restrictive effects beyond those inherent in state aid permitted under EU law. The Court ruled there was no evidence that the requirement deterred Ryanair from operating in Italy.
* Commission’s Assessment Scope: The Court clarified that the European Commission is not required to examine every individual instance of aid within a broader scheme. The Commission is authorized to assess the general characteristics of a measure to determine if it confers an unlawful advantage. It is not obligated to investigate whether aid granted to specific recipients might indirectly benefit other companies within the same corporate group through separate measures.

These rulings solidify the Commission’s approach to crisis-related state aid, confirming that member states may provide targeted support to domestic operators when that support is directly linked to the extraordinary damage caused by pandemic-related lockdowns.