COVID-19 prompts dramatic increase in state aid to (some) European airlines

Ryanair Group CEP Michael O'Leary has a colourful way to express his opposition to state aid given to rival airlines. "Lufthansa is going around hoovering up state aid like the drunken uncle at a wedding, drinking from all the glasses. They can't help themselves," he told Bloomberg in May2020.

Aside from Lufthansa and its subsidiaries, the most significant beneficiaries of state aid have been Air France-KLM, Norwegian, Alitalia, TAP Air Portugal, airBaltic and SAS. Loans and loan guarantees form the bulk of state aid so far, but equity is also at least some part of state support for Lufthansa, Alitalia, airBaltic, SAS and Finnair.

State aid can distort competition, but it can also restrict the recipients. Whether an explicit condition of the aid, or the result of the need to repay it, it often means cutting costs and capacity, meeting higher environmental standards and capping wages to staff.