Why are Air France Fares so low?

For the last 8 months I’ve been looking at the Air France fares to Greece and other parts of Europe from the US and been amazed at how low the fares were. I thought there was something fishy going on because they were consistently $200-500 lower than the other airlines. And then I read this article…Ah.. that explains it!

Ryanair files complaint against Air France


LONDON — Irish low-cost airline Ryanair Holdings PLC lodged a complaint with the European Commission on Thursday against Air France, alleging that the French carrier has received around 1 billion euros ($1.3 billion) in illegal state aid over the past few years.

Ryanair accused the French government of maintaining an airport fees system that makes landing and passenger charges for domestic routes up to 50 percent lower than on international routes within the European Union.

The airline said the system gave Air France an unfair price advantage, or the equivalent of around 1 billion euros ($1.3 billion) in state aid, at the expense of competitors.

“Air France has a rampant monopoly in the French market and this dominance has been enhanced by the illegal airport charging system that has been maintained in France, despite rulings by the European Commission in other EU member states,” Ryanair’s Head of Regulatory Affairs Jim Callaghan said.

“These substantially lower charges on domestic French routes, on which Air France has an almost complete monopoly, have allowed them to make super profits on domestic routes and to cross subsidize their international routes, on which they compete with airlines like Ryanair.”

The airline said it wants the European Commission to force the French government to change its charging system and to compel Air France to return the savings it has made from the system.

Low-cost airlines have long-complained about government subsidies to established carriers in Europe.

The European Union last month warned Greece it would face fines if it does not recover 161 million euros ($205.7 million) in illegal aid to Olympic Airways. The EU first ordered Greece to recover the money in 2002 after ruling that the aid granted between 1998 and 2002 infringed on an agreement on state aid to the struggling carrier.

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