FILE PHOTO: Easyjet planes are seen parked at Luton airport after Easyjet announced it has grounded its entire fleet, as the spread of the coronavirus disease (COVID-19) continues, Luton, Britain, March 30, 2020. REUTERS/Matthew Childs

BRUSSELS (Reuters) – Easyjet (EZJ.L) and Lufthansa’s (LHAG.DE) Germanwings on Wednesday lost their challenge against an EU ruling ordering Italy to recover illegal state aid granted to airlines serving Sardinia.

The European Commission has in recent years struck down deals granted by regional authorities to attract budget airlines to secondary European airports, saying that these gave them an unfair advantage.

EU competition enforcers in their 2016 decision said a Sardinian scheme to develop air transport was illegal state aid as the beneficiaries were the airlines and not the main Sardinian airport of Alghero, Cagliari-Elmas and Olbia.

EasyJet, Germanwings and Spanish low-cost airline Volotea subsequently took their case to the Luxembourg-based General Court, Europe’s second-highest, citing legal errors in regulators’ decision.

The court rejected their arguments.

“The operators of the Sardinian airports were not the beneficiaries of the aid but merely intermediaries between the autonomous region and the airlines, which must therefore reimburse it the public aid,” judges said.

The airlines can appeal to the Court of Justice of the European Union, Europe’s highest, on points of law.

The cases are T-607/17 Volotea v Commission, T-716/17 Germanwings v Commission, & T-8/18 easyJet Airline v Commission.

Reporting by Foo Yun Chee, editing by Louise Heavens

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