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Ryanair to close Marseille base over tax dispute

Text by News Wires

Latest update : 2010-10-15

Low-cost Irish carrier Ryanair will close its Marseille base as a result of its ongoing dispute with French authorities. French prosecutors have refused to drop a case against the airline for hiring French employees on Irish employment contracts.

AFP - Low-cost airline Ryanair said Wednesday it will close its base in Marseille because French prosecutors refused to drop a case against it for hiring workers on Irish contracts.

"We are very disappointed at this decision by the French authorities," said Ryanair boss Michael O'Leary, who travelled to the city to announce the closure of what has been the firm's Mediterranean hub since 2006.

O'Leary was making good on a threat he issued in May after local prosecutors accused Ryanair of illegal working practices because the Irish airline employed workers in Marseille under Irish contracts to save on payroll taxes.

The unions who filed the original legal complaint said that employees living in France should be declared in France.

But O'Leary repeated on Wednesday his belief that "these are not French jobs but rather Irish jobs on Irish aircraft which are defined by  EU regulations as Irish territory".

"Sadly, the loss of those four aircraft, 200 jobs and 13 routes at Marseille is a high price necessary to demonstrate these are mobile Irish workers," he told reporters.

O'Leary said he wanted to avoid being fined if the courts rejected his firm's arguments, as they did in April when they fined British budget airline EasyJet for hiring 170 employees under British contracts at a Paris airport

EasyJet was ordered to pay 1.4 million euros (1.88 million dollars) and 100,000 euros in damages to unions representing crew at Paris' Orly airport who were civil plaintiffs in the case.

The Marseille Provence chamber of commerce, which says it plans to ask the French state to drop the legal action against Ryanair, said the pull-out would damage the local economy.

"Ryanair, thanks to its planes based on our territory, has enabled the creation of 1,000 jobs directly or indirectly and brought into the local economy over 550 million euros," said the chamber's president Jacques Pfister. The four planes currently based in Marseille will be moved early next year to bases in Spain, Italy or Lithuania.

The routes shut down include flights from the French port city to Agadir, Venice and Palermo, said O'Leary.

But he added that the airline would continue to operate flights from Marseille to 10 other destinations including Brussels, Frankfurt and London -- using planes and crew that are based elsewhere.

It is not the first time the company's practices have been challenged in France.

A French court in 2007 dismissed a complaint by Ryanair against a law saying that employees of foreign airlines living in France have to come under French social security and tax law.

Ryanair, which has a total of 7,000 employees across Europe and is the continent's largest low-cost carrier, has taken that case to the European Court of Human Rights.

Date created : 2010-10-14

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