EU state aid regulators to investigate Irish air travel tax

BRUSSELS, Sept 28 (Reuters) - European Union antitrust regulators launched a full-scale investigation on Monday into an Irish air travel tax after an EU court last year annulled their 2011 decision approving the tax.

The European Commission said it would check whether exemptions to the tax for transfer and transit passengers gave certain companies an unfair advantage and so constituted state aid. Four years ago, it found this was not the case.

That prompted a Ryanair challenge at the Luxembourg-based General Court, Europe's second highest. Europe's top budget carrier said the Commission's decision hurt its point-to-point model but benefited the models of rivals Aer Lingus and Aer Arann.

Judges said the EU competition authority should have opened a formal investigation before issuing a decision.

"The investigation will examine in particular whether the exemption serves to avoid levying the tax twice on the same journey, and whether exempting transfer flights only when they were booked in a single-booking discriminates airlines not applying a single-booking policy," the EU executive said.

The probe will focus on the impact of the air travel tax before it was scrapped by the Irish government in April (LSE: 0N69.L - news) 2014. (Reporting by Foo Yun Chee; editing by Philip Blenkinsop and David Evans)