Lost Weekends?

What could be better than sipping a glass of fine chablis on the veranda of a weekend cottage in the heart of the French countryside?

For a quarter of a million middle-class Brits, the dream of a second home in France has become a reality, partly thanks to quick, cheap flights offered by budget airlines.

However, doom-mongers have predicted that the rich taste of continental life could turn sour next month if a key ruling by the European commission goes against the weekenders' favourite airline, Ryanair.

For the last two years, Eurocrats have been investigating an obscure deal struck by Ryanair with Charleroi airport, 46 kilometres from Brussels. The commission is widely expected to rule that Charleroi offered illegitimate aid to attract flights by the Irish airline.

If the Charleroi decision goes against it, Ryanair has threatened that it could axe services to dozens of other destinations, including all 20 of the French airports it serves. The airline's £10-a-seat fare to such weekend idylls such as Perpignan, Montpellier, Nimes and Pau could become history.

The imminent judgement has prompted nerves on the stockmarket, with Ryanair's usually robust shares falling by 10% during the last month. So could this mean curtains for the budget airline boom?

The investigation is a direct attack on the basis of Ryanair's business model. The airline's policy of squeezing bargain-basement deals on landing charges from little-used airports many miles from city centres is key to its low fares.

In some cases, airports have agreed to waive fees altogether, or even to pay Ryanair for running services. Their incentive is to attract passengers who eat, drink and shop in their terminals, and to set the ball rolling in pulling in other airlines.

Ryanair's boss, Michael O'Leary, argues that there is nothing much wrong with driving a hard bargain. Regulators agree, as long as the airports concerned are in private ownership.

The problem arises when airports are in public ownership. By offering Ryanair financial incentives to use their facilities, they are using taxpayers' money to subsidise a commercial airline. That could constitute illegal state aid under European rules.

The content of Ryanair's deal with Charleroi, revealed by The Observer, shows the extent of the problem.

The airport, part-owned by the Walloon regional authority, agreed to pay Ryanair €160,000 (£111,000) for each of the first 12 routes opened by the airline to Charleroi. Charleroi pledged to hand over €768,000 to fund crew training, provided Ryanair with free offices, and offered €250,000 to cover hotel and subsistence costs while the new facilities were set up.

To cap it all, Charleroi offered landing charges beginning at €1 per passenger, compared to the roughly £6 paid by British Airways at Heathrow.

The commission is widely expected to rule that it is wrong for Belgian taxpayers' cash to go towards the Ryanair deal, but local authorities disagree. They insist that they are merely trying to revive deprived areas: the Walloon region has suffered the collapse of its steel and coal industries.

By aiding Ryanair, tourists, investment and "second homers" are attracted to boost the regional economy - which, local politicians say, is an entirely appropriate use of public funds.

If Ryanair loses the battle, the implications will be most dramatic in France, where nearly all regional airports are either owned or part-owned by local authorities. The ruling could also have an impact in Spain.

Ryanair's network in Italy, Germany and Scandinavia is likely to be largely unaffected, because the airports tend to be in private hands.

However, experts warn against overstating the threat. Ryanair's suggestion that it could pull out of all its French destinations is seen by many as little more than an attempt to up the ante and scare the commission into submission.

Joe Gill, a transport analyst at Goodbody Stockbrokers in Dublin, says: "It's very difficult to see them not having France and Spain on their geographical map. What we could see is a considerable scaling back of services."

He suggests that Ryanair may be able to restructure many of its deals to secure the same financial benefits, but without receiving money directly from public funds.

For example, regional airports in the US have attracted airlines by persuading local businesses to guarantee block bookings of seats.

Analysts also point out that Ryanair has committed itself to a massive expansion in its fleet, which will increase from 60 to 250 aircraft by 2008. If Mr O'Leary boycotts France, it is difficult to see where all the brand new planes will fly to.

However, controversy over airport deals has already cost the airline its route to Strasbourg, where a French court accepted a complaint from Air France that Ryanair had unfairly been offered a better price.

Similar court action is looming in Pau, where Air Mediterannee alleges that it is being illegitimately edged out.

Frantic lobbying has been raging in Brussels. Traditional European flag-carriers have lined up alongside major international airports in opposing Ryanair. Standing alongside the Irish airline are regional governments and passenger groups, including the UK Air Transport Users' Council, which says that cut-price fares are in the public interest.

A key player on the board of Ryanair is Ray MacSharry, Ireland's former European commissioner, who knows his way around Brussels better than most.

It would be foolish to pretend that a negative ruling will spell the end for low-cost travel, but it would be a bitter blow for Mr O'Leary and Britain's army of French weekenders.

And, after five years of gloom for national flag-carriers, it might just mean that the tide is turning back in favour of the likes of British Airways, Air France and Iberia.

* Andrew Clark is the Guardian's transport correspondent