Ryanair has raised concerns about potential flight reductions in the UK if aviation taxes increase, impacting customer demand and economic viability.
- Michael O’Leary, CEO of Ryanair, criticized the potential rise in Air Passenger Duty (APD) for domestic flights, warning it could cut capacity.
- The UK government, facing a significant budget shortfall, is considering raising aviation taxes to generate more revenue.
- O’Leary described current APD as a tax burden on ordinary passengers, which could deter tourism and diminish investment benefits.
- Amid aircraft delivery delays, Ryanair may fly fewer passengers next year, yet still anticipates growth, forecasting 210 million passengers by 2025.
Ryanair’s CEO, Michael O’Leary, has issued a warning regarding potential flight reductions within the UK if Chancellor Rachel Reeves decides to increase aviation taxes. Specifically, O’Leary expressed apprehension about the impact of any rise in Air Passenger Duty (APD) on domestic routes, which he believes could severely affect customer demand and render certain routes economically nonviable. Currently, APD stands at £7 for internal flights, but any increment could disproportionately burden ordinary passengers and dissuade tourists. O’Leary referred to APD as ‘a penal tax on the poor,’ and highlighted the adverse effects it may have on tourism and investment in regional UK airports, where Ryanair has significantly increased its capacity.
The context of these concerns stems from the UK’s current fiscal challenges, particularly the government’s endeavor to address a £22 billion budget shortfall. One proposed solution includes tax hikes, with aviation taxes seen as a viable target for boosting public finances. O’Leary underlined the importance of aviation as a potential driver for post-Brexit economic growth, emphasizing the need for the UK to stimulate inbound tourism. He urged the government to adopt pro-growth policies that can provide immediate economic benefits, particularly in the aviation and tourism sectors.
Ryanair’s warning follows a precedent in Germany, where the airline reduced its capacity by 12% due to increased aviation taxes, illustrating the airline’s willingness to relocate aircraft across Europe when routes become less viable. Despite no formal confirmation from the UK government regarding changes to APD in the upcoming Budget, O’Leary remains cautious yet hopeful about the Chancellor’s forthcoming proposals. He accentuated the necessity for more than just rhetorical commitments from the government, advocating for competent administration and substantial pro-growth initiatives.
Additionally, Ryanair faces further operational challenges with delayed aircraft deliveries from Boeing, a factor contributing to a forecast of flying 5 million fewer passengers than planned next year. Despite these obstacles, Ryanair remains optimistic, anticipating flying 210 million passengers by 2025—though this figure is slightly lower than their initial target of 215 million. As the Chancellor prepares to release the new Budget, the aviation industry, particularly low-cost carriers such as Ryanair, is watching attentively to gauge how any potential tax adjustments may influence their operational and growth prospects within the UK.
Ryanair’s potential reduction in UK flights underscores the critical influence of tax policy on the aviation sector’s economic sustainability.
