Ryanair has issued a stark warning about potential flight reductions in the UK.
- CEO Michael O’Leary is concerned that increased aviation taxes could severely affect customer demand.
- He argues that domestic routes might become economically unfeasible with higher Air Passenger Duty (APD).
- O’Leary emphasizes the impact on ordinary passengers and regional investments.
- The airline’s strategic decisions are anticipated as the UK’s budget plans unfold.
In a candid statement, Michael O’Leary, CEO of Ryanair, expressed serious concerns regarding the proposed increase in Air Passenger Duty (APD), particularly affecting domestic flights in the UK. He highlighted that any rise in APD would drastically impact customer demand, rendering certain routes economically unsustainable. O’Leary warned that if APD were raised, Ryanair might have to cut capacity, indicating that many routes currently barely break even.
The backdrop to O’Leary’s comments is a broader governmental fiscal strategy aimed at addressing a significant £22 billion budget shortfall. With aviation taxes identified as a potential source for increased revenue, the prospect of raising APD has gained traction. Currently set at £7 on internal flights, any increase is seen by O’Leary as a direct hit on ordinary passengers, whom he describes as disproportionately burdened by such ‘penal taxes.’
Moreover, O’Leary cautioned against the potential negative repercussions on tourism and regional investments, particularly in areas where Ryanair has recently expanded, like Glasgow, Edinburgh, and Belfast. He drew a parallel to Ryanair’s past decisions in Germany, where the airline reduced its capacity by 12% following tax hikes, demonstrating a willingness to reallocate aircraft where routes are not viable.
Emphasizing the strategic importance of aviation as a catalyst for economic growth post-Brexit, O’Leary urged the government to adopt pro-growth policies that would bolster the tourism industry and deliver immediate economic advantages. He noted that despite positive signals regarding airport expansions, the airline industry needs substantial policy support beyond rhetoric to realize its potential.
O’Leary also addressed a shift in the environmental agenda across Europe, with nations like Sweden and Ireland reducing aviation taxes to stimulate economic expansion. He suggested that the UK should consider similar measures to maintain competitiveness. Even though Ryanair faces challenges, such as an anticipated reduction of 5 million passengers due to delayed Boeing deliveries, the airline remains optimistic about its growth trajectory, targeting 210 million passengers by 2025, albeit short of the initially planned 215 million.
As budget deliberations continue, Ryanair’s operational strategies will hinge on the UK government’s tax decisions.
