Ryanair has issued a stark warning to the UK government, threatening to cut hundreds of flights if Chancellor Rachel Reeves raises air passenger duty (APD) in the upcoming Budget.
Michael O’Leary, Ryanair’s CEO, said any increase in APD, particularly on domestic flights, would severely impact customer demand and make certain routes economically unfeasible.
O’Leary voiced his concerns, stating: “If they raise APD again on domestic flights then there will be a cut in capacity, no question. These routes are not particularly profitable, they barely break even.” The CEO’s comments come as the Chancellor considers tax hikes to address a £22 billion budget shortfall, with aviation taxes seen as a potential target for increased revenue.
Currently, APD on internal flights stands at £7, but any rise, according to O’Leary, would hit ordinary passengers hardest. He described APD as “a penal tax on the poor” and warned that any tax increases could deter tourists and undermine recent investment in regional UK airports, where Ryanair has expanded capacity, particularly in Glasgow, Edinburgh, and Belfast.
O’Leary’s remarks follow a similar move by Ryanair in Germany, where the airline slashed 12% of its capacity due to higher taxes, demonstrating its readiness to shift aircraft across Europe when routes become less viable.
He emphasised that aviation could be a key driver for post-Brexit economic growth in the UK. “In a post-Brexit environment, the UK needs to stimulate inward tourism,” O’Leary said. He urged the government to focus on pro-growth policies, especially in the aviation and tourism sectors, which can deliver immediate economic benefits.
While the government has not yet confirmed its plans for APD in the upcoming Budget, O’Leary said he would reserve judgment until Reeves’ proposals are revealed. He noted that while there have been positive indications regarding airport expansion, the airline industry needs more than just rhetoric. “What’s wanted is a competent administration with some pro-growth policies and no more whining about how we don’t want any more air travel,” he added.
O’Leary also highlighted a shift in the green agenda across Europe, with some countries, such as Sweden and Ireland, moving to scrap aviation taxes in favour of stimulating economic growth. He suggested that the UK should follow suit to remain competitive.
Additionally, Ryanair faces operational challenges as the airline expects to fly 5 million fewer passengers than planned next year due to delayed aircraft deliveries from Boeing. Despite this setback, Ryanair still projects growth, expecting to fly 210 million passengers in 2025, though this is lower than its initial target of 215 million.
As the Chancellor prepares her Budget, the aviation industry, particularly low-cost carriers like Ryanair, will be watching closely to see how any tax changes might affect their operations and growth prospects in the UK.