Ryanair has issued a stark warning to the British government, threatening to cancel hundreds of flights if Chancellor Rachel Reeves increases air passenger rights (APD) in the upcoming budget.
Ryanair CEO Michael O’Leary said any increase in APD, especially on domestic flights, would have a serious impact on customer demand and make certain routes economically unviable.
O’Leary expressed his concerns, saying: “If they increase APD again on domestic flights there will undoubtedly be a reduction in capacity. These routes are not particularly profitable, they barely break even.” The CEO’s comments come as the chancellor considers tax rises to tackle a £22 billion budget deficit, with aviation taxes seen as a potential target for higher revenues.
Currently the APD on domestic flights is £7, but any increase would hit regular passengers hardest, according to O’Leary. He described the APD as “a criminal 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 comments follow a similar move by Ryanair in Germany, where the airline has cut 12% of its capacity due to higher taxes, demonstrating its willingness to move planes around Europe as routes become less viable.
He emphasized that aviation could be a key driver of post-Brexit economic growth in Britain. “In a post-Brexit environment, Britain needs to boost inbound tourism,” O’Leary said. He urged the government to focus on growth-enhancing policies, especially in the aviation and tourism sectors, that can deliver immediate economic benefits.
Although the government has not yet confirmed its plans for APD in the upcoming budget, O’Leary said he would defer judgment until Reeves’ proposals are announced. He noted that while there is positive evidence regarding airport expansion, the aviation industry needs more than just rhetoric. “What we need is a competent government with pro-growth policies and no more whining about not wanting air travel anymore,” he added.
O’Leary also highlighted a shift in the green agenda across Europe, with some countries such as Sweden and Ireland moving to abolish aviation taxes in favor of boosting economic growth. He suggested that Britain should follow suit to remain competitive.
In addition, Ryanair is facing operational challenges as the airline expects to carry 5 million fewer passengers than planned next year due to delayed aircraft deliveries by Boeing. Despite this setback, Ryanair is still expecting growth and expects to carry 210 million passengers by 2025, although this is lower than the original target of 215 million.
As the Chancellor prepares her Budget, the aviation industry, and particularly low-cost airlines such as Ryanair, will be keeping a close eye on how any tax changes could affect their operations and growth prospects in Britain.