Ryanair cuts Hungarian operations due to windfall tax

Ryanair cuts Hungarian operations due to windfall tax
Ryanair CEO Michael O’Leary said that eight flights from Budapest will be suspended. / bne IntelliNews
By bne IntelliNews September 14, 2022

Ryanair will reduce the number of flights this winter to and from Hungary due to the extra profit tax on airlines, Michael O'Leary, CEO of Europe’s leading low-cost airline, announced at a press conference in Budapest on September 13.

O’Leary said that eight flights from Budapest will be suspended, which would reduce passenger traffic from 4.5mn to 4mn. The airline predicted traffic of around 5mn in Hungary in 2023.

In mid-August, the airline indicated plans to remove eight cities from its Budapest timetable from October. According to local media, flights to Bordeaux, Bournemouth, Cologne, Krakow, Kaunas, Lappeenranta, Riga and Turin would be terminated from October and Ryanair will operate fewer flights to Amman, Bristol, Prague, Pisa, Sofia and Warsaw.

The announcement of Ryanair's maverick CEO’s visit to Budapest a week ago triggered speculation that the airline would announce drastic measures in response to Hungary’s windfall tax. A week ago, in the Belgian capital, O'Leary had announced the closure of the Brussels base. But O'Leary said Ryanair is not closing its Budapest base and has no plans to withdraw from Hungary.

To set the tone for the press conference, O'Leary posed with a sign reading "Scrap the extra profit tax on loss-making airlines" next to him on the table as he spoke.

Airlines operating in Hungary were hit with a departure fee from €10-25 per passengers in June as part of the government windfall taxes on sectors from energy and banking to airlines to plug its yawning budget gap.

Hungary’s government and Ryanair have been embroiled in a war of words since then.

O'Leary called the tax "highway robbery'' and "idiotic", a levy on a loss-making sector recovering from the pandemic.

"I'm sure that some members of the government were drunk when they decided to impose an extra profit tax on a loss-making sector in the spring", he told reporters.

Ryanair passed over extra costs to consumers after which the Budapest Government Office slapped the airline with a HUF300mn (€757mn) fine last month for "unfair commercial practices, that misled consumers".

O'Leary said the airline would not pay the fine and expects to lose the legal case in Hungary, but in that case, they would go to the EU’s Court of Justice, he added.

 

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