No new planes for UK if taxes keep rising, warn Ryanair and Wizz Air
Low cost airline bosses are braced for increase in air passenger duty
Two of the UK’s largest low cost airlines have warned that raising taxes on the sector will push carriers to shift planes out of Britain in the future.
Senior executives from Ryanair and Wizz Air have separately warned about the risk to UK growth from increasing charges in the Budget.
Airports are concerned that a feared jump in business rates will force them to raise prices, while airlines are braced for another increase in air passenger duty, which is already the highest in the world.
“It’s definitely a risk that aviation in the UK could be very growth stunted,” said Michael Delehant, chief operations officer at Wizz Air.
He cited Wizz’s recent decision to pull all its flights from Vienna over rising airport costs, and relocate planes over the border in Slovakia’s Bratislava.
“When you’re at the price sensitive part of the chain, you have to and you can’t just accept [higher prices],” he told the Financial Times. “Vienna was the perfect example. That’s your case study.”
In a separate warning, Eddie Wilson, chief executive of Ryanair, said that raising air passenger duty would result in the airline using fewer new planes on UK routes.
The comments follow Gatwick’s warning last week that a sharp rise in business rates at the airport could jeopardise upcoming investment decisions, including its expansion to build a second runway.
Wizz flies from both Gatwick and Luton, and has 19 aircraft based in the UK. It is the airline’s second largest centre of operations outside of Hungary.
Delehant warned that Gatwick’s prices were already “unsustainable,” with the airport the most expensive in Wizz’s network.
If the company is “trying to offer its ultra-low fares, and already before you leave the gate you’re paying €50, €60, it’s not sustainable,” he said. “People won’t buy it.”
Trade body Airports UK has calculated that each plane stationed in the UK supports around 400 jobs and adds some £27mn of economic benefit to the economy each year.
While airports are concerned about rising business rates, ministers have already raised Air Passenger Duty that airlines pay to record levels. The industry is braced for an inflation-linked rise this year, although there have been reports that Reeves could look to raise it even higher.
While the Labour government wants to decarbonise the UK’s aviation sector, Reeves has also been a vocal proponent of airport expansion as a way of injecting growth into the economy.
Wilson told the FT that Reeves raising air passenger duty any further would see Ryanair divert future aircraft orders to cheaper locations.
He said the airline has cut some services from Newquay in Cornwall in favour of Sweden, which has abolished air passenger duty. The tax changes mean the gap between the two destinations was €20. “When our average fair last year was just over €50, that’s massive,” he told the FT.
Ryanair has 300 new aircraft on order, and will allocate them across Europe according to the most profitable routes it can fly. This means that growth earmarked for the UK would be diverted elsewhere if taxes rise, he warned.
Airlines are “the most mobile investment in the world”, he added. “But the dull grey people in the Treasury don’t see that, they think the aeroplanes are just there. It means the decision to allocate growth won’t go where you have rising taxes.”