bne IntelliNews – Ryanair slashes Hungarian operations due to windfall tax

Ryanair will reduce the number of flights this winter to and from Hungary due to the additional tax on airline profits, Michael O’Leary, CEO of Europe’s first low-cost airline, announced during of a press conference in Budapest on 13 September.

O’Leary said eight flights from Budapest will be suspended, reducing passenger traffic by 4.5 to 4 minutes. The airline predicted traffic of around 5 minutes in Hungary in 2023.

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

News of Ryanair’s maverick CEO’s visit to Budapest a week ago sparked speculation that the airline would announce drastic measures in response to Hungary’s windfall tax. A week ago, in the Belgian capital, O’Leary announced the closure of the Brussels base. But O’Leary said Ryanair was not closing its Budapest base and was not considering pulling out of Hungary.

To set the tone for the press conference, O’Leary posed with a sign reading “Removal of additional tax on loss-making airline profits” beside him on the table as he spoke.

Airlines operating in Hungary were hit with a departure fee of €10-25 per passenger in June as part of one-off government taxes on the energy and airline banking sectors to fill its budget gap gaping.

The Hungarian government and Ryanair have since been embroiled in a war of words.

O’Leary called the tax “highway” and “stupid,” a levy on a loss-making sector recovering from the pandemic.

“I’m sure some in the government were drunk when they decided to impose an additional profit tax on a loss-making sector in the spring,” he told reporters.

Ryanair passed on the additional costs to consumers, after which the government office in Budapest fined the airline HUF 300 million (757 million euros) last month for “unfair commercial practices, which misleading consumers”.

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

Laura T. Thrasher