- IATA/ICAO code:
- Airline type:
- low cost carrier
- Dublin Airport, London Stansted Airport, Milan Bergamo Airport
- Year of foundation:
- Air group:
- Ryanair Group
- Eddie Wilson
Ryanair continues its vocal opposition to Hungary’s new ‘excess profit’ tax. The airline has pulled some routes from Budapest, cut frequencies on others and threatens to move lost capacity to neighboring countries.
At the same time, Ryanair and the Hungarian government are embroiled in a legal battle over a $780,000 fine Hungary imposed on the airline. Ryanair handles more passengers in Hungary than any other airline, including Wizz Air, so the dispute has drawn significant national attention.
What is the tax?
Hungary’s newest tax, dubbed the “excess profit” tax, was introduced as part of a broad tax package in Hungary earlier this year. Aviation is just one of seven sectors affected. The tax is 3,900 HUF ($10) for intra-European flights and 9,750 HUF ($25) for other flights. The tax is per departing passenger, so connecting passengers are not affected.
The airline has reduced frequencies on seven routes and canceled seven others. Photo: Getty Images
Which routes have been cut?
Ryanair reacted by deciding to cancel seven routes from Budapest and reduce frequencies on seven others. All cuts and cancellations start during the winter timetable, so end of October.
The canceled trips are:
- Bordeaux (BOD)
- Bournemouth (BOU)
- Cologne (CGN)
- Kaunas (KUN)
- Krakow (KRK)
- Lappeenranta (LPP)
- Riga (RIX)
- Torino (TRN)
And the following routes have had their frequencies reduced:
- Amman (MA)
- Bristol (BRS)
- Pisa (PSA)
- Prague (PRG)
- Sofia (SOF)
- Tel Aviv (TLV)
- Warsaw (WAW)
Accompanying the news, Ryanair CEO Michael O’Leary said:
“We regret these route and flight cuts which are caused solely by the stupid and illogical decision of the Hungarian government to impose ‘excess profits’ on the loss-making airline industry, which now makes flights to/from Hungary more expensive and less competitive.”
Ryanair CEO Michael O’Leary is known to react quickly to increased airport charges or government taxes. Photo: Getty Images
Will the ability be moved elsewhere?
Part of O’Leary’s statement is particularly interesting because it alludes to redeployments of capacity to neighboring countries. “The application of an ‘excess profit’ tax to the loss-making airline sector in Hungary is inexplicable and only succeeds in increasing the costs of flights to/from Hungary when other Central European airports have lower costs and no silly “excess profit” tax either.These routes and flights will be shifted to other lower-cost neighboring countries like Slovakia, Austria, Croatia and Romania, none of which have any Silly ‘excess profit’ tax on loss-making airlines.”
However, no flights have yet been rescheduled and passengers do not yet know where alternative flights could depart from. O’Leary also said:
“All Hungarian passengers affected by these W22/23 route closures and frequency reductions from November will receive email notifications in the coming days offering full refunds or alternative flights to/from airports cheaper than Budapest for W22/23.”
It is not uncommon for Ryanair to make such moves. The most recent and high-profile example of Ryanair’s response to higher taxes or fees by redeploying capacity was the complete closure of its base at Frankfurt Airport (FRA).
However, things were a bit easier for Ryanair back then, as it could simply swap routes to Frankfurt Hahn Airport (HHN), which is two hours from Frankfurt. There is no such fast alternative to Budapest airport.
What do you think of Ryanair’s response to the new Hungarian tax? Let us know in the comments below.