Proactive Investors - Ryanair (LON:0RYA) has signalled hundreds of internal flights could be axed if chancellor Rachel Reeves hikes aviation tax in the upcoming Autumn Budget.
Cutbacks would be inevitable were air passenger duty raised, Ryanair boss Michael O’Leary said on Thursday, given the likely knock to demand from higher prices.
“If they raise air passenger duty again on domestic flights then there will be a cut in capacity, no question,” he told The Telegraph.
“These routes are not particularly profitable, they barely break even.”
Air passenger duty currently sits at £7 for internal flights, with O’Leary’s warnings coming as businesses brace for expected tax increases in the Budget on October 30.
Britain’s new Labour government previously warned of a “painful” Budget to come as Reeves grappled with what it has labelled as a £22 billion “black hole” in public finances.
O’Leary argued an air passenger duty hike would come as the UK “needs to stimulate inward tourism” post-Brexit and lashed out at the government for “running around in circles”.
“What’s wanted is a competent administration with some pro-growth policies [...] Sir Keir Starmer has said it’s about growth and competitiveness.
“If he wants to deliver growth the easiest way to deliver it is with aviation and tourism, because we can move planes around and turn that tap on almost straight away.”
Ryanair previously slashed 12% of its capacity in Germany in response to tax increases, with the airline also warning this week of fewer flights next year due to Boeing Co (NYSE:BA) delivery delays.