Ryanair Blasts Ireland's New Flight Tax
Ryanair has made a direct plea in response to a new air travel tax which was
unveiled by the Irish Government in Tuesday’s budget. Ryanair fears that its services will now become uncompetitive when compared
to competition from the sea travel industry and other airlines, adding strain
to a business in an already delicate industry. Finance Minister Lenihan announced that the new tax will be imposed at a flat charge of EUR10
per passenger, with shorter journeys attracting a EUR2 charge. The levy is due
to be introduced in March 2009 and is expected to raise EUR150mn in revenues
annually. Ryanair has expressed dismay that its low cost airline could fall victim
to comparatively massive levels of taxation. The airline complains that the
higher tax charge would equate to 25% of its average ticket price and its
fares to some destinations could double in price. The company has also expressed concerns that consumers will be taxed twice
when using Dublin airport, where the government-owned DAA monopoly is already
taxing each departing passenger over EUR15 per ticket. Ryanair is negotiating
with the Irish Government to re-consider the plans or alleviate some of the
burden customers face when using the Dublin airport. It has called
for reductions in the tax of 50%, to reduce the amount paid to around EUR7. Ryanair expressed its greatest concern at the effect that the proposed travel
tax will have on its low fare (loss making) base at Shannon. The EUR10 tax would
often exceed the average price of tickets sold at the airport. Ryanair had already
warned that it would reconsider the financial viability of its investment
of EUR400m in Shannon if the proposed tax changes went ahead. The airline is also unhappy that no comparable taxation for ferry travel has
been introduced by the Irish Government, despite its claims that ferry travel
is responsible for 5% of Europe’s carbon emissions in comparison to the
2% contributed by air travel.
Michael O’Leary, CEO of Ryanair, said he resigned himself to the fact some level of taxation may be inevitable in the
light of the Irish government's EUR9bn deficits. However, he called for fair,
proportionate taxation for both industries. .
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