Ryanair Forwards Ultimatum Over Irish Air Tax

by Robert Lee, Tax-News.com, London

14 February 2009

Increasing regulatory costs and the Irish government’s EUR10 air tax are responsible for cut-backs at Dublin Airport, claims Ryanair CEO Michael O’Leary.

O’Leary has warned that when the EUR10 tourist tax imposed by the Irish government comes into force on March 30 this year it will render Ireland uncompetitive on the European stage, stating that airliners should be receiving fiscal stimulus measures during periods of reduced demand rather than increased taxation.

“[The new tax] will make Dublin and Ireland a higher cost destination and render it uncompetitive against other European cities, where airports are lowering costs and Governments are welcoming tourists; the government must realise you can only promote tourism by welcoming visitors, not taxing them,” reasoned O'Leary.

The recent plea from Ryanair follows many months of opposition to the tax, which was introduced by Finance Minister Brian Lenihan’s maiden budget. Ryanair has warned that if the planned tax enters into force on March 30 the following reductions will be made to Ryanair’s Dublin Airport summer 2009 schedule:

• Aircraft based in Dublin will be cut by 20%, to eighteen from twenty-two.
• An 18% cut in weekly rotations (from over 700 to under 600);
• Cumulatively, Ryanair will lay off 200 pilots, cabin crew and engineers;
• Ultimately this will lead to a 20% drop in Ryanair’s Dublin traffic from 10.8m to 8.7m passengers in 2009/10.

Ryanair has announced that it also anticipates further cost cutting measures during the winter season.

“Ryanair has repeatedly called for this tax to be made fairer by making it a percentage of the air fare paid, or alternatively why not scrap the tax altogether and generate equivalent savings by closing quangos like Tourism Ireland and Fáilte Ireland which spend over EUR150m pa, but deliver few if any visitors,” argued O'Leary's statement.

“As was the case in the run up to cuts at Shannon, the proposed cuts will be reversed if the Government retracts its EUR10 tourism tax on or before March 30," finished O'Leary.

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