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Ryanair Blasts Ireland's New Flight Tax

by Jason Gorringe, Tax-News.com, London

15 October 2008


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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