Jet2 Chief Warns Against Higher Taxes on Airline Industry

The chief executive of Jet2 has urged the government to reconsider plans to increase taxes on the airline and holiday industry, cautioning that further rises will inevitably be passed on to customers. Steve Heapy, leading the UKs largest package holiday provider and third-largest airline by passenger volumes, noted that increased taxation would result in higher prices, potentially reducing demand and making travel less accessible to lower earners.

Air passenger duty affecting nearly all travellers departing from UK airports has already seen significant increases. Domestic flight duties rose from £7 to £14, while the charge for short-haul flights doubled from £13 to £28. Medium and long-haul duties jumped from £90 to £216 and from £94 to £224 respectively. Another rise is scheduled for next April. Heapy emphasised that continually raising taxes could transform flying into a privilege reserved for the affluent, undermining broader accessibility.

Jet2 reported record half-year revenues of £5.3 billion, marking a five per cent annual increase as seat capacity grew to sixteen million, fuelled in part by new operating bases at Bournemouth and London Luton airports. Profit before tax and foreign exchange revaluation edged up by one per cent to £780 million. In addition to these results, Jet2 announced a £100 million share buyback.

Flight-only passenger numbers surged sixteen per cent to 4.7 million in the six months ending September, reflecting the widespread trend of later bookings in the sector. This shift contributed to a seven per cent reduction in net ticket yields for flight-only fares, attributed to promotional pricing strategies. Package holiday customers increased by one per cent, with overall passenger numbers reaching nearly 14.1 million, though this fell slightly short of certain analyst expectations.

Despite a challenging consumer environment, which prompted Jet2 to remove 200000 seats from its winter schedule, customer demand for holidays in the sun remains robust. The company expects full-year operating profits to align with consensus forecasts at £453 million, though the winter half typically brings lower profits due to increased costs.

The company will begin flights from Gatwick starting March next year, aiming for profitability at the site by 2029 despite stiff competition, notably from easyJet. Jet2s shares rose by 4.1 per cent in response to these developments.

On the marketing front, Jet2 has benefited from a surge in online visibility. Its holiday advert, featuring a re-recording of Hold My Hand by Jess Glynne, has become a viral sensation on TikTok, amassing billions of views and boosting brand recognition, especially among younger audiences. Management views this phenomenon as overwhelmingly positive for brand awareness, with over ninety per cent of posts being positive in nature.