Ryanair warns of UK capacity cuts if visitor tax plans proceed

Michael O’Leary, chief executive of Ryanair, has issued a direct warning to the UK government that the airline will reduce its flight capacity in the country if plans to introduce a new visitor levy are implemented without the simultaneous abolition of Air Passenger Duty. The Dublin-based carrier argues that the proposed measures would result in a double taxation of tourists, a stance O’Leary described as economically detrimental to the nation. He stated that the airline is actively shifting capacity away from markets that are increasing tax burdens on visitors, and he suggested that the UK could see a withdrawal of services for the summer of 2026 if the current legislative path is maintained.

The controversy centres on the government’s intention to grant mayors the power to impose a levy on overnight accommodation. O’Leary contended that this would compound the existing tax burden, as air passengers are already subject to Air Passenger Duty, which was increased from 13 pounds to 15 pounds for short-haul economy flights in April. He criticised the Labour government’s strategy, characterising it as a focus on increased taxation and public spending that stifles economic growth. O’Leary highlighted that several European nations, including Sweden, Slovakia, Hungary, Albania and Italy, have removed similar access taxes and are experiencing rapid growth, contrasting this with the UK’s current trajectory. He urged the government to abolish Air Passenger Duty to allow visitors to enter the country before being taxed on their accommodation.

In a conditional offer, Ryanair claimed that if the government commits to scrapping Air Passenger Duty, the airline would introduce 30 new aircraft to UK airports, establish 200 new routes and hire 10,000 new workers. O’Leary argued that the tourism industry is a flexible sector that can be stimulated immediately through tax relief, providing a direct route to delivering growth across the country. He also took aim at the new Prime Minister’s recent remarks attributing national economic issues to four decades of neoliberalism. O’Leary dismissed these comments, noting that the UK economy in the 1970s and 1980s was often described as the sick man of Europe and was under the management of the International Monetary Fund. He suggested that a return to the policies of that era would be a mistake for those seeking to deliver growth in every postcode.

Separately, O’Leary reiterated his calls for the dismissal of Martin Rolfe, the chief executive of National Air Services, the UK’s air traffic control authority. The airline has blamed Rolfe for two technical outages earlier this month that grounded thousands of flights. O’Leary alleged that Rolfe is overpaid and underworked, citing bonuses of two million pounds collected in recent years. The Department for Transport declined to comment on whether Rolfe will be dismissed. However, it is understood that Transport Secretary Heidi Alexander is set to meet with Sir Warren East, the chair of National Air Services and former Rolls-Royce boss, to discuss the executive’s future. A spokesperson for National Air Services stated that the system is stable and has been running at full capacity since Monday lunchtime, while apologising for the disruption caused to customers.