Ryanair Holdings PLC (LSE:RYA) is to cut flight capacity to and from UK airports by 10% next year following an increase in air passenger duty announced in this week’s Budget.
Chief executive Michael O’Leary on Friday slammed Chancellor Rachel Reeves’ Budget, dubbing last Wednesday’s statement a “short-sighted tax grab”.
Reeves had announced air passenger duty would increase from 2026, equating to an additional £2 per economy ticket on short-haul flights.
O’Leary argued the government had “damaged tourism and damaged air travel to and from the UK,” through the move, warning higher air tax would “deliver cuts, not growth”.
“This [...] will make the UK a less competitive destination compared to Ireland, Sweden, Hungary and Italy where these governments are abolishing travel taxes to stimulate traffic, tourism, and jobs growth in their economies,” O’Leary said.
Ryanair had previously warned of cuts to UK flights as speculation built over higher air taxes ahead of the Budget.
Reeves subsequently said that air passenger duty had “not kept up with inflation in recent years” in her budget, prompting “an adjustment”.
This would mean “an increase of no more than £2 for an economy class short-haul flight,” she said, with air passenger duty currency sitting at £7 for domestic flights and £13 on those up to 2,000 miles.
Regional airports were likely to be “particularly damaged,” according to O’Leary, as higher costs threatened to deter passengers.
Ryanair would “review” its schedules, he said, with the planned reduction set tocut up to five million passengers at UK airports.