So which way does the wind blow on air taxes in Europe? Clickair chief executive Alex Cruz, who will head the newly merged Spanish carrier it is forming with Vueling, and Ryanair boss Michael O’Leary were both in London this week talking to the media. Both took the opportunity to hit out at the UK’s £10 air passenger duty.
“We are most concerned about the passenger taxes,” said Cruz. The new Vueling will serve London from four Spanish cities and is switching all its London flights to Heathrow. “It puts a huge burden on our pricing. If we had lower taxes on the final purchasing price, I think we would be doing significantly better and we would be adding even more routes.” Cruz said.
O’Leary’s Ryanair meanwhile has frozen its growth at UK airports this year after slamming the UK’s APD. “This year we expect to add 9 million passengers…but all that growth will be delivered in continental Europe,” he said. “The UK Government is devestating UK traffic and tourism. We are calling again on the UK Government to scrap to the £10 APD and save the UK tourism industry from further collapses.”
But after the Dutch Government earlier this year dropped controversial plans to implement an environment tax on flights, and amid other European schemes aimed boosting tourism, there were differing takes from the two on whether anything is likely to change with the UK APD.
Cruz was far from optimistic ”We don’t expect them to. Look at the Amsterdam experience, the tax was put in, then taken off. I think its a one-off. I just don’t see a whole load of taxes being put in, then taken off. So I think we have to assume it will be there.”
But O’Leary was altogether more optimistic.
“I think it will have to be scrapped. One of the few industries governments can control is tourism. It is an incredibly price-sensitive industry. Yet the numbers in UK tourism are in freefall. That could be reversed very quickly with a sensible tax cut.”
And pointing to examples in Europe, in Spain, Greece and Belgium in addition to the Netherlands, he suggests: ”What you see across Europe is Governments reducing taxes.
“I think the governments are beginning to realise that the theory behind a lot of these taxes, that passengers don’t mind paying another £10 as it’s not a lot, well the answer is yes they do.”