Ryanair CEO Michael O’Leary slams UK government over travel tax plans

Ryanair chief executive Michael O’Leary on Monday admonished the U.K. government over its push to boost taxes on passenger flights, warning that the policy will see airlines move planes in a foreign country.

Talking to CNBC’s “Europe Early Edition” after reporting a significant upswing in first-half profit, the outspoken CEO described the Labour government’s push to boost air travel taxes as counter to its strategy of kickstarting economic growth.

His comments come ahead of the U.K. government’s high-stakes Autumn Budget on Nov. 26, with Finance Minister Rachel Reeves under pressure to resolve a fiscal conundrum over spending, taxation and borrowing.

Ryanair’s O’Leary said there had been a trend of European governments rolling back “mad environmental taxes” and subsequently being rewarded with bumper economic growth.

“So, you see markets like Sweden, Hungary, Italy and Croatia abolishing environmental taxes after which you will have the laggards, like Germany, France and Rachel Reeves here within the U.K., remarkably talking about wanting growth and yet increasing taxes on air travel — on an island, on the periphery in Europe,” O’Leary told CNBC’s Silvia Amaro on Monday.

“Which again confirms my belief that Rachel Reeves hasn’t a clue easy methods to deliver growth despite the very fact now we have written to her offering her significant growth, particularly within the regions of the U.K,” O’Leary said.

A Treasury spokesperson was not immediately available to comment when contacted by CNBC on Monday morning.

The CEO of Europe’s largest low-cost carrier singled out Britain’s air passenger duty (APD), referring to a tax per passenger on flights that depart the U.K. for domestic and international destinations.

In last yr’s Autumn Budget, Reeves announced strict rules that limited the federal government’s room for maneuver on spending and borrowing, with day-to-day government spending funded by tax revenues and never borrowing.

As a part of a broader push to spice up public funds and encourage more sustainable travel options, Prime Minister Keir Starmer’s government intends to extend APD rates from April next yr, with a 50% raise for personal jets and general increases for other flights.

To make certain, APD is a major source of presidency income, with the Office for Budget Responsibility estimating revenues of £4.7 billion ($6.18 billion) in 2025-2026. Aviation, meanwhile, is known to be considered one of the fastest-growing sources of greenhouse gas emissions.

O’Leary said the federal government’s plan to boost the APD from April next yr would represent a tax of just about 33% on the common price of a Ryanair flight, which he said was about £45.

“It’s ridiculous,” O’Leary said. “For a family of 4, it becomes prohibitive. We wrote to Rachel Reeves when she first got elected and said we are able to deliver you 50% traffic growth, not in London, but within the regions of the U.K., where they really want growth in those red wall seats, in Birmingham, Manchester, Glasgow, Edinburgh, Bristol.”

He added: “Just abolish APD outside of London. , London is full, London pays the APD, but abolish it outside of London. It might cost them about 2 billion of their budget, they’d get that back in additional consumer spending, VAT on additional visitors on consumer spending inside one yr. No response.”