Ryanair clashes with Hungary over ‘more than stupid’ tax


Ryanair (FR, Dublin Int’l) demanded that the Hungarian government scrap what it said was a recently announced ‘unjustified’ and ‘misguided’ tax on airlines, to be imposed on departing passengers as part of efforts to fight against inflation. When the carrier argued it would be forced to pass on the “illogical” new windfall tax to consumers, Budapest responded by ordering an immediate consumer protection investigation into the company.

Viktor Orbán, who won a fourth consecutive term as Hungarian prime minister in early April, unveiled the new tax on May 25. He then said in a Facebook video that the tax would be levied on “banks, insurers, large retail chains, energy and trading companies, telecommunications companies and airlines” to counter the imputed price hikes. to the war in neighboring Ukraine, as well as to fund new defense spending.

The proclamation came a day after he introduced a state of emergency citing the same reasons. The money raised will go to two funds, he explained – one to bolster the military, the other to impose price caps on energy and water bills. The “policy of sanctions in Brussels” against Russia in connection with the war has led to higher prices, he claimed, which, together with high interest rates, “gives banks and large multinationals additional benefits”.

The taxes, worth 800 billion forints HUF (2.1 billion USD), will apply for 2022 and 2023. For airlines, the new tax involves a tax of 10 to 25 euros (10.50- USD 26.50) per passenger departing from Hungary from July.

In a June 8 statement, Ryanair argued that the move will “irreparably harm Hungarian tourism, connectivity, traffic and jobs”. A new tax on the airline industry is “beyond stupid”, he added, as the carrier itself “just announced losses, but the government is proposing a tax on ‘additional profits’, which are non-existent due to Covid and the Russian invasion of Ukraine.”

‘Untimely and ill-advised’ tax ‘inexplicably compares loss-making aviation industry to hugely profitable oil and energy companies [and] instantly made Hungary uncompetitive and less attractive to airlines and tourists. Ryanair will therefore be “forced to shift its growth capacity to countries that are working to restore traffic”.

Two days later, the Hungarian government said it had launched a consumer protection investigation against Ryanair for pledging to pass the costs on to passengers. The investigation will determine whether the carrier conducted unfair trade practices, state news agency MTI reported.

Márton Nagy, Minister of Economic Development, told the news agency that the government would do everything possible to prevent the costs of windfall taxes from being passed on to consumers. He added: “It is particularly unfavorable that Ryanair has started this practice in relation to tickets sold earlier. Investigations will be carried out in each case.”

On June 14, Ryanair asked Nagy to explain why airlines are levying a tax “to ‘protect Hungarian families’ as airlines record record losses”; why “Hungarian families and visitors are asked to pay higher rates”; and “How does increasing air travel taxes ‘help’ Hungarian families?” It’s not an “excess profits” tax, it’s just highway robbery.”

He added: “Ryanair welcomes the proposed consumer protection inquiry and calls on Budapest City Council to extend this inquiry to investigate how the Hungarian government is introducing an ‘excess profit’ tax on an industry loss-making such as the airlines. When loss-making airlines are trying to recover from Covid and Russia’s invasion of Ukraine, the last thing we or passengers need is an ‘excess profit’ tax. Maybe Minister Nagy can explain why this stupid tax is imposed on the loss-making airline industry.

Buzz (Poland), a subsidiary of Ryanair, is one of three passenger carriers currently operating a crew base in Budapest, the others being Smartwings (Hungary) and Wizz Air. Wizz and Ryanair dominate airport traffic, the ch-aviation capabilities shows the module. Of the 34 passenger airlines currently operating there, the two LCCs have 30.51% and 30.05% of capacity respectively. For Hungary in general (Debrecen and Sarmellek also see regular passenger flights), Wizz Air and Ryanair occupy 32.13% and 29.26% of the market respectively.

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