Economic Boost or Bust: The Aviation Industry’s Verdict
Tax Cuts vs. Runway Expansion: A Finance Chief’s Plea
Ryanair’s finance chief, Neil Sorahan, has a stark message for Rachel Reeves: cutting taxes would be a more effective way to stimulate the economy than backing Heathrow’s expansion plans. Sorahan argues that scrapping the planned increase in airline passenger tax would have a more immediate impact on short-term growth than investing in a new runway.
The Departure Tax Dilemma
The planned increase in air passenger duty (APD) has already prompted Ryanair to cut UK flights, a move that contradicts the Chancellor’s goal of stimulating the economy. Sorahan believes that halting the APD increase would not only boost passenger numbers but also strengthen the case for investing in airport infrastructure.
A Short-Sighted Decision?
Sorahan criticizes the government’s decision to raise APD, calling it a “short-sighted” move that makes operating in the UK uncompetitive. He warns that unless the government reverses its decision, Ryanair will be forced to reduce capacity and shift its focus to more competitive markets.
A Summer of Disruption
Ryanair’s business in Britain is expected to be “broadly flattish” this summer, but the budget airline plans to fly fewer routes and reduce frequencies from 2026. Sorahan attributes this decision to the APD increase, which he believes will drive up costs and make the UK a less attractive market.
Aircraft Shortage Worsens the Situation
A chronic shortage of aircraft, exacerbated by a production crisis and strike at Boeing, has further complicated the situation. Ryanair is owed 38 planes by the US manufacturer, but only nine are expected to arrive by the summer. This shortage has forced the airline to prioritize its most profitable routes and markets.
A Profit Warning
Ryanair has issued a profit warning, citing the plane shortage, price cuts, sluggish economies, and high interest rates. The airline expects its profit to fall by 20% in the 12 months ending in March.
A Call to Action
Sorahan’s comments serve as a wake-up call to the government: cutting taxes and supporting the aviation industry could be a more effective way to boost the economy than investing in costly infrastructure projects. Will Rachel Reeves take heed of this advice, or will she continue to back Heathrow’s expansion plans? Only time will tell.
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