LONDON – Ryanair (FR, Dublin Int’l) has confirmed it has appealed in EU courts against a “baseless fine” imposed by Hungary for charging consumers the cost of a new tax designed to target excess profits in certain sectors of the economy.
Lately, The Irish carrier had already threatened to appeal to the courts after the Hungarian Consumer Protection Agency (CPA) fined it 300 million forints ($732,000) because it had “deceived consumers through unfair business practices” on taxes, which charges a fee of 10-25 EUR ($10-25) per passenger departing Hungary. The airline also cut out eight routes from Budapest in protest at the tax.
Against Orban’s Tactics…
The Hungarian government of nationalist Prime Minister Viktor Orbán announced the special tax in May, to collect the extra profits it claimed were being earned by banks, energy companies, telecommunications, and airlines, among others, in the hope of offsetting the extra expenses that helped him win a fourth straight term in April.
Ryanair “has now appealed against the unjustified fine and is confident that the EU courts will uphold its decision to retroactively transfer this tax to passengers,” Ryanair said in a statement.”
This is because “EU legislation – which is still binding on Hungary – allows EU airlines to freely select set airfares and pass on taxes to consumers without any interference from national governments”.
It added: “The fact that the Hungarian Minister of Justice announced this groundless fine on her Facebook page, even before Ryanair received a notification from the Hungarian CPA, shows that it is a politically motivated fine from an agency that clearly lacks independence or autonomy from the Hungarian government.”
Michael O’Leary, CEO of Ryanair, added in the statement: “The application of an ‘excess profits’ tax to Hungary’s loss-making airline sector is inexplicable and only succeeds in making flights to and from Hungary more expensive and less competitive compared to other Central European airports who have lower costs.”
Could We See a Withdrawal from Hungary?
A question that needs to be asked from this is whether we could see a Ryanair withdrawal from Hungary, similar to what they have done in Athens, Greece.
Ryanair announced it would close its Athens Int’l base and reduce its network out of the Greek capital during the 2022/23 winter season, citing what it called an “inexplicable failure” of the Greek government to reduce ” non-competitive” airport charges.
“Athens airport is a great example of how the Greek government and the high-cost German ownership failed to contribute to the Greek people and economy,” Chief Executive Eddie Wilson said, citing Croatia, Ireland, and Portugal as examples of countries that have reduced fees and charges in the wake of the pandemic to spur recovery.
The Irish LCC is currently grounding two B737-800s out of Athens. As such, their move will reduce the carrier’s network from the Greek capital from 29 planned routes to only 10.
It remains clear that Ryanair is leading the charge in ensuring that countries are not instigating these taxes, as it will affect the way that low-cost carriers can perform.
With Ryanair already transferring operations to Newcastle from Athens, there is nothing stopping the carrier from doing the same and going somewhere else and reaping the benefits there.
Either way, this is going to be an interesting development to watch, especially if it means Orban backing down from this tax in the future.
With contributions from James Field