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O'Leary warning on airport tax as Prestwick flights cut by third

RYANAIR chief Michael O'Leary warned Air Passenger Duty was strangling growth at Prestwick Airport as the airline unveiled plans to slash its summer schedule at the hub by a third.

SHOUTING IT FROM THE ROOFTOPS: Ryanair boss Michael O'Leary flies the flag in Edinburgh as he announces new flights. Picture: Gordon Terris
SHOUTING IT FROM THE ROOFTOPS: Ryanair boss Michael O'Leary flies the flag in Edinburgh as he announces new flights. Picture: Gordon Terris

The low cost carrier will operate 16 routes from there next summer, compared to its current 24 destinations. The move comes after the budget airline halved its winter schedule at the taxpayer-owned Ayshire airport, relocating most services to Glasgow.

However, Mr O'Leary stressed Ryanair remained "heavily committed" to Prestwick, where it stations three aircraft and operates a major maintenance site.

The company is due to launch its winter schedule from Glasgow, its newest Scottish base, in October with seven services to Dublin, London Stansted, Derry, Riga in Latvia, Warsaw Modlin, Wroclaw, and Bydgoszcz, all in Poland.

Its summer 2015 schedule will add an additional two routes, to Carcassonne in France and Chania, Greece.

There will also be 32 destinations from Edinburgh Airport, including one new route to London Stansted. It comes as Ryanair, famed for its no frills approach, introduced a business class option for the first time, starting at £59.99.

Mr O'Leary said Ryanair's operation at Prestwick, where it is the only airline, was "profitable but not hugely profitable".

He added the firm was in talks with the Scottish Government and Prestwick bosses about boosting passenger traffic by about 100,000 a year, from 500,000 currently, but said Air Passenger Duty remained a "major disincentive" against airlines setting up at regional airports, such as those in Scotland.

The Scottish Government has promised to halve and eventually scrap the tax altogether if there is a vote for independence, and has repeatedly called on the Treasury to devolve control over the tax to Holyrood.

Mr O'Leary said: "APD should be repealed up here in Scotland. It is a major disincentive to airlines, and it is one of the reasons why we struggle to develop the business at Prestwick. It turns off a lot of visitors to Scotland.

"I think Prestwick has a role and a bright future for leisure travel, but there is no beating about the bush that the future for Prestwick remains challenging as long as it continues to labour under the yoke of APD.

"Services that have been lost in recent years would come back at three, four, five times if APD was scrapped.

"But Scotland can't develop its tourism industry if it has to compete at the same rates as London."

APD is levied on all tickets for flights taking off in the UK. It adds £13 per passenger to the cost of domestic and European short-haul flights, but, in practice, much of the fee has been absorbed by airlines in an attempt to keep prices competitive.

In 2013, control over APD on long-haul flights was devolved to Northern Ireland, although this covered only one flight - a daily service from Belfast International to Newark, New Jersey.

However, Westminster has been reluctant to devolve the tax to Scotland, mainly because of the potential losses in revenues if it was axed.

APD on flights from Scotland generated £234 million for the Treasury in 2012/13, about eight per cent of the UK total.

The Scottish Government bought Prestwick Airport for £1 last year after its previous owner, New Zealand-based Infratil, failed to find a commercial buyer. Accounts have since shown it had been running at a pre-tax loss of £9.77m in 2013/14.

The Scottish Government will publish a report in October outlining its plans for returning the airport to profit.

Richard Muir, deputy chief executive of Glasgow Chamber of Commerce, said: "The chamber welcomes Michael O'Leary's comments in relation to scrapping APD, which we see as an unhelpful cost to doing business overseas. APD acts as a deterrent to airlines when considering investment into the city.

"It is fantastic to see Ryanair launch its 2015 summer schedule from Glasgow Airport, announcing nine new routes. The three additional Polish services reflect the city's growing links with Poland and we hope to build upon these business relationships as connections between the two countries increases.

"The airline has made a major commitment to Glasgow Airport, carrying more than 850,000 customers per annum, which will be a massive boost to the region's economy."

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