Europe’s largest low-cost airline has announced additional flight reductions in Germany. After announcing a major reduction in flights from Berlin due to high local taxes, Ryanair now says they will be cutting back in Dortmund, Dresden, Leipzig and Hamburg starting next year, reports Economx.
Airport traffic in Germany performs the worst in Europe. It only recovered to 82 percent of the level before the Covid-19 epidemic, which will seriously hinder the economic recovery next year as well.
However, the decline in the German air market can benefit Hungary, especially since the special tax on airlines will be abolished in Hungary from January.
Ryanair CEO Michael O’Leary had been a vocal critic of the special tax and now believes that the Hungarian government is making forward-looking decisions. Ryanair continues to expand its capacity in Hungary due to higher traffic, and is doing the same in Sweden, Italy, and Poland.
The reason behind Germany’s air traffic woes is that the country has the highest state taxes and fees for airlines in Europe, meaning travelers in Germany pay the highest ticket prices.
Gábor G. Varga, the founder of the Egek Ura Blog, has warned about the impact of taxes on carriers. In relation to Ryanair, he says that while the number of passengers continues to rise, Ryanair has been warning its investors more and more strongly for more than a year that the profit content of ticket sales is falling, partly due to the decrease in base prices and partly due to the increase in costs.
“In this environment, the taxes on the tickets really matter, which further erodes the profit that can be generated on the affected routes, of which a few euros per item is significant,” added the expert.
This is why the elimination of the special tax in Hungary is such a big deal for Ryanair’s operations, and and why it bodes well for future air traffic growth in Budapest.
