Green tax from Brussels to hike Ryanair fares

Published on 8th June, 2008. By John Reynolds

Airline faces €250m bill for emissions scheme
Fifty million passengers face the prospect of a new “green” surcharge if Ryanair is forced to enter the emissions trading scheme proposed by Europe. 

Speaking to the Sunday Independent, Ryanair chief Michael O’Leary admitted that if the proposals — which will make passengers pay for the pollution caused by their flights — become law, then the airline will have no choice but to add a further cost to air fares.

“If a law is passed then we’ll have to comply with it. But the need for it was when oil was $40 a barrel. That has now disappeared with oil at $130 a barrel,” he said.

Due to its plans to double in size and carry about 80 million passengers a year by 2012, the total annual cost to Ryanair could be up to €250m, or about half the profit it made last year.

The EU’s proposals — which would come into effect in 2011 — come as smaller airlines around the world are going bust, hit by spiralling oil prices and a global recession.

Both low fares airlines, such as Skybus in the US, and even business class-only airlines Maxjet and Silverjet, have burned through their cash and seen their business plans turned to ashes due to the rocketing oil price.

As it attempts to ride out the industry turbulence, Aer Lingus this week shocked the markets by claiming that even though it is abandoning routes and introducing even more fuel surcharges, it will at best break even this year.

It would also be forced to bring in emissions surcharges, which could amount to €200 for a family of four travelling to Orlando. When added to the national carrier’s current fuel surcharges, the additional costs come to a total of €800 for this example. By comparison, Ryanair short-haul passengers would see about €10 added to their fares, according to the EU.

Meanwhile, airline trade body IATC last week forecasted impending doom and losses of several billion for the sector, compared to big profits last year. British Airways’ boss, former Aer Lingus chief Willie Walsh, warned that on top of this, the emissions trading scheme will cripple Europe’s airlines.

Although he is reducing capacity and taking 20 jets out of service this winter to cope with the current situation, Michael O’Leary remains bullish.

“If more airlines go bust this winter because of the oil price, we’d expect to speed up our growth,” he vowed.

Nor does he fear Ryanair’s business suffering due to emissions charges. “If the same charges apply equally across all other airlines, then I don’t think it’ll have any effect on our business.

It won’t affect the price differential between ourselves and our competitors, in which case people will continue to fly with us. But equally I don’t think it’ll have any effect on the environment.

“With oil at $130 a barrel, we want to burn as little of it as possible. We’ve partly been doing this by flying slower. “We’ve been doing that for the last 10 years, whereas other airlines are only starting to do so,” he added.


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