LONDON (Reuters) - Irish airline Ryanair RYA.I said it would cut UK winter capacity by 16 percent from November, blaming the UK government's Air Passenger Duty (APD), adding that the move would lower its costs and boost profits.
The airline said it will switch these London-based aircraft to lower cost European bases, where governments have scrapped “tourist taxes” and reduced passenger charges, resulting in the loss of over 2 million passengers at UK airports.
At a press conference, Chief Executive Michael O’Leary said Ryanair could save about 10 million pounds by taking two aircraft out of London Stansted.
The UK capacity cuts should lower costs and boost profits, he said, declining to give further guidance.
The APD came into effect in November 1994 and taxes every passenger leaving the UK. The four-band duty currently ranges from 11 pounds to 110 pounds depending on the destination.
Ryanair said capacity at London Stansted will be reduced by 17 percent with the loss of up to 1.5 million passengers at the airport between November and March 2011.
It said this could lead to 2,500 jobs being cut at the airport of which less than 200 are expected to come from within Ryanair.
It cut winter capacity at Stansted last year by 14 percent.
Ryanair will also cut winter flights at most of its other UK bases, except Edinburgh and Leeds Bradford.
The tax and BAA’s high airport charges are damaging UK tourism and the British economy generally, O’Leary said.
Bookings, which were disrupted significantly by the volcanic ash cloud’s impact on passenger confidence, have improved recently.
“Bookings over the last couple of weeks have been very strong and jumped significantly in the UK since Sunday,” he said.
O’Leary, sporting a German soccer shirt, said bookings in the UK jumped 15 percent on Sunday from the week earlier after England’s World Cup defeat to Germany took them out of the competition. Bookings were up 20 percent on Monday on the previous week, he added.
He tipped Brazil as winner of the tournament adding that he would be happy if all the European teams were knocked out so that bookings could get a lift.
The airline has carried 27 million passengers in the first five months of this year, a 3 million increase on the year earlier.
The ash cloud disruption affected bookings between April-June although average fares were higher and O’Leary said he expects these to rise significantly in the second quarter to end September.
Reporting by Julie Crust; editing by Louise Heavens
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