Hungary fines Ryanair for raising prices to handle Covid recovery tax

(Alliance News) - Hungary has accused Ryanair Holdings PLC of consumer protection violations and fined it more than GBP600,000 after the budget carrier raised ticket prices to cope with a tax on what the government calls "extra profits" of industries ranging from airlines to banks.

Justice minister Judit Varga wrote on Facebook that an investigation against Ireland-based Ryanair started in June and found "unfair trade practices", triggering a fine of HUF300 million, about GBP643,000.

The fine is the first tied to the tax, which led Ryanair and others to increase prices and set off a clash with the industry. Hungary has said costs should not be passed to customers.

Ryanair said it will "immediately appeal any baseless fine" but added that it has not received notice of one.

It pointed to EU law allowing airlines to set fares for flights within the 27-nation bloc without interference from national governments and said it will appeal to EU courts if needed.

Prime Minister Viktor Orban's right-wing nationalist government says industries from banking to insurance to airlines that have enjoyed "extra profits" arising from soaring demand after the Covid-19 pandemic should contribute to the country's economic recovery.

His government blames the war in Ukraine and EU sanctions against Russia for woes like the rocketing energy prices, its currency weakening to record levels and inflation reaching 13% in June.

The government has said it hopes the tax will raise HUF815 billion, about GBP1.74 billion, to maintain a programme that reduces people's utility bills and bolsters the military.

The economic problems "require that whichever multinational companies that make extra profit should pay their share of the costs of the overhead protection and the national defence", Varga wrote.

Economists have said some targeted industries like fossil fuels and banking are making higher-than-usual profits, but most are not.

Ryanair Chief Executive Michael O'Leary has called the tax "highway robbery" and "idiotic", calling on the government to end it.

Ryanair, easyJet PLC and Hungary-based budget carrier Wizz Air Holdings PLC have said they will add around EUR10 to each ticket to cover the costs of the new tax.

source: PA

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