EasyJet boss warns Rachel Reeves against more passenger tax hikes
Chancellor understood to be considering air passenger duty hike Shares in airline fall despite higher profits and falling costs
The boss of EasyJet has warned tax increases would deter Britons from booking holidays abroad, as the airline sector braces ahead of Wednesday's Budget. Kenton Jarvis said he hopes Rachel Reeves freezes air passenger duty, adding 'taxes rise in this space that will naturally dampen demand'.It comes after the boss of rival Jet2 last week warned that a tax raid could mean flying abroad becomes only for the ‘rich and privileged’ if airlines are forced to hike prices.Businesses are nervously waiting to hear from the Chancellor after she hit employers with a shock £25billion raid on National Insurance contributions last year.There has been speculation that Reeves is likely to hike Air Passenger Duty (APD) - the tax paid on flights leaving the UK.Jarvis said that he was hopeful for a freeze but ‘not super optimistic’ and urged the Government to consider airports in its growth agenda. Airlines have asked the Chancellor to freeze air passenger duty at the BudgetHe said a potential increase ‘doesn't feel very joined up if at the same time, you're trying to persuade airports to build new runways because they'll need to be customers there for the aircraft to take off’.The UK’s largest airports - Heathrow and Gatwick - are both pursuing expansion plans worth billions of pounds of investment.It has also been rumoured that Reeves could introduce a ‘tourist tax’ where visitors are charged a levy for hotel and Airbnb stays.But Jarvis warned that ‘any increase in tax that impacts the competitiveness of the UK’s visitor economy would not be a good thing’.His remarks came as shares in EasyJet dipped despite the group hailing its holiday business going from ‘strength to strength’.Profits rose 9 per cent to £665million for the year to the end of September, thanks to booming business for its package holidays. Revenues rose 8.6 per cent to £10.1billion.But shares were down 2.6 per cent in Tuesday afternoon trading, adding to a slump of 15 per cent this year.The group said it had found profits ‘harder to improve over the winter than originally anticipated’ due to a slower performance in its winter business.‘We are not yet back in each month, in the winter, to the level of flying we did pre-pandemic,’ he said. ‘We’ve been restoring winter flying at a slower pace than summer flying,’ Jarvis said. The airline said it was catering for demand for winter sun with new routesThe group has been impacted by the war in the Middle East due to ‘limited flying’ into Tel Aviv and Jordan, which were previously ‘popular winter sun destinations.’ It has been adding more flights to further flung destinations, including Cape Verde and Egypt, to capture demand for winter sun.Mark Crouch, market analyst for eToro said that shares had ‘behaved as if someone left the air brakes on’.He added: ‘Three years of earnings growth and falling energy prices should have created a powerful tailwind, one that may not blow forever. 'However, easyJet hasn’t enjoyed the same post-Covid lift as Ryanair, the only one of Europe’s big three budget carriers to fly confidently out of the pandemic. 'Investors may simply be tired of waiting for valuation upside that never seems to leave the runway.’DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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EasyJet boss warns Rachel Reeves against more passenger tax hikes
