NEWS | Wednesday, 10 September 2008

Ryanair passengers receive tax subsidy

David Darmanin
Ryanair’s recent issue of 6 million tickets sold at €10 has eliminated Air Malta’s chance of competing, as the Irish low cost carrier has not only knocked off prices on air fare, but also on moneys due to government in taxes, usually borne by the passengers.
When reserving airline tickets online, both Ryanair and Air Malta quote a breakdown of costs pertaining to air fare price, taxes and, in Air Malta’s case, also fuel surcharge. Ryanair’s policy on fuel surcharge is to absorb the cost itself rather than charge it directly onto the customer as many other airlines do.
But even if Air Malta had to follow suit in absorbing fuel cost increases and offer flights for free to Bari, Pisa and Valencia from Malta for the next months, it would still not be in a position to compete with Ryanair when it comes to tax charges, including those due to the Maltese government.
The €23.29 departure tax imposed by the Maltese government until 1 November for instance, does not appear on Ryan Air’s breakdown of costs for flights booked for 31 October or before.

Air Malta on the other hand, include it as a cost due to government by the passenger, since the tax is intended to directly address the consumer, not the airline.
But even after this tax is removed in November, taxes paid on Air Malta tickets still differ considerably to those paid on Ryanair tickets for most destinations.
For instance, the tax rate due by Ryanair to the Maltese government for a one-way flight to Bari in November, amounts to €10.00 per person, the total cost of the ticket.
Airmalta do not fly to Bari, but a flight on the same day to the closest airport, in Reggio Calabria, would amount to €63.49, €18.49 of which are due in taxes to the Maltese government.
Meanwhile, a spokesperson for the Ministry of Finance was contacted to clarify why there was such a discrepancy in taxes between the two airlines.
“The Maltese government charges the same tax rates to all airlines. There are no subsidies or reductions favouring an airline or the other. Both are charged the same rates,” he said. “With regards to the departure tax, both airlines will be paying such taxes until 1 November, which is when this tax will be removed.”
A Ryanair official in Ireland was asked whether the airline forks out money to subsidise taxes due to the Maltese government by its passengers, but a reply failed to reach this newspaper by the time we went to print.
Air Malta’s public relations officer was not available to take our calls, but when one of the airline’s sales offices was contacted, a representative said: “Besides departure tax, I don’t know exactly what the taxes are for and what they cover, but I am almost certain that Ryanair would have different tax arrangements and special concessions in the countries in which it operates. I cannot tell you much about Ryanair though, but speaking for Air Malta, the tax rate appearing after 1 November includes a €23.29 discount that would have been previously due as departure tax.”

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