Ryanair threatens legal action against Hungary over 'unjustfied' fine

(Sharecast News) - Low-cost airline Ryanair said it would take the Hungarian government to court after it was fined for passing an "unjustified" windfall tax onto customers.

The budget airline was fined more than €750,000 for adding around €10 onto the price of flights in response to a new tax on "extra profits" introduced by Prime Minister Viktor Orban.

Ryanair dismissed the penalty as "baseless" and aid it would challenge the decision in the EU courts. The airline added that it has the power to set airfares as it wished "without any interference from national governments or their consumer protection agencies".

Orban has levied windfall taxes worth €2bn (£1.7bn) on companies that have made "extra profits" from higher energy prices, interest rates and an uptick in consumer spending following the end of pandemic lockdowns.

The tax was introduced to help restore Hungary's finances after Orban ramped up public spending ahead of his re-election in April. Budapest said it did not expect the tax to trigger price rises for consumers, but Ryanair decided to pass some of the cost on.

The airline emailed customers in early June to tell them it would increase the cost of bookings by around €10, even if they were made before the imposition of the tax.

Travellers were told they could cancel their tickets if they did not want to accept the new charge and would receive a full refund.

The Hungarian government then opened an investigation into the move and on Monday said Ryanair had "misled customers".

Ryanair said that it had not yet received notice of the fine but was readying an appeal.

"EU law prohibits the Hungarian government from introducing retrospective travel taxes while attempting to unlawfully limit the right of airlines to pass on such unjustified taxes onto passengers. If necessary, Ryanair will appeal this matter to the EU courts," it said.

The airline's chief executive Michael O'Leary has said it was "beyond stupid" to levy such a tax on airlines just as they were recovering from losses inflicted by the Covid-19 pandemic.

Reporting by Frank Prenesti at Sharecast.com