Ryanair Holdings Plc Chief Executive Officer Michael O’Leary blasted Italy’s new cap on airfares as “illegal” and impossible to comprehend, threatening to scale back some of the discount carrier’s flights on popular domestic routes if the government holds onto the measure.
(Bloomberg) — Ryanair Holdings Plc Chief Executive Officer Michael O’Leary blasted Italy’s new cap on airfares as “illegal” and impossible to comprehend, threatening to scale back some of the discount carrier’s flights on popular domestic routes if the government holds onto the measure.
“The price decree is illegal and completely unenforceable,” O’Leary said in an interview. The government failed “to explain how it works,” he said, following a meeting with Italian officials.
Prime Minister Giorgia Meloni’s cabinet last month approved a decree to reduce the impact of rising airfares after a wave of sharp price hikes during the summer, particularly on routes to Sardinia and Sicily.
O’Leary said his airline would consider thinning out its service to the islands if the government holds onto the price cap, and instead offer more international flights to the two destinations, though he noted that Italy remains a key hub for the carrier.
Ryanair has already filed a complaint related to the decree with the European Union.
The airline initiative — one of several recent moves from Italy’s right-wing government signaling a more hands-on approach in the corporate area — was designed to clamp down on carriers’ use of algorithms to set ticket prices.
The decree comes in the wake of a rapid consolidation of the Italian aviation market since the collapse of state-owned Alitalia and a pullback by other carriers during the pandemic.
Read More: Meloni Weighs Further Aviation Moves After Italian Price Caps
Ryanair and Alitalia’s successor, ITA Airways, together make up 53% of the airline market in Italy this year, based on revenue from scheduled flights tracked by consumer group Euromonitor, with the Irish discounter rapidly gaining share.
The Dublin-based carrier and ITA are the dominant players on services between the biggest airports in Sicily and Sardinia and Italy’s two largest cities, Rome and Milan, according to OAG, which tracks trends in aviation.
In the interview, O’Leary also said he’s “not a believer” in buybacks, preferring to reward shareholders with dividends.
Meloni’s government is planning formal talks with airlines this month, according to people familiar with the matter, as the premier advances a populist economic agenda touching on everything from bank taxes to debt reform.
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The escalating fares seen in Italy mirror hikes that have also galvanized other European governments to push back against an increase in airline fees on items such as carry-on baggage and seat selection.
The UK’s Department for Business and Trade is investigating what it calls hidden fees after Prime Minister Rishi Sunak lashed out at the charges in June, an agency spokesperson said. Spain’s Ministry of Consumption has begun examining fees at low-cost carriers such as Ryanair, Vueling Airlines SA, EasyJet Plc and Volotea SL.
(Updates with Italy market from sixth paragraph.)
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