Wizz Air ‘reviewing UK capacity’ over increases in APD

The boss of Wizz Air has warned that UK routes may have to be trimmed in the face of rising Air Passenger Duty.

The budget airline would decide whether to reduce services following a review into how the increase in APD is affecting demand and profitability, chief executive Jozsef Varadi told The Telegraph.

He was speaking as Wizz Air reported a profits slump to the year to March as it took a hit from aircraft groundings due to the need for engine repairs and its exposure to the Middle East as the Iran war forced the redeployment of capacity away from points such as Tel Aviv.

APD hit a record high in April, with further inflation-linked increases due from next year.

Varadi said Budapest-based Wizz Air was mostly happy with the performance of its British network but it could not ignore “issues affecting the UK airline industry like ADP charge increases”.

He was reported as saying: “We are evaluating the impacts of those measures to see how they would play out, so that would affect our capacity in the UK.

“Nothing is ever engraved in stone. We have to evaluate how exactly that plays out on our network, our customer base and our financial performance and make decisions accordingly.”

The carrier is seeking to hold down fares this summer despite a hike in jet fuel prices triggered by the Iran war and the closure of the Strait of Hormuz.

He accused the government of heading “directionally the wrong way” by increasing a duty that risked hurting the wider tourism economy.

Varadi said: “I do not think the UK should be overcharging airline customers to raise funds for other activities and commitments, because this is going to undermine airlines and the UK is going to lose out on tourism at the end of the day.”

He said that people were continuing to book later because of the uncertainty the war had created, but that the effect was diminishing, and destinations including Cyprus and Egypt were also seeing an upturn in demand.

Varadi voiced no concerns about fuel supplies, with good visibility until the middle of August, although some countries have begun tapping into strategic reserves.

He said jet fuel was “expensive enough” that refineries would prioritise its production over distillates such as heating oil in the summer months at least. Wizz has locked in 84% of its fuel prices at lower rates during the summer and around 70% for the rest of the year.