EasyJet boss Kenton Jarvis has warned Chancellor Rachel Reeves against raising flight taxes ahead of Wednesday's Budget, arguing such moves would hurt holidaymaker demand and damage the UK's visitor economy. The warning comes as the airline posted better-than-expected annual profits driven by its package holidays business.
Jarvis said UK air passenger duty was already «one of the highest in Europe» and any increase would «naturally dampen demand». He also cautioned against proposed tourist taxes that would allow London mayor Sir Sadiq Khan and other city leaders to impose levies on overnight hotel stays.
«Any increase in tax that impacts the competitiveness of the UK visitor economy would not be a good thing,» Jarvis said. He warned such measures could push tourists toward rival European cities like Paris instead. Last year, easyJet flew 15 million tourists into the UK who spent just under £10 billion across the economy.
Strong holidays performance
The Luton-based carrier reported headline pre-tax profits of £665 million for the year to September 30, up 9% from £610 million and beating analyst expectations of £650 million.
The holidays business was the standout performer, with annual earnings surging 32% to £250 million. This strong showing led easyJet to raise its earnings target for the holidays arm to £450 million by 2029-30. Customer numbers grew by a fifth to 3.1 million, while revenues rose 27% as average selling prices increased 5% to £698.
Airline struggles continue
The airline division faced a tougher year, with headline profits slipping to £415 million from £420 million. EasyJet said improving the carrier's performance had been «more challenging» than hoped, particularly in winter, due to «the pace of route maturity and the wider geopolitical, macro-economic and competitive environment in specific markets».
The company cut seat capacity growth for the year ahead to around 7%, down from 9% in 2024-25. Despite this, easyJet said its winter actions were «the right ones to drive productivity and utilisation benefits while ensuring that the airline is well prepared for the key summer season, which is vital to overall profit growth».
Market reaction
Shares in easyJet fell 3% despite the profits rise. Aarin Chiekrie, equity analyst at Hargreaves Lansdown, noted «The outlook for the new year brought some mixed news». He said «Winter losses are set to get worse, coming in around £30 million behind market expectations, as ongoing investment in its new strategic bases in Milan and Rome continues».
The company expects to grow holidays customers by 15% in the year ahead, with average prices set to rise by high single digits.
Note: This article was created with Artificial Intelligence (AI).
