Ryanair says to cut Italian routes, jobs, blames government passenger tax

A Ryanair aircraft is parked at Manchester Airport in Manchester, north-west England, Britain, May 26, 2015. REUTERS/Andrew Yates

ROME (Reuters) - European budget airline Ryanair said on Tuesday it will cut routes and jobs in Italy later this year as a result of a 40 percent increase in passenger departure taxes.

Ryanair said that from October it would drop 16 routes and 600 jobs after the Italian government this year raised departure taxes to 9 euros ($9.81) from 6.50 euros to help subsidise layoffs at former flagship carrier Alitalia.

“Ryanair had no choice but to close two of its 15 Italian bases, Alghero and Pescara, and move its aircraft, pilots and crews to countries that have lower tourism costs,” David O’Brien, Ryanair’s chief commercial officer, said in a company statement issued in Italian.

Cutting eight routes from the Sardinian city of Alghero, five from Pescara on Italy’s Adriatic coast and all of its current service in the southern city of Crotone will cause 600 job losses and 800,000 client losses, Ryanair said.

The tax increase will “seriously damage Italian tourism,” O’Brien said, appealing for the government to eliminate the tax that “will hand a golden opportunity for growth to destinations in Spain, Portugal and Greece that have lower tourism costs”.

On Monday, Ryanair announced a massive share buyback of 800 million euros because record passenger numbers will allow it to hit its profit target even as fares fall.

In a separate statement, Ryanair said it would add four new routes for the “winter of 2016” from Rome to Sofia, Bulgaria, Nuremberg, Germany, Prague and Lanzarote in the Canary Islands.

Reporting by Steve Scherer; Editing by Mark Heinrich