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Hungarian Government is making Wizz Air pay extra taxes!
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On 26 May 2022, the Hungarian government published important information on taxation. Airlines that have not been paying extra in the past are now on the government’s list of extra levies. This is a surprise as the sector is only just beginning to recover from the shock of the coronavirus outbreak. Read below for more details.
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Economist Márton Nagy detailed his thoughts at the government briefing: “All airlines operating in Hungary will now have to pay surtax, with a €10 fee per passenger.”
Portfólió reports that Márton Nagy justified the airline tax by saying that passenger traffic at Budapest airport is increasing fast. The summer travel season will likely be strong, as people want to go abroad after two years of restrictions.
The losses of Wizz Air
Wizz Air is the largest of the Hungarian airlines in terms of market share, so the special tax announced today, meaning a total of 30 billion forints per year, is likely to hit the company founded by József Váradi the hardest. In the most recent financial year, Wizz Air had a 31.5 per cent share of the Hungarian market. This is followed by Ryanair, which was the second-largest with a 20.8 per cent share. Lufthansa was third with 7.3 per cent.
Wizz Air is a big player across Europe, and the Hungarian operation plays a key role. The airline’s Hungarian subsidiary, Wizz Air Hungary, had a €286 million profit in 2019. After taxation, Wizz Air lost €721 in the epidemic-hit year of 2020. The whole airline sector was in the red that year, not just Wizz Air.
It is no different to APD – Air Passenger Duty in the UK (also known as Departure Tax in other countries that levy it). In the UK on a short haul flight (within 2000 miles – 3208 km) of London in an economy class seat it is 13GBP – around 5720 huf (business class and first class rates are much higher, as are long haul flights) . Passengers using Wizz Air flights from the UK are already paying that tax. It does not affect the profitability of the airline because the airline merely collects this tax on behalf of the government and then passes it on to the government.