Italy's price cap on flights to Sicily and Sardinia is "illegal and unenforceable", Ryanair (RYA.I) group CEO Michael O'Leary told Reuters on Tuesday, adding the budget airline had lodged a complaint with the European Commission.
Speaking in Rome, O'Leary said Ryanair could respond by reducing domestic flights to Sicily by as much as 15-20% this winter, shifting its focus instead to international routes to the southern Italian holiday island.
Last month, the government banned airlines from raising fares to Sicily and Sardinia beyond a level "200% higher" than the average price for flights to the two islands, a move aimed at stemming price increases over the peak holiday periods.
Ryanair, the largest airline operator in Italy, quickly spoke out against the move which O'Leary said had not been properly thought out.
"They (the government) have no idea how their own decree will work," he said.
"What average air fare? The average air fare in August, the average air fare in November, the average air fare on a Tuesday, the average air fare on a Friday?"
"You ask these simple questions and they don't know," he added.
Industry Minister Adolfo Urso hit back, telling reporters that Italy "is a sovereign country and won't allow anyone to blackmail it".
GROWTH PLANS
O'Leary said Ryanair remained committed to growing over the long term in Italy, regardless of the government's moves.
"We have set out for investors that we have 400 aircraft deliveries over the next 10 years and we want to place up to 100 new aircraft in Italy in the next 10 years. We plan to grow from 50 million to 100 million passengers in Italy," he said.
He expects the company's annual meeting this week comfortably approve a 300 Boeing (BA.N) aircraft order.
Asked about an RTX Corp (RTX.N) engine problem that will force some Ryanair competitors to ground some Airbus jets for inspection in the coming years, O'Leary said he believed it would only have a short-term impact on industry capacity.
"Over the medium and long term it will have no effect," he said.
