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Ryanair fares may soar after staff costs rise

RYANAIR may have to increase its fares as a result of a sudden rise in staff costs.

The employment expenses could shoot up following a ruling which changes the way airlines pay social security contributions for workers.

At the moment, Ryanair pays the contributions according to the regulations in Ireland where the rates are among the lowest in the EU.

Regardless of where they live, Ryanair's thousands of cabin crew and pilots are employed under Irish contracts as the company's registered address is in Dublin.

But new laws from the European Parliament aim to force airlines to pay social contributions based on where the staff members are located.

It would mean, for example, that Ryanair workers flying in and out of France would have to receive the rates applicable to that country.

The airline branded the legislation another example of how the EU introduces regulations "which serve no purpose" other than to increase the cost of air travel.

It also believes the changes would reduce competitiveness between EU states.

MEPs voted to close the loophole, meaning airline workers will be subject to the social security rules of the country in which they routinely work.

The legislative resolution was adopted with 540 votes in favour, 19 against and 30 abstentions.

Ryanair said: "This is also another blow for the free movement of labour which was one of the founding principles of the single market."

British MEP Jane Lambert said: "It (the previous system) was not put in place to provide an opportunity for cost-cutting for businesses and asking them to provide an opportunity, particularly for those with mobile workers, for the business to choose the cheapest place to register its workers for social security purposes."

Ryanair boss Michael O'Leary said in 2010: "All of Ryanair's mobile employees are employed on lawful EU contracts.

"They are required to -- and do -- pay taxes, social insurance and pension fees in accordance with EU regulations as a condition of their employment in Ryanair."