EasyJet Warns It May Pull Out of Madeira as Parliament Scraps Fare Caps on Island Flights

EasyJet has warned the Portuguese government that it may cut capacity on flights to Madeira and abandon plans to resume service to the Azores after Parliament approved a reform of the islands' mobility subsidy that removes the fare caps airlines have relied on for years.

The low-cost carrier's warning, confirmed by the Secretary of State for Infrastructure in Parliament this week, came days after Ryanair announced it would not return to Azores routes, citing increased airport fees and what it called an unfriendly policy environment.

What Changed

Portugal's Subsídio Social de Mobilidade — the mobility subsidy — has long reimbursed airlines for the difference between a capped fare and their actual operating cost on routes between the mainland and the Atlantic archipelagos. A round trip between Lisbon and Funchal, for example, was subject to a maximum out-of-pocket price for island residents, with the state covering the rest.

In April 2026, the Assembleia da República approved a legislative revision that eliminates the maximum price caps on reimbursable tickets. The state will still pay a subsidy, but without the ceiling that previously kept fares predictable for passengers. Critics say the new formula could allow airlines to raise ticket prices until the subsidy is entirely absorbed — leaving residents paying as much as or more than before.

What EasyJet Said

According to statements relayed to Parliament, easyJet's Portuguese management said the removal of the reimbursement cap creates commercial uncertainty that could make island routes financially unsustainable. Specifically:

• The airline may reduce the number of seats it offers on Madeira routes.
• It does not plan to resume Azores flights under the current rules.

EasyJet has not formally cancelled any scheduled service, but the warning signals a potential withdrawal that would follow Ryanair's exit and leave TAP Air Portugal and SATA as the dominant carriers on island routes — with less price competition for consumers.

Why It Matters for Residents and Expats

For the roughly 250,000 people on Madeira and 240,000 in the Azores, affordable flights to the mainland are not a luxury. Islanders depend on air links for healthcare appointments, university education, family visits, and job opportunities. The mobility subsidy exists precisely to prevent the geographic isolation that comes with living 1,000 kilometres from Lisbon.

The departure of low-cost carriers would reduce competition on routes already dominated by flag carrier TAP and regional airline SATA, potentially leading to higher fares, fewer frequencies, and reduced connectivity to the rest of Europe.

Government's Position

Government officials have defended the reform as part of a broader effort to modernise the subsidy framework and remove outdated controls. However, the Secretary of State acknowledged in Parliament that easyJet had directly communicated the risk of pulling flights if the legislation stands unchanged.

Tourism stakeholders and island authorities are now pressing for adjustments before the summer season, when demand — and the economic dependence on visitor spending — peaks. The Azores and Madeira regional governments have publicly expressed concern that the full consequences of the reform were not assessed before the vote.

What Happens Next

No formal route cancellations have been announced, but passengers planning trips to Madeira or the Azores should monitor airline schedules closely and consider booking early while current capacity remains in place. The government faces pressure to negotiate a compromise that preserves low-cost competition without reversing its legislative goals.

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