EasyJet plans to follow Ryanair in cutting domestic flights following the Government’s move to increase air passenger duty (APD).

The budget airline is scaling back its UK schedule to meet an anticipated slump in demand on domestic routes, with fares set to rise after the Chancellor’s latest tax raid.

Kenton Jarvis, the airline’s finance chief, said services linking London airports with Scotland and Northern Ireland would be worst hit.

Mr Jarvis, who will step up to become chief executive in January, said that while easyJet would take a £13m annual hit from the Government’s rise in National Insurance contributions for employers, the decision to increase APD would be more damaging.

It comes after the Chancellor confirmed in her Budget last month that APD would rise by £2 per flight, lifting the standard rate to £16 – or £32 for a return trip between UK cities.

Mr Jarvis said: “We were really happy when the Government said they were pro-growth and I understand why they want to increase things like the minimum wage.

“But the ADP is really disappointing. Fundamentally, it’s exactly what they said they didn’t want to do, which is to tax the working person.

“We’re an island and we’re taxing what gets the economy moving. It’s at loggerheads with being pro-growth. I don’t think it’s a smart move.”

Mr Jarvis said he expected the step to “dampen demand”. He said easyJet would respond by “taking a bit of capacity out of UK domestic,” where the tax “is going to hit both ends of those flights, if you go there and back.”

EasyJet ranks as the number one airline serving Scotland, with flights from Gatwick and Luton to Glasgow and Edinburgh, as well as Aberdeen and Inverness, with more than two dozen flights a day at peak times.

EasyJet’s planned service reductions come after Ryanair said this month it would slash UK capacity by 10pc or 5m passengers in response to what it called an “idiotic” tax grab.

Michael O’Leary, the Ryanair chief, branded the move to lift APD as “short-sighted” and said it showed that Ms Reeves had “no clue how to deliver growth in the UK economy.”

APD was introduced in 1994 by Kenneth Clarke, the then-chancellor, to ensure that aviation paid its fair share of taxation.

Labour has increased the levy just as other European governments introduce measures to promote flights. Ireland, Hungary, Sweden and some Italian regions have abolished air travel taxes.

Mr Jarvis said he regarded the APD and National Insurance increases as “part of the cost of doing business in the UK”.