German air passenger departure tax linked to environmental performance draws airline protests
(photo: Günter Wicker/Berlin Airports)
Wed 9 June 2010 – The German government is to introduce a departure tax on all passengers departing German airports until the introduction of airlines into the Aviation EU Emissions Trading Scheme in 2012. The tax is aimed at raising €1 billion ($1.2bn) annually and although details are still to be released it is expected to add around €8-16 per ticket. In a statement, the government said the tax would be based on factors such as the flight’s noise level and fuel consumption. IATA branded the tax a “cash grab” and inappropriate at a time of economic hardship for European airlines. Lufthansa CEO Wolfgang Mayrhuber said the tax raised would exceed the total annual collective earnings of all German airlines.
The tax, or “ecological air travel levy”, was announced by the government as part of a four-year plan to cut the country’s budget deficit.
Speaking yesterday at the conclusion of the International Air Transport Association (IATA) AGM and World Air Transport Summit, coincidentally held in Berlin, the German capital, IATA Director General Giovanni Bisignani said: “This is the worst kind of short-sighted policy irresponsibility. It’s a cash-grab by a cash-strapped government. Painting it green adds insult to injury. There will be no environmental benefit from the economic damage caused.”
He described the tax as the wrong measure at the wrong time. “If the Chancellor is serious about aviation and climate change, the focus should be on finding a globally coordinated solution at the International Civil Aviation Organization in advance of the COP-16 climate talks in Cancun,” he said.
“This tax is a body blow to the weak economy and a fragile industry. And it is a kick in the teeth to travellers at a time when they can least afford it.”
He said the German government should learn from the experience of the Dutch, who had similarly tried to raise revenue from a similar eco-tax on air tickets but “had the good sense” to rescind the tax when it found the loss to the Dutch economy exceeded the income from the tax.
The German announcement, which had been unforeseen by airlines, came as IATA declared that global air traffic is returning to pre-recession levels, with all regions forecasting a return to overall profitability in 2010. The exception, noted Bisignani, was Europe, whose airlines are expected to notch up a collective loss of $2.8 billion.
Sylviane Lust, Director General of the International Air Carrier Association (IACA), which represents leisure airlines, commented: “This tax is thinly disguised as a ‘green tax’ when it is obviously a revenue generator for the German government. We are seeing a worrying trend for governments to misuse the ‘green’ label as a way of making money that does nothing for the environment.
“The recent ticket tax in the Netherlands caused a significant drop in demand for flights from its airports and had to be hastily withdrawn. I would urge the German government to first research the full effects that such a tax may have on demand.
“Following the recent ash crisis, the last thing airlines need is another blunt tax imposed on them. The EU ETS scheme will be penalising enough for airlines and any more taxes will put further pressure on airlines.”
The German Airports Association (ADV) said the tax was a severe blow to the German air transport industry and would affect the competitiveness of the German economy and was an enormous burden to passengers. It provisionally estimated the tax could add €14 to a ticket.
With a contrary view, Bill Hemmings of European transport NGO Transport & Environment said: “Germany is playing catch-up. The UK and France have both had ticket taxes for several years, to make up for the lack of Value Added Tax on international tickets. Other governments across Europe should be doing the same; it’s far smarter to close this loophole than to raise taxes on labour, for example.”
In one of its first moves, the new UK government announced recently it would switch Air Passenger Duty to a per plane levy to make the tax more environmentally sensitive, with the argument that it would encourage carriers – including all-cargo operators for the first time – to use more fuel efficient aircraft and achieve higher load factors.