Belgian and Irish announcements of new passenger departure taxes lead to airline industry anger

Belgian and Irish announcements of new passenger departure taxes lead to airline industry anger | taxes, passenger taxes, Ireland, Belgium, AEA, IATA, Dublin Airport Authority

(photo: Brussels South Charleroi Airport)
Thu 16 Oct 2008 – Both Belgian and Irish governments announced on Tuesday their intentions to levy departure taxes on airline passengers. Belgium, which is struggling to find up to 2.5 billion euros to balance its 2009 books, is looking to raise 132 million euros from the new tax, although it is being promoted as a measure to benefit the environment through an anticipated reduction in carbon emissions. The Irish tax, which has no such pretensions, is expected to raise 95 million euros in 2009 and 150 million euros in a full year.
Exact details of how much passengers departing Belgian airports will have to pay are unclear, although reports suggest it could be €10 to a European destination and €40 for all others. Airports in Belgium like Brussels, Antwerp, Liège and Charleroi have been benefiting from Dutch passengers seeking to avoid a similar ‘eco-tax’ imposed by the Dutch government in July. The Dutch tax levies departure taxes ranging from €11.25 to €45, raising what the government predicts will be around €312 million annually.
Ireland plans to introduce its passenger departure tax from March 2009, with air travellers paying €2 for a single flight of less than 300km (186 miles) – effectively €4 on an internal return flight – or €10 over this length. Although the details have yet to be spelt out, the tax is not extended to flights outside Europe, except to North Africa. Whether intentional or not, this would appear to avoid contravening Article 15 of the Chicago Convention, assuming other EU countries won’t object, which prohibits such levies without a bilateral agreement.
The Dublin Airport Authority, which operates Dublin, Cork and Shannon airports, stressed the new tax would be on top of the airport charge of €14.60 currently payable by departing passengers to cover airport infrastructure, security and safety costs.
The UK is expected to announce a decision soon on its proposals to replace Air Passenger Duty with an aviation per-plane duty from November 2009 that is expected to raise €3.2 billion annually, rising to $4.4 billion by 2012.
The Belgian and Irish measures have brought an angry response from the airline industry. Irish flag carrier Aer Lingus said the tax would further damage already falling consumer demand for air travel, putting inbound tourism and related jobs at a significant risk.
The Association of European Airlines (AEA), which represents some 35 carriers and is based in Brussels, called on the Belgian government to admit the passenger tax proposal was “a purely money-grabbing exercise which will have no discernible effect on the environment”.
AEA Secretary General Ulrich Schulte-Strathaus said: “There is a perverted logic here: either the treasury benefits from passengers paying the tax, or the environment – supposedly – benefits from passengers not flying. You can’t have it both ways.
“Let us be absolutely clear, this is another burden on the Belgian taxpayer and Belgian business. Travel is a quality-of-life amenity which, in difficult times, takes an extra significance in personal spending decisions. It would be a very unfriendly act indeed to extract still more tax revenue when consumer and business confidence – in Belgium and worldwide – is at such a low ebb.”
The International Air Transport Association (IATA) criticized the Irish and Belgian plans as “collective madness”. Its Director General and CEO, Giovanni Bisignani, said: “Filling budget gaps or financing government investment in the banking industry with gratuitous travel taxes is policy myopia at its worst. The timing could not be worse for governments to make mobility more expensive.”
Note: At current exchange rates €1=US$1.34



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