Germany To Nearly Double Aviation Tax on Short-haul Flights

 - October 15, 2019, 2:55 PM

Short-haul flights from Germany will see a 75 percent increase in the aviation tax, from the current €7.50 ($8.27) per passenger departing the country’s airports to €13.03, under plans set for adoption by the federal government at its weekly cabinet meeting on Wednesday. Germany’s coalition government revealed plans to raise the aviation tax—which it introduced in 2011—already last month, but it never confirmed the rates of the planned hike.

According to the latest draft proposal, reported in Die Welt on Tuesday afternoon, the aviation tax increase on all departing flights—connecting flights remain exempt—will take effect on April 1, 2020. While short-haul flights will see the highest rate hike proportionally, the tax on medium-haul flights between 2,500 kilometers (1,350 nm) and up to 6,000 kilometers will increase to €33.01 from €23.43 at present. A €17.25 increase in the levy on long-haul flights will result in a tax of €59.43.

The German Finance Ministry heralded the decision. “It puts us at the forefront of the air transport tax, together with the UK, in Europe,” it said. The UK air passenger duty (APD) amounts to £13 ($16.61) per ticket for flights up to 2,000 miles in standard economy-class flights and £78 for longer flights in economy, and £26 and £172 for premium-class tickets, respectively.

The revenue earned from the German aviation tax increase will finance a reduction of the value-added tax on train tickets to 7 percent, from the current 19 percent. It accounts for part of the country’s wider climate protection goals and “Klimaschutz” package.

The German aviation industry, however, fears the aviation tax hike will reduce the competitiveness of German airlines and asserts it does not support efforts to significantly reduce CO2 emissions from aviation. The aviation tax cost airlines €1.2 billion in 2018, of which German airlines contributed €549 million. The German government expects the new measure will deliver additional tax revenues of €740 million per year. “We oppose the tax increase,” a spokesperson for the German aviation association, the BDL, told AIN. “We do not believe this additional tax revenue will contribute to the nation’s or the industry's climate goals. It will reduce German airlines’ financial resources to invest in new technologies and fleet,” he said, adding that taxing does not cut CO2 emissions.

At a BDL event in Brussels last month, the trade body’s executive director, Matthias von Randow, told AIN he urged the German government to segregate revenue from the aviation tax in research and development for a greener air transport system. The BDL sees substantial benefits in the industrial-scale production of power-to-liquids (PtL) alternative fuel from renewable electricity and CO2 to replace conventional kerosene. The comprehensive and time-critical implementation of those innovative fuels requires extensive political backing, the BDL argued.

Airports have expressed concern about traffic leakage to gateways in neighboring countries. “Airports in Holland, Belgium, and Luxembourg will be very happy to accommodate German passengers fleeing this increased airline tax,” Cologne Bonn Airport president and CEO Johan Vanneste said. He told AIN he expects traffic at the airport to decline next year by several percentages as a result of the aviation tax increase. “We saw this happening in 2011; airports close to the border lost a lot of traffic to their counterparts in neighboring countries such as Maastricht Airport," the BDL spokesperson noted.