Germany Proposes Long-Haul Aviation Tax

Worrisome news from Germany: On Wednesday, the German Federal Cabinet passed a draft of a so-called "Luftverkehrsabgabe" (Air Traffic Concession Tax). According to Ricarda Lindner, regional manager the Americas for the German National Tourist Office, this is a three-stage tax per passenger for all flights departing from German airports (except transit flights) of $10 (€8) for short-haul and inner-German flights, $32 (€25) for medium-haul and $57 (€45) for long-haul flights...for example, to the US. "The tax will be taken from the airlines, not the passenger, and all flights starting January 1, 2011 are affected," Lindner told Travel Agent. The tax will also be charged on flights for 2011 booked after August 31 of this year. Lindner did acknowledge that airlines might have to "adjust their ticket prices accordingly" for the tax.

According to the federal budget estimate, Lindner added, the tax is expected to generate €1 billion of tax income in 2011.

Martin Riecken, Head of Corporate Communications The Americas for Lufthansa, said that the airline is "strongly opposed" the proposed aviation tax. "This applies both to the content of the tax and to its immediate application, which was announced September 1."

"Such unilateral action will weaken Germany as a base for the aviation industry, and will massively distort competition," Riecken said. "As Germany’s largest carrier, Lufthansa will be hit particularly hard by the tax. The relationship between the level of the tax and the distance flown will put Germany – a leading export nation that relies heavily on global connections – at a special disadvantage. The aviation tax will give momentum to foreign airlines and airports, as the experience in the Netherlands has shown." The Netherlands imposed a similar tax in 2008, which was abolished in 2009, after Dutch airlines lost nearly €1 billion in revenues, Riecken explained.

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