| Part of a series on |
| Taxation |
|---|
 |
| An aspect of fiscal policy |
Aviation taxation and subsidies includes taxes and subsidies related to aviation.
Taxation is one of several methods to mitigate the environmental impact of aviation.
According to the Amsterdam-based international environmental organisation Friends of the Earth (2005), aviation does not pay tax on fuel and aviation's expansion is fuelled by its exemption from taxes. In the UK, aviation got £9 billion tax free benefits in 2003. Friends of the Earth argued that fuel tax would give incentive to improve the energy efficiency of operations, and would be a more effective response than emission trading. [1]
Historically, EU aviation fuel was tax free and attracted no VAT. Commercial aviation fuel taxation in the EU was banned in 2003 by the Energy Taxation Directive (2003/96/EC), except with bilateral agreements between member states. However, as of 2018, no such agreements exist. [2]
In November 2019, the Finance Ministers of Belgium, Bulgaria, Denmark, France, Germany, Italy, Luxembourg, the Netherlands and Sweden presented a joint statement calling on the European Commission, more specifically European Commissioner for Climate Action Frans Timmermans, to introduce EU-wide taxes on aviation so as to charge the entire aviation industry more for its emissions and pollution, and put all member states on level pegging. Citing the fact that aviation causes around 2.5% of global CO2 emissions, the Ministers proposed both uniform air passenger taxes as well as kerosene taxes (both excise duties and VAT). [3] [4] In a September–October 2019 poll conducted by the European Investment Bank (EIB) amongst 28,088 EU citizens from the then 28 member states, 72% said they would support a carbon tax on flights. [5]
As part of its Fit for 55 package proposed in July 2021 by the European Commission, the European Union is planning to gradually introduce a kerosene tax (for both private and commercial flights) between 2023 and 2033 at EUR 10.75 per gigajoule (GJ), while sustainable fuel such e-kerosene will benefit from a minimum rate of zero. [6]
Austria introduced a Flight Tax Act (Flugabgabegesetz, FlugAbgG) in April 2011 [7] similar to the German aviation taxation system. In 2013, the fees for short and medium-haul flights were reduced from 8 euros to 7 euros and from 20 euros to 15 euros respectively, and halved again in 2018. According to §5.1 of the Flight Tax Act, the flight tax depends on the distance to the destination airfield per passenger: [8]
During the COVID-19 pandemic, airlines in Europe had to temporarily cease most operations and had requested a total of 12.8 billion euros in government support by mid-April 2020, according to a Transport & Environment, Greenpeace and Carbon Market Watch report. At the time, Austria was the only country which insisted (through Minister of Climate Action, Environment, Energy, Mobility, Innovation and Technology Leonore Gewessler of the Greens) that a government bailout of its flag carrier (Austrian Airlines, with about 7,000 employees [9] ) should be linked to climate targets. [10] On 8 June 2020, the Austrian conservative–green coalition government concluded a support deal for Austrian Airlines (a subsidiary of Lufthansa) for 150 million euros in taxpayer grants, and 300 euros in banking loans that are to be paid back. This was significantly less than expected (Austrian Airlines had applied for 767 million euros), and came under the following conditions: [11] [12] [9]
In 2022, the Belgian government introduced an aviation tax for all airline flights of 10 euros within 500 kilometres, two euros if the destination is located more than 500 kilometres away and within the EEA and four euros outside the EEA. The reason the tax is higher for short flights is because a shift to trains is more realistic for those distances. [13]
On 9 July 2019, French transport minister Élisabeth Borne announced that France would introduce an eco-tax on passengers in 2020. Flights within the EU, including domestic flights, would be taxed 1.5 euros for economy class and 9 euros for business class, while flights out of the EU would be charged with 3 euros for economy class and 18 euros for business class. Different rules apply to Corsica and other overseas departments and territories of France. The exo-tax was projected to produce 180 million euros in revenue annually. [14]
On 9 June 2020, during the COVID-19 pandemic in France, economy and finance minister Bruno Le Maire announced a financial support programme for the aerospace sector for 15 billion euros. It included the earlier announced bailout of its flag carrier Air France–KLM at 7 billion euros (comprising a state loan of 3 billion and bank loans of 4 billion), with conditions to transform it into the 'most environmentally friendly airline on the planet'. There were several aims, including the protection of 300,000 direct and indirect jobs (100,000 of which were said to be at risk within 6 months), a gradual recovery of the 34 billion annual trade surplus that the French aviation industry produced, and the goal of developing carbon-neutral air travel by 2035 rather than 2050 (for which the civil aviation research council CORAC would receive €1.5 billion in support over three years). [15]
Germany's air passenger tax is divided in three categories, with the following taxes since 1 April 2020: [16]
In 2018 Germany applied 19% VAT on domestic airline tickets.
The Republic of Ireland had an Air Travel Tax from 2009 until April 2014.
On 1 July 2008, the Fourth Balkenende cabinet introduced an aviation tax (vliegbelasting or vliegtaks) of 11.25 euros per ticket for flights within Europe and 45 euros for destinations outside Europe. [17] Due to vehement opposition by the aviation industry and travel agencies, the tax was abolished a year later on 1 July 2009, leading to heavy criticism from academia and environmental organisations. Amsterdam Airport Schiphol claimed it lost 900,000 passengers to airports abroad due to the tax, but Vrije Universiteit Amsterdam economist Eric Bartelsman pointed out that the Great Recession reduced air travel across the world, not just in the Netherlands. Tilburg University economist Lans Bovenberg was more positive, arguing aviation taxes should be implemented simultaneously across the entire EU to be effective, and that taxing jet fuel would be a more effective measure than taxing passengers. [18]
In 2017, the Third Rutte cabinet coalition agreement planned to introduce a new aviation tax of 7 euros on every ticket, regardless of destination, on 1 January 2021. [17] Cargo aircraft will pay a tax based on their weight and noise pollution class: [17] up to 3.85 euros per tonne of cargo, with a lower rate for quieter aircraft. [14] The tax, which is projected to produce an annual revenue of 200 million euros, has four goals: reducing CO2 emissions, reducing other emissions such as particulates, reducing noise pollution, and preventing a jet fuel tax. [17] The new plan is more likely to succeed because the tax is much lower than in 2008, and most neighbouring countries except Belgium had also introduced aviation taxes in preceding years, making passengers' tax circumvention efforts unlikely. [17] The government was aiming to eventually establish a uniform EU-wide aviation tax. [17]
Since 1 January 2021, an air passenger tax of €7.845 per person per flight applies in the Netherlands. The tax does not apply to transfer passengers, and children under the age of 2. In the Tax Plan 2023, the cabinet proposed to increase the air passenger tax by €18.48 from 2023. Parliament had yet to approve the plans. [19] 1 January 2023, the new tax rate of €26,43 went into force. [20]
Sweden introduced a passenger tax for commercial flights of more than ten passengers in April 2018. [14] As of 2020, Swedish aviation taxes for passengers were divided into three categories, depending on the destination: [21]
In November 2019, the Swedish government of Stefan Löven (Löfven I Cabinet) proposed to collect an annual aviation tax of around 78 million euros. [22] Under the proposal's conditions, the Swedish aviation industry would still be 100% exempt from the Swedish energy tax, carbon dioxide tax and sulphur tax that other companies pay. [23]
Norway introduced airline passenger fees on 1 June 2016. From 1 June 2016 to 31 March 2020, the fee was 80 Norwegian kroner per passenger. On 1 April 2020, the fee was changed to 75 kroner for passengers with a final destination in Europe and 200 kroner for passengers with a final destination outside Europe. In addition, VAT was added to the tax. [24]
In June 2020, the Swiss Federal Assembly approved a proposal (passed by the Council of States in 2019) to introduce an environmental levy of 30 to 120 Swiss francs per airline ticket 'depending on distance and [travel] class'; nearly half of the proceeds are to flow into a climate fund for emissions-reduction initiatives. [25] The Swiss oil lobby started a campaign and a referendum against the new CO2 laws (which included the aviation tax), and in June 2021, 52% of the Swiss voters rejected them, [26] [ non-primary source needed ] meaning there will not be aviation taxes in the very near future.[ citation needed ] Parliament continued to reject several parliamentary initiatives on the subject thereafter. Public support for some kind of airline ticket tax remained high, with 72% of respondents in a June 2022 GfS Zurich survey saying they were in favour: 42% of respondents backed a levy of CHF30 ($30.40) for short-haul flights and CHF120 for long-haul flights, while 50% agreed with even higher charges. [27]
In the United States, most states tax avgas and jet fuel.
Some governments[ who? ] subsidize airports and passenger customs costs within airports.
The EU Commission in 2014 ruled that subsidies Ryanair received from a regional authority a decade ago had to be repaid (€525,000). [28]
In June 2020, Flemish Economy Minister Hilde Crevits decided that trainings for airplane and helicopter pilots would no longer be subsidised in Flanders from 1 July 2020 onwards. [29]
An airline is a company that provides air transport services for traveling passengers and/or freight. Airlines use aircraft to supply these services and may form partnerships or alliances with other airlines for codeshare agreements, in which they both offer and operate the same flight. Generally, airline companies are recognized with an air operating certificate or license issued by a governmental aviation body. Airlines may be scheduled or charter operators.
Deutsche Lufthansa AG / Lufthansa German Airlines, commonly shortened to Lufthansa, serves as the flag carrier of Germany. When combined with its subsidiaries, it stands as the second-largest airline in Europe in terms of passengers carried, after the ultra low-cost carrier Ryanair, largest in Europe and fourth largest in the world by revenue. Lufthansa is also one of the five founding members of Star Alliance, which is the world's largest airline alliance, formed in 1997.
Scandinavian Airlines, more commonly known and styled as SAS, is the flag carrier of Denmark, Norway, and Sweden. SAS is an abbreviation of the company's full name, Scandinavian Airlines System or legally Scandinavian Airlines System Denmark-Norway-Sweden. Part of the SAS Group and headquartered at the SAS Frösundavik Office Building in Solna, Sweden, the airline operates 180 aircraft to 90 destinations. The airline's main hub is at Copenhagen-Kastrup Airport, with connections to 109 destinations around the world. Stockholm Arlanda Airport is the second largest hub, with Oslo Airport, Gardermoen being the third major hub of SAS. Minor hubs also exist at Bergen Airport, Flesland, Göteborg Landvetter Airport, Stavanger Airport, and Trondheim Airport. SAS Cargo is an independent, wholly owned subsidiary of Scandinavian Airlines and its main office is at Copenhagen Airport.
Pakistan International Airlines is an international airline which is the government-owned flag carrier of Pakistan. Its primary hub is Karachi's Jinnah International Airport, while Allama Iqbal International Airport in Lahore and Islamabad International Airport serve as secondary hubs.
Norwegian Air Shuttle ASA, trading as Norwegian, is a Norwegian low-cost airline and Scandinavia's second-largest airline, behind Scandinavian Airlines. It is the fourth largest low-cost carrier in Europe behind Wizz Air, easyJet and Ryanair, the largest airline in Norway, and the ninth-largest airline in Europe in terms of passenger numbers. It offers a high-frequency domestic flight schedule within Scandinavia and Finland, and to business destinations such as London, as well as to holiday destinations in the Mediterranean and the Canary Islands, transporting over 30 million people in 2016. The airline is known for its distinctive livery of white with a red nose, with portraits of high achievers on the tail fins of its aircraft.
Ryanair Holdings PLC is an Irish ultra low-cost carrier group headquartered in Swords, Dublin, Ireland. The company includes the subsidiaries Ryanair DACTooltip Designated activity company, Malta Air, Buzz, Lauda Europe and Ryanair UK. Ryanair DAC, the oldest airline of the group, was founded in 1984. Ryanair Holdings was established in 1996 as a holding company for Ryanair with the two companies having the same board of directors and executive officers. In 2019 the transition began from the airline Ryanair and its subsidiaries into separate sister airlines under the holding company. Later in 2019 Malta Air joined Ryanair Holdings.
Thai Airways International Public Company Limited, trading as THAI is the flag carrier airline of Thailand. Formed in 1961, the airline has its corporate headquarters in Vibhavadi Rangsit Road, Chatuchak district, Bangkok, and primarily operates from Suvarnabhumi Airport. THAI is a founding member of the Star Alliance. The airline is the second-largest shareholder of the low-cost carrier Nok Air with a 15.94 per cent stake (2020), and it launched a regional carrier under the name Thai Smile in the middle of 2012 using new Airbus A320 aircraft. In 2023, it was announced that Thai Smile would be merged back into Thai Airways.
Olympic Airlines, formerly named Olympic Airways, was the flag carrier airline of Greece. The airline's head office was located in Athens. The airline operated services to 37 domestic destinations and to 32 destinations worldwide. The airline's main base was at Athens International Airport, "Eleftherios Venizelos", with hubs at Thessaloniki International Airport, "Macedonia", Heraklion International Airport, "Nikos Kazantzakis" and Rhodes International Airport, "Diagoras". Olympic Airlines also owned a base at London Heathrow Airport. By December 2007, the airline employed about 8,500 staff.
Wizz Air, legally incorporated as Wizz Air Hungary Ltd., is a Hungarian ultra low-cost carrier with its head office in Budapest, Hungary. The airline serves many cities across Europe, as well as some destinations in North Africa, the Middle East, and South Asia. It has the largest fleet of any Hungarian airline, although it is not a flag carrier, and serves 54 countries. As of 2023, the airline has its largest bases at Bucharest Henri Coandă International Airport, Budapest Ferenc Liszt International Airport and London Luton Airport and flies to 194 airports.
Airlines for America (A4A), formerly known as Air Transport Association of America (ATA), is an American trade association and lobbying group based in Washington, D.C. that represents major North American airlines since 1936.
Aircraft engines produce gases, noise, and particulates from fossil fuel combustion, raising environmental concerns over their global effects and their effects on local air quality. Jet airliners contribute to climate change by emitting carbon dioxide, the best understood greenhouse gas, and, with less scientific understanding, nitrogen oxides, contrails and particulates. Their radiative forcing is estimated at 1.3–1.4 that of CO2 alone, excluding induced cirrus cloud with a very low level of scientific understanding. In 2018, global commercial operations generated 2.4% of all CO2 emissions.
The Air Passengers Rights Regulation 2004 is a regulation in EU law establishing common rules on compensation and assistance to passengers in the event of denied boarding, flight cancellations, or long delays of flights. It requires compensation of €250 to €600 depending on the flight distance for delays over of at least three hours, cancellations, or being denied boarding from overbooking. Delays shorter than three hours means no entitlement to any compensation of any kind even if the delay was classified as non-extraordinary. Airlines must provide refreshments and accommodation where appropriate. The Court of Justice of the European Union has interpreted passenger rights strictly, so that there are virtually no exceptions for airlines to evade their obligations for breach of contract.
Air Passenger Duty (APD) is an excise duty which is charged on the carriage of passengers flying from a United Kingdom or Isle of Man airport on an aircraft that has an authorised take-off weight of more than 5.7 tonnes or more than twenty seats for passengers. The duty is not payable by inbound international passengers who are booked to continue their journey within 24 hours of their scheduled time of arrival in the UK. If a passenger "stops-over" for more than 24 hours, duty is payable in full.
The environmental effects of aviation in the United Kingdom are increasing due to the increasing demand for air travel in the country. In the past 25 years the UK air transport industry has seen sustained growth, and the demand for passenger air travel in particular is forecast to increase more than twofold, to 465 million passengers, by 2030. Two airports; London Heathrow and London Gatwick, are amongst the top ten busiest airports in the world for international passenger traffic. Whilst more than half of all passengers travelling by air in the UK currently travel via the five London area airports, regional airports have experienced the most growth in recent years, due to the success of 'no-frills' airlines over the last decade.
TAP Air Portugal is the flag carrier of Portugal, headquartered at Lisbon Airport which also serves as its hub. TAP – Transportes Aéreos Portugueses – has been a member of the Star Alliance since 2005 and operates on average 2,500 flights a week to 90 destinations in 34 countries worldwide. The company has a fleet of 100 aircraft, all of which are manufactured by Airbus with the exception of 22 aircraft manufactured by Embraer and ATR, operating on behalf of the regional airline TAP Express.
The solidarity tax on airplane tickets is a surcharge on the civil aviation tax which is destined to finance Unitaid. This tax was initially proposed by Presidents Jacques Chirac of France and Luiz Inácio Lula da Silva of Brazil. It was initially adopted by five founding countries during a conference in Paris on September 14, 2005. Nine countries actually implemented this tax: Cameroon, Chile, Congo, France, Madagascar, Mali, Mauritius, Niger and the Republic of Korea. Norway also contributes through its tax on CO2 emissions.
The COVID-19 pandemic has had a significant impact on the airline industry due to travel restrictions and a decimation in demand among travelers.
Taxation of aviation fuel in the European Union is regulated by the Energy Taxation Directive (2003/96/EG) of 27 October 2003. This prohibits the taxation of commercial aviation fuel, except for commercial domestic flights or by bilateral agreement between member states. As of 2023, commercial aviation fuel is currently tax exempt under the legislation of all member states of the European Union. This tax exemption has been criticised on environmental grounds.
A short-haul flight ban is a prohibition imposed by governments on airlines to establish and maintain a flight connection over a certain distance, or by organisations or companies on their employees for business travel using existing flight connections over a certain distance, in order to mitigate the environmental impact of aviation. In the 21st century, several governments, organisations and companies have imposed restrictions and even prohibitions on short-haul flights, stimulating or pressuring travellers to opt for more environmentally friendly means of transportation, especially trains.
In aviation, tankering is the practice of loading more fuel than necessary for a trip, to take advantage of lower fuel prices at the airport of origin, or when fuel is in short supply at the destination airport. Tankering increases the weight of the aircraft and therefore total fuel consumption, however it can still reduce costs if the difference in fuel prices is great enough. Fuel prices can vary by over 50% within Europe, with price differences of 20% to 30% between major airports. Modern flight management systems can calculate the optimum amount of fuel to tanker for given origin and destination fuel prices.
