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Annual General Meeting In Berlin

IATA lashes out about new German tax on air transport

Luc Citrinot, eTN  Jun 09, 2010

(eTN) - It sounds like a bad joke or some kind of unwilling irony. As more than 700 aviation leaders gathered in Berlin for IATA's (International Air Transport Association) Annual General Meeting on June 7 and 8, the government of German Chancellor Angela Merkel announced a series of austerity measures to reduce its deficit. Among them is a new tax, which will heavily burden the airline industry. Once more, the tax has been branded as an "environment tax," modeled on the English one and introduced a year ago by the former UK Labour government. The tax is supposed to raise €1 billion per year.

The decision has, of course, infuriated IATA and its director general and CEO, Giovanni Bisignani: “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.”

Bisignani’s anger is largely shared by Wolfgang Mayrhuber, Lufthansa chairman of the Board and CEO: “It is absolutely detrimental for a country like Germany, which depends so much on export. Putting one billion euro of taxes represents more than all profits from the entire German airlines’ industry,” he explained. “We are not the enemies of the German government. In contrary, I fully respect the state’s commitment for reducing the country’s debt. But the government should look at all negative aspects and look at similar initiatives taken before in the Netherlands or Belgium. The Dutch government finally withdrew its aviation tax once it realized that the Netherlands’ economy was losing €1.2 billion in revenues when the state was trying to raise €300 million.”

Air Berlin CEO Joachim Hunold could not agree more on the government’s initiative: “We do not understand our government’s vision. Our industry is useful to the community; it is an asset for all of us. We should be more vocal and lobby better all governments about the benefits of air transport for everybody,” he said.

Germany’s new tax arrives at one of the worst times for the European air transport industry. “European GDP is expected to grow this year by only 0.9 percent - the lowest among the world’s major regions. Operating in this environment, Europe’s airlines will be the only region in the red with losses of US$2.8 billion. This tax is a body blow to the weak economy and a fragile industry. And it is a kick in the teeth to travelers at a time when they can least afford it,” added Bisignani. According to Mayrhuber, the future departure tax should burden passengers by an estimated €16.

IATA lashes out about new German tax on air transport
Giovanni Bisignani and Wolgang Öyrhuber during IATA AGM in Berlin / photo by Luc Citrinot

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