The International Air Transport Association (IATA) on Thursday made a strong pitch for global governments to take a re-look at the economic costs of imposing more taxes.
It gave the examples of Africa, where taxes, fees and lack of transparency are significant contributors to making jet fuel costs on average 21 per cent more expensive than the global average, and Mexico, which has recently introduced an environmental tax totalling $37 million annually. In addition, on Wednesday the US announced a budget agreement that will see the minimum security fee rise to $11.20 (from $5) per round trip .
Besides, there are also passenger taxes, the most infamous of which is the UK’s Air Passenger Duty, the single biggest aviation tax in the world which accounts for £2.8 billion in 2013.
Impact demand Talking about the various taxes levied on the industry, Tyler said that they hamper demand for travel, are bad for airlines and, most important, are bad for the economy.
In this context, Tyler gave the example of “enlightened” Ireland where the government has decided to abolish its Air Travel Tax from April 2014.
“In 2008, the year before the tax was introduced, Ireland had just over 30 million travellers. By 2012, that had dropped to 23.5 million. Of course, not all of that was due to the Air Travel Tax, but certainly some of it was. The government’s decision to abolish the tax was in anticipation of greater gains from increased air traffic volume,” the DG said. Airlines in India have for long been pointing to the fact that they face many handicaps, including the fact that the domestic cost of aviation turbine fuel is 25-30 per cent higher due to State levies ranging from 4 per cent to over 30 per cent.
In addition, the high cost of operating into airports also makes the cost of operating airlines in India higher than global levels.
>ashwini.phadnis@thehindu.co.in
(The writer is in Geneva at the invitation of IATA)