IATA tells Germany to axe its proposed air taxes

The German government's plan to introduce an environmental tax of EUR 1 billion a year on air travel tickets out of Germany has met with fierce resistance from the International Air Transport Association.

Giovanni Bisignani, IATA's Director General and CEO commented on the tax proposal at the 66th IATA Annual General Meeting and World Air Transport Summit in Berlin. "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," said Bisignani. Bisignani brought to light three of his major concerns with the German environmental tax proposal. "The proposal should be axed. It is the wrong measure at the wrong time; and it ignores the lessons learned from the failure of a similar tax in the Netherlands," said Bisignani. The wrong measure: "Climate change is a global issue. The solution requires a global approach, not uncoordinated regional taxes. "What will this do for the environment? Absolutely nothing. If the Chancellor is serious about aviation and climate change, the focus should be on finding a globally coordinated solution at the International Civil Aviation Organization in advance of the climate talks in Cancun," said Bisignani. The wrong time: "Airlines have an important role in driving economic growth, particularly as we struggle to recover from the recession. "This is not the time to burden the aviation industry with more taxes. European GDP growth is expected to be 0.9% this year 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 $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," said Bisignani. Lessons unlearned: "Even as a cash-grab, the proposed tax makes no sense. The Dutch government tried to raise EUR 300 million with a similar tax. "It cost the Dutch economy EUR 1.2 billion in lost business. It also failed as an environmental measure, sending travelers across the border to start their journey from more tax-sensible regimes. "The Dutch had the good sense to repeal their tax. Why repeat past mistakes" questioned Bisignani. Qantas CEO Alan Joyce told the Australian that he thought the tax was "crazy" and that it would hit Australian travellers on the airline's Frankfurt route. "We've been saying we want a global approach to this because you're going to have ETSs that are going to overlap, and these types of country-driven taxes that are double dipping."

"And you've got an industry that's made a half a per cent margin, just coming out of the worse period in its history -- it can't afford this." Ltd.