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Are taxes on airline passengers appropriate?

Written by Aviation Advocacy on . Posted in Airlines, Competition

The aviation industry has a reputation as one of the least-taxed industries. There are practical historic reasons for this (such as the exemption for duty on international aviation fuel). It is also a sign of successful lobbying by the industry (such as the general exemption from any form of environmental taxes), which is convinced that the world would fall apart should anything stand in the way of aviation growth. Aviation also has a reputation as one of the most whingey industries when it comes to taxation. It issues multiple papers each year, criticising governments for their tax policies and for failing to understand the true impact their fiscal budget is having on passengers and the wider economy. More importantly (but oddly less prominent in these papers) is the fact that taxation also results in higher fares for passengers, and therefore – so the argument runs – subdued demand and thus lower airline profits. Take taxes on air passengers, the scourge of the aviation industry. The mere mention of it is sufficient of increase the blood pressure of any airline CEO by several points. A recent press release from A4E referred to the UK’s air passenger duty (APD) as ‘fleecing’ passengers and punishing businesses and consumers. That’s the kind of rhetoric we’re dealing with here.

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