- Norway risks to lose more than a million passengers.
- Thousands of Norwegian jobs are at risk.
The implementation of a new air passenger tax (flypassasjeravgift) by the Norwegian authorities has been strongly condemned by Airlines for Europe (A4E) today. Since its launch in January A4E has addressed the issue of new and rising aviation taxes in Europe, as one of its key policy priorities.
“We are astonished about the unwavering approach of the Norwegian authorities on implementing the Air Passenger Tax while almost all comments during the public consultation period contained objections to it. Instead of preventing economic growth and job creation by imposing unreasonable taxes, European governments should create a supportive regulatory environment”, said Thomas Reynaert, Managing Director of A4E.
The Norwegian Government’s planned Air Passenger Tax equivalent to NOK 80 (EUR 8.5), set to be put in place this summer on departing passengers for both domestic and international flights, will have a harmful impact on Norway’s economy and its airline industry. According to IATA analysis, the tax risks reducing the overall demand for air transport by 5%, which equals roughly 1.2 million passengers per year. In addition, the tax would lead to a reduction in the direct and indirect output of the aviation sector by an estimated NOK 1.4 billion (EUR 150 million).
“Unavoidably, the proposed tax will lead to fewer operators in the Norwegian aviation market and reduced competition. If already the Norwegian competition authority states that airports may have to consider ceasing their operations due to reduced traffic the government deliberately wants to stifle the travel sector”, Thomas Reynaert added.
Experience and economic analysis both show that removing taxes is beneficial, e.g. the Dutch government’s removal of its ticket tax in 2009 led to strong growth in passengers; the Irish government’s removal of traffic tax in April 2014 led to extensive traffic growth at Irish airports and an 8% increase in tourism last year while the number of Northern Ireland residents flying from Dublin increased by 52% in the first year; economic analysis by PwC shows removing UK Air Passenger Duty (APD) would boost British GDP by 1.7% and create 60,000 new jobs by 2020. Scotland is already cutting APD by 50% as a precursor to getting rid of it entirely. The tax is said to cost Scotland EUR 90 billion in lost tourism expenditure till 2020. Slashing APD will add EUR 1.3 billion to the Scottish economy and create 4,000 jobs, according to studies from Edinburgh airport.
Earlier this year the Italian government increased the taxes on passengers charged at Italian airports by €2.50 – literally overnight and with immediate effect. Some A4E member airlines have already taken action and positioned their airplanes at airports outside of Italy which is damaging the Italian economy and puts the tourism sector at risk.
Airlines for Europe (A4E) is Europe’s new and largest airline association, based in Brussels. Launched in January 2016, the association consists of Air France KLM, easyJet, Finnair, International Airlines Group (IAG), Jet2.com, Lufthansa Group, Norwegian, Ryanair and Volotea, and plans to grow further. With more than 500 million passengers on board each year, A4E members account for more than half of the continent’s passenger journeys, operating more than 2,300 airplanes and generating EUR 93 billion in annual turnover.