Germany draws up plan to tax air traffic with fee of up to $33 per passenger

Germany to levy up to $33 per flight

BERLIN — Germany plans to levy up to €26 ($33) for each passenger on flights under a plan aimed at taxing air traffic’s impact on the environment and bolstering government finances.

A draft bill obtained by The Associated Press Thursday says airlines will have to pay €13 per passenger on flights of up to 1,553 miles (2,500 kilometers) — which includes the whole European Union — and €26 for longer-haul flights taking off in Germany.

Passengers only transiting Germany and children under age 2 will be excluded.

The measure is aimed at encouraging people to prefer other, more environmental friendly methods of transportation, such as trains, where possible.

The government expects the tax — first announced last month as part of a plan to save €80 billion through 2014 — to bring in an annual €1 billion starting next year.

Its bill says it aims to provide “incentives for environmentally friendly behavior.” Once air traffic is included in a wider carbon trading scheme, the tax may be lowered, it says.

A spokesman for Deutsche Lufthansa AG, Peter Schneckenleitner, said Germany’s biggest airline “is strictly opposed to the tax on air traffic.”

The heavy tax burden on long-haul flights particularly disadvantages German airlines as passengers can easily use a hub elsewhere, he added.

“The air traffic tax means exporting German jobs and weakening Germany as a place to do business,” Schneckenleitner told the AP.

The levy is likely to be added to ticket prices as most airlines operate on very low margins and are only just recovering from losses generated in the economic downturn.

“One has to expect that the air traffic tax will normally be added to the flight fares,” the draft law says.

A spokesman for Germany’s second biggest airline, Air Berlin PLC, said the new tax distorts competition and the distance rule seems arbitrary.

“Tickets to popular holiday destinations as Egypt and Israel will get more expensive because they will be considered as long-haul flights by the tax,” Hans-Christoph Noack said.

But destinations such as Libya, Morocco or Russia will only be taxed with a €13 surcharge as the countries’ borders are in the 1,553-mile range from Frankfurt, the country’s main hub.

For flights within Germany, typically around €100 one way, the tax could mean a price increase of more than 10 percent, Noack said. He argued that families and vacationers, as opposed to businesspeople, will be worst hit as they can’t pass on the cost.

When the government first floated the tax early June, the head of the International Air Transport Association, Giovanni Bisignani, called it nothing but a “cash grab.”

The measure is “the worst kind of shortsighted policy irresponsibility,” a blow to a fragile industry that is key to the economic recovery, he said.

Tackling climate change requires a global solution and “not uncoordinated regional taxes”, Bisignani added.