• German airline tax comes under fire

    2010-06-09

    German chancellor Angela Merkel announced an economic recovery package on June 7, cutting spending severely in various sectors. One aspect of the new law that has come under heavy criticism is a €1 billion per year tax on German airlines.

    The tax is not unprecedented and has been tried before in countries like England, Ireland and the Netherlands, according to the New York Times. Germany will add a tariff to all departing flights from German airports, and the tax is higher on planes with poor fuel economy. Ostensibly, the tax is designed to force airlines to become more environmentally friendly.

    However, airline officials point out that the tax is poorly-timed, coming on the wake of the ash cloud which disrupted European travel for some time. While the airline industry worldwide is recovering, European carriers are predicted to lose 2.8 billion this year, according to the International Air Traffic Association.

    The CEO of Lufthansa, Wolfgang Mayrhuber, told the news source that Merkel's proposed revenue of 1 billion euros a year is more than the collective profits of all German airlines in 2009. “I think that if you took away all of the earnings from Germany’s carmakers, you would probably hear a lot of horns honking,” he said.

    Analysts say the tax may raise ticket prices by 10-15 percent. Proponents of the tax argue that the tax will cause the airlines to adopt greener practices, benefiting everybody. It is unclear if the airlines will raise prices on German flights only, or spread the cost of the tax out evenly by slightly raising all ticket prices.
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