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Dutch Court Upholds Flight Ticket Tax

by Ulrika Lomas, Tax-News.com, Brussels

21 July 2008


A Dutch court has upheld the introduction of a tax on passenger flights, despite an appeal from airlines and industry bodies, the Finance Ministry announced in a statement on 18th July.

The tax, ostensibly an environmental measure, took effect on 1st July, and will add EUR11.25 (USD17.69) to the cost of a short-haul flight and EUR45 to flights longer than 2,500 km.

The court ruled that the tax was not in conflict with European and international law.

The appeal against a previous case upholding the tax in March was brought by airlines and airports including Ryanair, Maastricht airport and industry body BARIN (Board of Airline Representatives in The Netherlands).

Pieter Verboom, the chief financial officer of Amsterdam's Schiphol airport, said in March the tax would cap passenger traffic growth and profits for the year and said low-cost carriers were switching to airports outside the Netherlands.

Schiphol lost its fourth place in Europe's passenger airport rankings to Madrid last year, despite a 3.8% rise in 2007 passenger numbers to 47.8 million.

The Dutch court’s decision was strongly condemned by the European Low Fares Airline Association (ELFAA), which represents several low cost airlines including Clickair, EasyJet, Flybe, Jet2.com, Myair.com, Norwegian, Ryanair, Sky Europe, Sterling, Sverige Flyg, Transavia.com and Wizz Air.

“Low Fares Airlines pride themselves on being the most environmentally efficient airlines by operating the most technologically advanced aircraft, coupled with dense seat configuration and very high load factors, thus producing the lowest emissions per passenger kilometre," commented John Hanlon, Secretary General of ELFAA.

ELFAA claims that while the ticket tax will raise EUR350mn (USD555mn) annually, none of this will be used for environmental purposes but instead will "accrue straight into the Exchequer’s money box."

"At a time when the aviation industry is going through its toughest challenges yet, the Dutch Government’s irresponsible travel tax imposes a further financial burden on airlines, while producing no environmental benefit at all," Hanlon continued.

"Governments should focus on creating a Single European Sky to address the current inefficiencies of Air Traffic Management, which alone is responsible for 12% of current emissions. This is an easily available measure to deal with the 2% of global emissions which account to aviation. A blunt instrument such as taxation will do nothing to address environmental concerns, but will further hinder the ability of airlines to continually renew their aircraft and invest in new technology," Hanlon concluded.


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