The recent surge in aviation taxes in Germany has faced sharp criticism from the International Air Transport Association (IATA). According to the association, the tax will have a long-term detrimental effect on the German economy and hinder the industry’s efforts to decarbonize.
In line with a decision by the German government, as of May 1, 2024, aviation tax rates in the country surged by 19%, now varying between €15.53 and €70.83 per passenger, contingent upon the route. After the tax increase, IATA voiced concerns that Germany could become less competitive across several critical economic sectors, such as tourism, exports, and employment.
Given that international passenger numbers in the country remain 20% below pre-pandemic levels, placing it among the slowest in the European Union, the association warns that these measures will hinder the aviation sector’s recovery from the pandemic.
According to IATA’s Director General Willie Walsh, Germany’s government should focus on improving its competitiveness rather than opting for a short-term revenue boost.
“When Germany’s economic performance is anemic at best, denting its competitiveness with more taxes on aviation is policy madness. The government should be prioritizing measures to improve Germany’s competitive position and encouraging trade and travel. Instead, they have gone for a short-term cash-grab which can only damage the economy’s long-term growth,” Walsh said.
IATA also cautioned that although aviation aims to achieve net-zero carbon emissions by 2050, the tax increase will have a detrimental impact on decarbonization efforts.
“The German government coalition agreement originally stated that revenues from aviation taxes would directly fund production of SAF, but this commitment has been broken. In addition, weakening the German air transport industry with this tax makes it harder for airlines to invest in SAF, in a more fuel-efficient fleet and other decarbonization efforts,” IATA statement reads.
The association asserts that the country’s government appears to be leaning towards the European Taxation Directive, which proposes implementing an additional tax on jet fuel. According to a recent survey conducted by IATA among air travelers in Germany, travelers are skeptical about the tax increase and do not perceive it as a solution to promote sustainability in aviation.
“The German government appears to have an unhealthy obsession with aviation taxes. On top of increasing the passenger tax, it is also in favor of a European jet fuel tax which will make it even more expensive to do business in Germany or for families to go on holiday,” Walsh said.
“Our survey of air travelers in Germany shows deep skepticism about government claims for ‘green taxes’. 75% agreed with the statement “Taxation is not the way to make aviation sustainable” and 72% agreed that “Green taxes are just government greenwashing”. Time and again, we see taxation that was supposed to help the industry decarbonize be stolen and then lost in the general budget. And money taken out of the industry means that it has less money to invest in other decarbonization measures,” the IATA’s Director General concluded.