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Govts rake in US$136bn from airport tax 

By: Maclean Kwofi
The aviation industry provides a lot of revenue for governments through taxes
The aviation industry provides a lot of revenue for governments through taxes

Airlines and passengers were estimated to have paid at least US$136 billion for the use of airports and air navigation infrastructure globally in 2018. 

This is an increase of 10. 57 per cent over the previous year’s amount paid in tax revenues by airlines and their customers to governments across the world.

A recent fact sheet report of the International Air Transport Association (IATA) which captured the development indicated that the amount paid was equivalent to 45 per cent of the industry’s Gross Value Added (GVA), the firm-level equivalent to GDP paid to governments.

It stated that the aviation industry also contributed about US$118.9 billion for the use of airports and air navigation infrastructure in the world in 2015. This is estimated to have increased to US$125.9 billion in 2016. 

While the airline sector does not object to paying non-discriminatory and equitably levied taxes, the IATA said it would work towards eliminating those unfairly target in the air transport industry. ”Taxes on air travel does not have any positive impact on aircraft emissions and increased taxes on air travel diminishes the financial capacity of the industry to invest in green technologies and reduce CO2 emissions.” 

IATA’s focus 

In all its work, IATA aims for a more balanced customer-supplier relationship between airlines, airports and air navigation service providers, starting with engagement on the infrastructure planning to ensure capital expenditure projects involve the airline community as early as possible and result in facilities that are demand-led, fit-for-purpose and cost effective to develop and operate. 

For this, the IATA emphasises the key principles of infrastructure charges that consist of meaningful engagement with the airline community, transparency, cost-relatedness of charges and equitable charges structure.

The rest are timely, efficient and affordable investment aligned to airline needs based on a long-term master plan, productivity and service level improvements and a robust and effective economic regulatory framework.

The report also identified that while there have been some positive developments, increased taxes, together with rising charges and fees, remain a threat across the globe.

Airlines support investments in infrastructure, provided they are demand-led, fit-for purpose and based on a long-term planning view with a sound business case to allow for efficient and productive operations.

“We strongly oppose calls for lighter economic regulation of airports. Effective economic regulation is the key to improving airport cost efficiency and transparent, cost-related airport charges.”

In the context of Europe, the European Commission confirmed that the objectives of the Airport Charges Directive (ACD) have not been fully met and it intends to launch an impact assessment.

Private ownership

The report stated that the IATA welcomed this development as the ACD, in its current form, does not adequately prevent airports with market power from abusing their dominant position and raising charges 

The trend of increasing private ownership adds urgency to the need for independent, fit-for-purpose economic regulation. 

“The IATA is seeking to ensure that airlines, as the key stakeholders, are engaged in any privatisation processes from the outset, allowing understanding of the objectives and assessment of alternative options.”