German Passenger Tax Increase to Weaken Economy & Hamper Decarbonization

Translation: Erhöhung der Luftverkehrssteuer schwächt die deutsche Wirtschaft und behindert die Umwandlung zum klimafreundlichen Fliegen (pdf)

Geneva – The International Air Transport Association (IATA) sharply criticized the increase in German aviation taxes, which will weaken the German economy and damage aviation’s ability to decarbonize.

On 1 May, German taxes on flying increased by 19% to between EUR 15.53 and EUR 70.83 per passenger, depending on the route. The tax will make Germany less competitive in key economic areas such as exports, tourism, and jobs. It will further affect Germany’s air transport recovery from the pandemic, which is one of the slowest in the EU. Germany’s international passenger numbers, for example, are still 20% below pre-pandemic levels. 

“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,” said Willie Walsh, IATA’s Director General.

IATA also warned that the tax increase will hamper the industry’s efforts to decarbonize. Aviation has a goal of reaching net-zero CO2 emissions by 2050 and sustainable aviation fuels (SAF) are vital to this effort. 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.  Furthermore, the German government appears sympathetic to the European Taxation Directive which would add a tax on jet fuel.

“The German government appears to have an unhealthy obsession with aviation taxes. On top…