German Chancellor Angela Merkel announced plans on Monday to charge a new environmental fee on passengers flying out of the country, shocking airline executives gathered in Berlin for the annual International Air Transport Association meeting.
The special charges would be placed on departures until aviation is included in an international carbon dioxide emission trading scheme expected to go into effect in 2012.
However, the new charges have many in the IATA saying that Germany is seeking a different kind of green.
Unhappy with Germany’s plans to impose an air travel tax on a struggling European aviation industry, the global airline industry issued a harsh reprimand of the plan during the closing day of the IATA’s meeting on Tuesday.
The plan was called a “cash grab” by IATA Chief Executive Giovanni Bisignani, who also questioned the tax’s environmental benefits. Bisignani told reporters that climate change issues needed to be taken on by a “global solution” and not by an uncoordinated tax imposed by a single country.
The harshest critics of the new fees say that they exist only to shore up funding for Germany’s stretched public finances. The environmental fees coincide with $102 billion of budget measures Germany announced on Monday.
Analysts say the environmental fee would add up to around $1.3 billion a year in tax revenue for Germany. Though details about the tax are still nebulous, German airliner Lufthansa’s chief executive, Wolfgang Mayrhuber, estimated the tax could raise the price of a ticket by roughly $10 to $20.
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The controversial fee comes at a time when the European aviation industry is still feeling the ill effects of airspace closures caused by a volcanic ash cloud and a weak euro.
German airline executives also voiced concerns that the fee might cause international airlines to bypass Germany for connecting flights, which would undermine Germany’s place as a travel hub.
After losing $9.4 billion in 2009, when travel budgets shrank faster than the airlines could cut capacity, the IATA estimated on Monday that global earnings for 2010 were recovering quickly in Asia and other regions.
The only place airlines were expected to post losses this year was Europe.
By Adriana Padilla for PeterGreenberg.com.
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