20 Oct, 2008
IATA Silent on Fuel Surcharges, But Rails Against Passenger Taxes
After remaining strangely silent as airlines levied massive fuel surcharges on their passengers, the International Air Transport Association (IATA) has now come out with a thundering condemnation of the higher departure taxes that European governments are planning to pass on to airline passengers to partially fund the massive bank bailout packages.
Although Mr. Giovanni Bisignani, IATA’s Director General and CEO, criticised budget plans in Belgium and Ireland that mimic British and Dutch departure taxes as “collective madness,” IATA has only itself to blame for paving the way for governments to see air-passengers as cash cows.
The Geneva-based global association of airlines said nary a word as airlines passed on the massive hikes in fuel prices to passengers in the form of fuel surcharges, sometimes to a level that doubled the actual fare. Most airlines also rebuffed calls by consumer protection groups for more transparency in the exact calculation of the fuel surcharges.
The fact that air travel continued in spite of the massive fuel surcharges, and the airlines had no qualms about jacking them up without warning, has sent a clear signal to governments that travel & tourism will remain “resilient” and can foot part of the bill for the bank bailout packages.
Known for thundering loudly only after the horse has bolted the stable, Mr. Bisignani now says: “Filling budget gaps or financing government investment in the banking industry with gratuitous travel taxes is policy myopia at its worst.”
He said, “The timing could not be worse for governments to make mobility more expensive. Look at what has happened in fuel, the biggest cost item for airlines. Even with the recent drop, today’s price is still over 300% more expensive than it was only a few years ago,” said Bisignani.
“Rather than collective action to squeeze taxpayers, Europe’s governments should be looking to improve European competitiveness. An effective Single European Sky would save 16 million tonnes of CO2 annually and improve the competitiveness of Europe’s skies by over EUR 5 billion,” said Bisignani.
Effective 1 July 2008, the Dutch Government began levying between EUR 11.25 and EUR45.00 on passengers departing Dutch airports to raise an estimated EUR 312 million annually.
The UK Government doubled its Air Passenger Duty in 2007 to collect GBP 2 billion (EUR 2.5 billion) annually. From November 2009, the UK Government is proposing to replace this with an Aviation Duty that will collect GBP 2.5 billion (EUR 3.2 billion) annually rising to GBP 3.5 billion (EUR 4.4 billion) by 2011/2012.
The Irish government plans to raise EUR 150 million annually with a tax to be applied to all passengers departing Irish airports commencing 30 March 2009. The Belgian Finance Ministry confirmed plans to raise EUR 132 million annually with a similar tax, the details of which are yet to be decided.
This means that by 2010 air travellers could face a tax burden of up to EUR 3.8 billion annually in these four countries alone, according to IATA.
Meanwhile, the UN World Tourism Organisation has announced plans to create a “Resilience Committee” to support its Members with accurate economic analysis and mechanisms to respond to the falling demand for business and leisure travel.
According to the UNWTO, although international tourism grew at around 5% between January and April, over the same period of 2007, the slowdown began with the summer holidays in the northern hemisphere.
The Panel of Experts of the UNWTO World Tourism Barometer, which up until then maintained favourable views of the sector’s situation, now shows a perceptible loss of confidence regarding the short-term outlook, according to the UNWTO.
UNWTO Secretary-General Francesco Frangialli said that “Experience teaches us that tourism is resilient, but there is no denying that there is a certain stage of deterioration of the situation beyond which all economic sectors will begin to suffer.”
Members of the UNWTO Executive Council feel that in late 2008 and the first half of 2009, the economic slowdown is expected to be more widely felt and consumers might decide to cut back further on their travel expenditures.
The “Resilience Committee” to be created will be open to all of the UNWTO’s public and private sector Members. It will be provided with “state of the art information with a special focus on air transport and major origin markets” along with suggested response initiatives.
The UNWTO has also commissioned a study entitled “Global Imbalances and Structural Change in World Tourism” which will be presented at UNWTO’s Ministers’ Summit at World Travel Market (London, 11 November).
In another development, the U.S.-based Association of Corporate Travel Executives (ACTE) has released the results of a survey which reports that 31% of respondents said they would travel less in the coming year, 36% said they would travel more and 33% said they would travel the same amount.
The survey also found that 39% of U.S. companies are cutting back on travel budgets by reducing internal meetings while 16% were reducing international travel. However, only 33% of respondents were actually planning to cut their travel budgets next year.
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