The federal government wants to plug billions in holes in the budget with a higher ticket tax from May 1st. This is not without consequences for the industry and holidaymakers.
The tax on airline tickets from German departure points will rise again on May 1st. This has consequences for holidaymakers. At the same time, tour operators and airlines fear burdens running into millions and long-term problems as a result of the traffic light coalition’s decision. The tax increase is part of the package of measures with which the federal government wants to plug billions in holes in the budget following a ruling by the Federal Constitutional Court.
Will package tours and flight tickets become more expensive in the future?
Probably, because commercial companies such as airlines or travel providers always have to try to pass on additional costs to their customers. However, taxes and duties only make up part of the price of a package holiday. The costs of purchasing hotel contingents and flight capacity are particularly important. How these develop also depends on the general price development in the respective holiday destination. When it comes to pure flight tickets, the competitive situation that exists on the route booked has an impact. If there is only one provider there, the higher taxes will probably be passed on in full to the customers, which would not be so easy if there was fierce competition.
How much are tax rates increasing?
The increase affects all passenger flights that take off from German airports. From May 1st, the tax rates will be between 15.53 and 70.83 euros per ticket, depending on the final destination of the flight. So far, between 12.48 euros and 56.91 euros were due in three distance classes. The increase compared to the rates that were only significantly increased in 2020 is between 22.5 and 24.5 percent. For European flights, the new tax rate is more than double the historic low at the beginning of 2019. In the EU, only 9 out of 27 member states levy a ticket tax. The German tax is one of the highest.
What tax rate is due at my destination?
Although the tax rates are generally staggered according to distance, the actual distance between start and destination does not play a direct role. Instead, the legislature has listed countries to which the respective rate applies in appendices to the Aviation Tax Act. The lowest class at 15.53 euros includes all European countries including Turkey, Russia and Algeria. Typical holiday flights to Mallorca are covered here, as is a business flight to London. 39.34 euros are due for flights to many African and Asian countries that are up to 6,000 kilometers away. Typical destinations here include Dubai, Tel Aviv or Addis Ababa. For even longer flights to China or the USA, for example, the ticket tax is 70.83 euros.
Can organizers and airlines claim taxes?
The corresponding tax law only came into force at the end of March, at a time when a number of flight tickets and package tours had already been sold for the period after May 1st, which are now subject to the increased tax rate. Only from March 28th were companies allowed to include the higher ticket taxes in their final prices.
However, the Federal Association of the German Aviation Industry (BDL) sees no legal basis for additional demands for flight tickets. Accordingly, Lufthansa, for example, paid the increased tax itself for tickets sold early, as a spokeswoman assured. A sum is not mentioned.
The legal situation for tour operators is different: under certain conditions, they are allowed to pass on the subsequently increased costs to their tourists. “The contract must provide for this and at the same time contain a reference to the fact that, conversely, the traveler can also demand a reduction in the travel price if, for example, the price of kerosene falls,” explains Felix Methmann from the Federal Association of Consumer Organizations (vzbv). Under these conditions, increases after conclusion of the contract are possible in the event of higher fuel costs, increases in taxes and other charges for agreed travel services or changes in the exchange rates applicable to the package tour. The organizer must disclose the calculation of the price increase and inform holidaymakers about it at least 20 days before the start of the trip. Organizers such as industry leader Tui and DER Touristik have ruled out retroactive price increases.
Did the organizers ask their customers to pay?
The organizers covered the additional costs themselves, says the President of the German Travel Association (DRV), Norbert Fiebig. “According to our calculations, the very short-term increase in ticket tax on May 1st and thus before the start of the peak travel season will lead to an additional burden on tour operators of around 21 million euros,” says Fiebig. “These additional costs cannot be passed on to the travelers, as a subsequent increase in travel prices for package tours is de facto not possible,” he says, referring to the associated conditions.
What long-term consequences do tourism experts fear?
Fiebig criticizes the fact that political decisions are making travel more and more expensive. For example, starting next year, aviation security fees could be increased by 50 percent. “Holidays have already had to accept price increases due to inflation and increased energy costs, and political decision-makers are also making travel more and more expensive.”
How much does the tax increase bring to the state?
The ticket tax introduced by the black-yellow government in 2011 brought in almost 1.2 billion euros in revenue for the state in 2022. This year, around 400 million euros more in taxes are expected to flow into the state coffers as a result of the higher ticket tax. The government expects additional income of 580 million euros for the following years.
What are the longer-term consequences for air traffic?
In recent years, not only the aviation tax has been increased several times. At the same time, the costs for passenger and baggage checks, for the services of air traffic controllers on the route such as take-off and landing and for handling at the airports increased. When an Airbus A320 medium-haul jet takes off, government fees of around 4,000 euros are due at German airports, Lufthansa complains in its latest policy letter. The same start in Madrid or Barcelona, however, would only be charged 600 euros.
According to industry associations, the fact that Germany has become an expensive place for passenger flights also has long-term effects. While the number of seats available in this country has only reached around 80 percent of the pre-Corona level, most other European countries have long since returned to the same amount of flights as before the pandemic.
Low-cost companies such as Ryanair, Easyjet and Wizz Air use their aircraft in markets with lower input costs because it is easier for them to break even there. Their range of flights with cheap tickets is growing in Italy, Spain and Poland, while it has already shrunk significantly for consumers in Germany. A reversal can only happen if costs at German airports fall, Ryanair’s marketing boss Dara Brady recently explained.
Aviation Tax Act with Annexes Figures Ryanair Low Cost Monitor German Aerospace Center (DLR) 2nd Budget Financing Act
Source: Stern
