Middle Eastern airports now adding air passenger charges, to pay for airport infrastructure

As well as the UK charging Air Passenger Duty, Germany, Austria, France, Spain and Norway and others have a comparable charge.  Germany has the second highest charges in Europe after the UK with levels of around €7, €23 and €42 for different bands of countries. Norway now has a charge of about €8.50 on all flights.  But other airports else where in the world are increasingly charging.  Hong Kong has now started a charge, of around £14 – 16 depending on length of flight and class of seat, in order to pay for the 3rd runway. The charges may last till 2031 when the runway is fully paid for.  Now Middle Eastern airports have started to charge all passengers, to contribute towards the cost of the huge airport infrastructure. Dubai introduced a charge of around £7 for all passengers, except children under the age of two and transit passengers remaining on the same plane. Abu Dhabi also introduced the same fee as did Sharjah – all started on 30th June. Now Doha’s Hamad Airport says it will introduce a Passenger Facility Charge of about $10 for all departing passengers, together with transferring passengers who make a connection within 24 hours.  It will come into effect on December 1st.  Australia has had a Passenger Movement Charge since 1995 for any departing passenger on an international flights, at around £31.
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Doha’s Hamad airport introduces passenger charges

Sep 1, 2016

By Alan Dron (ATW)

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Doha’s Hamad International Airport (HIA) is to introduce a Passenger Facility Charge (PFC) of QAR35 ($10) for all departing passengers, together with transferring passengers who make a connection within 24 hours.

It will not apply to transit passengers who do not change aircraft, or any passengers who land in Doha because of involuntary re-routing.

The new charge will be included within airlines’ ticket prices. It was announced on Aug. 29 and made applicable to tickets the following day, for journeys commencing from Dec. 1.

HIA is the latest of the Gulf’s major airports to introduce such a charge. Dubai and Abu Dhabi have announced similar charges this year and Sharjah is scheduled to introduce one. Dubai said it had invested heavily in expanding its infrastructure and products to accommodate booming growth, “while keeping aeronautical fees in the lower quartile compared to similar hub airports around the world.”

Four minor airports in Abu Dhabi, which is one of seven emirates making up the United Arab Emirates, also introduced a charge.

In a statement, HIA said the charge “is in line with International Civil Aviation Organization [ICAO] principles and similar charges have been levied by a large number of airports around the world. Even with the addition of the PFC, HIA’s overall airport charges are on the lower side internationally. By introducing the PFC, HIA aims at delivering consistent service levels, enabling its passengers to continue using the airport’s world-class services and facilities, many of which are complimentary.”

http://atwonline.com/airports-routes/doha-s-hamad-airport-introduces-passenger-charges?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+AtwDailyNews+%28ATW+Daily+News%29

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Abu Dhabi introduces Dh35 exit fee for airport passengers

ABU DHABI // Passengers departing from or transiting through airports in the emirate of Abu Dhabi are to be charged a Dh35 service fee.

The fee will be introduced from June 30, reported Aletihad, the Arabic-language sister paper of The National, quoting the Official Gazette.

Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, has issued an Executive Council resolution to approve the fee.

Children under the age of two, transit passengers travelling on the same flight number and airline crew will be exempt from paying.

Abu Dhabi Airports Company will collect the fee from the airlines, which will charge it to customers through their flight tickets.

Dubai announced in March that it would start charging a Dh35 departure tax for all flights taking off after June 30.   Sharjah followed suit with a similar announcement in April.

http://www.thenational.ae/uae/20160615/abu-dhabi-introduces-dh35-exit-fee-for-airport-passengers

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Sharjah follows Dubai with exit fee for airport passengers

SHARJAH // A Dh35 exit fee will be levied on passengers leaving Sharjah airport, following in the footsteps of Dubai Airports’ move last week.

Sharjah’s Deputy Ruler, Sheikh Abdullah bin Salem Al Qasimi, approved the fee during a meeting of the emirate’s Executive Council on Tuesday.

Dubai said on March 30 that, on flights leaving its airports from June 30 onwards, it would start charging the exit fee in a move that would help to fund infrastructure and expansion plans.

Now Sharjah International Airport, which is home to budget airline Air Arabia, will follow suit.

For both emirates, however, flight crews, transit passengers and children under two years of age will be exempt.

The Sharjah fee is being levied for the use of the airport facilities and services, a statement said.

Some Sharjah airport users on Tuesday expressed their dismay at the new fee.

“We use Sharjah airport for its budget airline and if you add Dh35 to a family of six or seven individuals, the bill adds up and becomes cumbersome for us,” said Amani Raed, a 37-year-old Syrian mother of three.

Pakistani Ghafar Mohammed, who works for a construction company in Ajman, said: “My salary is Dh1,200, and every dirham I save goes to my family back home. So for purchasing a ticket to go back to my country every couple of years, the new fee is not welcome, but low-income workers don’t have any other option but to pay it.”

Other residents, however, said the fee was justifiable – if it went to developing the airport and enhancing its services.

“If the fee goes to enhancing the airport services, then that’s good for passengers in the long run. The airport is small and maybe there are plans to expand it,” said Emirati Mohammed Al Mazmi, a 47-year-old businessman.

Ahmad Radwan, a 32-year-old sales manager, said: “It will not make much difference to singles or married couples – the fee can be compared to a meal in a fast-food restaurant or a couple of cups of coffee.”

The details of when the new fee will start being collected and the mechanism of how it will be collected were not announced.

http://www.thenational.ae/uae/sharjah-follows-dubai-with-exit-fee-for-airport-passengers

 


Exit tax for Dubai airport passengers

 (The National)

 

DUBAI // Airline passengers flying from Dubai are paying a Dh35 (Dihram.  About £7.16) departure tax for all flights taking off after June 30.

Airlines began charging the exit fee on March 1, Dubai Media Office said on Wednesday, adding that it would help to fund Dubai airports’ infrastructure and support expansion.

These include Dubai International Airport’s recently opened Concourse D, and renovations and expansions to its Terminal 1 and 2 – all part of a Dh4.4billion (about £900 million) investment to improve service and capacity.

Passengers under two years old, cabin crew and transit passengers departing on the same flight number on which they arrived are exempt.

Dubai’s departure fee is not unique. Other countries charging an exit tax include Australia, Germany, China and the UK.

The decision, approved by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, means airlines operating at Dubai airports are in charge of collecting the fee when they issue the tickets. The fees will be transferred to Dubai Airports, then to the Dubai Government public treasury.

It is estimated that 100 million passengers will pass through Dubai airports by 2023.

The fee is the latest to be introduced or reviewed by Dubai. The emirate’s Roads and Transport Authority recently doubled on-street parking fees in some areas of the city to get more people to use public transport.

Dubai International, the world’s busiest airport for international traffic, set a record in January when it was used by 7.3 million passengers, a 6.3 per cent year-on-year increase.

It overtook London’s Heathrow as the world’s busiest airport in 2014 .

Dubai Airports chief executive Paul Griffiths said the airport had average monthly traffic of nearly 6.5 million passengers.

http://www.thenational.ae/uae/transport/exit-tax-for-dubai-airport-passengers

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Germany has the second highest air passenger tax in Europe, but it raises less than APD in the UK – partly as the UK is an island. British travellers have fewer alternative to flying for international travel, whereas Germany shares a land border with nine other countries.As well as the UK and Germany having passenger taxes, France, Austria and Italy have much lower rates and raise significantly less revenue.

From Wikipedia, the free encyclopedia
 German air passenger taxes

 


Norwegian government introduces approx €8.5 tax per air passenger on all flights

The Norwegian government will introduce an Air Passenger Tax, starting on 1st June 2016. It will be at the rate of a 80 Krone charge (around €8.64, £6.59, US$9.67) per person for both domestic and international flights. Exceptions of the tax include those under two years old and those transiting flights on the same airline. The airlines have, predictably, reacted with fury at being “defied” by the government. They say this tiny tax “threatens to reduce demand by 5%, equal to 1.2 million passengers a year,” and they say it could mean airlines might lose €150 million per year as a result. The airline lobby group, “Airlines 4 Europe” (whose members include EasyJet, Ryanair, Lufthansa, Norwegian Air Shuttle and International Airlines Group) is lobbying hard. They all completely ignore the inconvenient fact that air travel demand is artificially high, as it pays no VAT and no fuel duty. Those together amount to a massive annual subsidy (in the UK this is a net annual loss to the Treasury, even including takings from APD, of perhaps £9 blllion per year).  Several European countries do have a ticket tax, with the UK levels being the highest (Brits also fly more than most others). There are small charges in France, Germany and Austria. Ireland and the Netherlands scrapped theirs, due to airline pressure.  

http://www.airportwatch.org.uk/2016/05/norwegian-government-introduces-approx-e8-5-tax-per-passenger-on-all-flights/

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Australia

Australia has a Passenger Movement Charge (PMC) which was introduced in July 1995 (replacing Departure Tax) and is imposed in respect of the departure of a person from Australia for another country, whether or not the person intends to return to Australia.  The current rate of the PMC is $55.  ( That is about £31).

The PMC is levied under the Passenger Movement Charge Act 1978 and collected under the Passenger Movement Charge Collection Act 1978.

 

https://www.border.gov.au/Trav/Ente/Goin/Departing/Passenger-Movement-Charge-(PMC)

 

Other countries that have air ticket taxes:

The UK, Germany and Austria have air ticket taxes. http://www.airportwatch.org.uk/?p=4444

Spain also has an air ticket tax, and France has a Passenger Solidarity Tax  http://www.airportwatch.org.uk/?p=2585


Tourists to Spain face extra airport tax

Spain has increased the amount of departure tax it charges.  The increase will be, on average, only perhaps 20% above the current level, but from the largest Spanish airports, it will be almost doubled. This will mean a rise of some €5 to €9 or so. The tax is charged to the airline, and they can choose whether to pass it on to the passengers – Ryanair certainly will get its passengers to pay.  The tax  is applied “retrospectively to customers who booked flights before 2 July 2012 and are travelling from 1 July onwards.  Spain is implementing drastic measures to try to slash its budget deficit to 5.3% from 8.5% in 2011.  

 http://www.airportwatch.org.uk/2012/07/spain-tax/

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Mixed reaction to Hong Kong airport’s new surcharge to fund third runway

Passengers buying tickets from Monday have to pay a new levy, hoped to help fund the HK$141.5 billion third runway

2 August, 2016 ( South China Morning Post)

Extracts below:

Passengers gave a mixed reaction to the surcharge, which is designed to help fund Hong Kong International Airport’s HK$141.5 billion third runway, expected to be completed in 2024.

Airlines said they will closely monitor the impact of the fee on travel, as construction of the runway officially kicked off on Monday.

Under the new policy, departing passengers travelling in first or business class on long-haul flights will pay HK$180. Those travelling in first or business class on short-haul flights and long-haul flight passengers in economy class will pay HK$160.

Economy class passengers on short-haul flights will pay HK$90. But if they are in transit or transferring, they need to pay only HK$70.

 

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Hong Kong authorities outlined ‘enhancement’ measures to compensate for marine habitat destruction, court hears in legal battle over third runway

 

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…..the fee could significantly drive up the budget airline’s low-fare tickets …..

“It is too soon to comment on the impact at this stage,” said a spokesman at Cathay Pacific Airways, but it welcomed the start of construction work for the runway, which it said was “essential to maintaining the long-term competitiveness of Hong Kong as a premier aviation hub”.

Berky Kong, regional corporate communications manager at America Airlines estimated its ticket sales would not be affected by the added fee, as “all airlines are facing the same charges”. “The impact on bookings is not clear today,” she said.

“I would not differentiate between low-cost and premium airlines – such as Hong Kong Express versus Hong Kong Airlines and Cathay Pacific. A passenger travelling from Hong Kong to Japan on any of those airlines will pay the same fee,” said Will Horton, senior analyst at the Centre for Aviation Consultancy.

http://www.scmp.com/news/hong-kong/economy/article/1997888/mixed-reaction-hong-kong-airports-new-surcharge-fund-third

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Departing passengers will pay around £8 – 16 tax till perhaps 2031 to fund 3rd Hong Kong airport runway

Outbound and transit passengers will pay up to between a bout £8 and £16 (HK$ 90 -180) to fund the construction of Hong Kong airport’s third runway system from August 1st. Initial reclamation work for the project is scheduled to start on the same day. The airport construction fee for short-haul economy departing passengers will be HK$90, and in first or business class, HK$160. For long-haul passengers, the fee for economy will be HK$160 and first or business class HK$180. Short haul economy passengers will pay HK$70. The costs would remain at the same level, but continue till the runway is fully paid for, which may be till 2031. Meanwhile, People’s Aviation Watch, an organisation opposing expensive infrastructure projects at the airport, said a judicial review to challenge the environmental impact assessment report for the runway will be heard in court this July. They say the Airport Authority’s decision to charge the fees before any verdict on the start of the runway disregards the law. But in March opponents lost a bid to legally challenge the ability of the airport to charge for the runway. A total of five judicial review cases or appeals against the runway are being planned. The new runway is likely to increase CO2 emissions by about 50%, and create serious noise pollution for some areas.  

http://www.airportwatch.org.uk/2016/06/departing-passengers-will-pay-around-8-16-tax-till-perhaps-2031-to-fund-3rd-hong-kong-airport-runway/

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Then there is this article  (2013) that says Italy also has a charge: 

http://www.aviationeconomics.com/NewsItem.aspx?title=Aviation-Taxes-in-Europe:-a-constraint-on-economic-recovery

 

Aviation Taxes in Europe: a constraint on economic recovery

18 DECEMBER 2013

These are taxing times for Europe’s regional airports and airlines. With the industry still struggling to shake off the effects of recession, there seems little sympathy or relief at the individual state or EU level. Indeed, the move appears to be to make life harder still for Europe’s air transport business, with the introduction of emissions taxes on intra-European flights and proposed limitations on state aid at regional airports.

Whilst these policies and proposals continue to generate headlines, passenger departure taxes at the state level quietly continue to chip away at the profitability of airline networks. Whilst a number of EU states have made the decision to abolish departure taxes – the Netherlands in 2009, and now Ireland in 2014 – key member states such as Austria, France, Germany, Italy and the UK show no signs of doing so. Indeed, both Italy and the UK increased their tax rates in 2013.

How big a burden are these passenger departure taxes? The table below shows a breakdown of the key charges levied by the state in four EU countries (all per departing passenger);

Austria

Air Transport Levy EUR 8.00

France

Civil Aviation Tax EUR 4.31

Solidarity Tax EUR 1.00

Airport Tax* EUR 12.00

National Surcharge EUR 1.25

Germany

Air Traffic Control Law EUR 8.00

Aviation Security Fee* EUR 5.24

United Kingdom

Air Passenger Duty GBP 13.00

France leads the way in the number of different taxes it levies on passengers, with four. The Airport Tax varies by airport, though outside of the main airports in France it is usually levied at EUR 12.00 per departing passenger. Taken together, these taxes make passengers departing from France the most heavily taxed in Europe.

The state levies two passenger taxes in Germany, a departure tax and a security fee. The departure tax does vary by distance, though for this analysis only the short-haul tax is required. The Security Fee varies by airport of departure, but is usually within the range of EUR 4.00 to EUR 7.00 per departing passenger.

The UK has been steadily increasing the departure tax since its introduction in 1994, when the fee for intra-European travel was GBP 5.00 per departing passenger. Current rates are GBP 13.00 per departing passenger (up to 2,000 miles), increasing to £26.00 as a standard rate and up to £52.00 per departing passenger for the highest class of travel. These rates will be held in 2014, though for distances over 2,000 miles they will be increasing; a business class passenger travelling over 4,000 miles would have to pay a departure tax of £332.

The analysis assumes that all passengers are travelling in economy class on short-haul European services, so the lowest rate of tax is paid in those countries with variable rates. It also assumes that passengers are travelling point-to-point only; this is an important distinction, as many of the departure taxes highlighted above are based on final destination. Passengers connecting onto long-haul flights within 24 hours of their arrival at the first destination would therefore be charged a much higher departure tax at the origin.

The chart below shows the typical impact of state passenger taxes on the full published charges of regional airports in the EU. The charges shown are the average for a basket of regional airports in each country, including runway, environment, security, parking, passenger and infrastructure charges. The analysis was carried out for an 84-seat regional jet with a load factor of 70%.

Inline images 1
Source: www.airportcharges.com

In all of these countries, state passenger taxes make up a significant proportion of the combined airport and passenger charges. The most lightly taxed is Austria, with taxes making up 14% of the total charges; next comes the UK, at 28%, followed by Germany at 37%. As indicated above, the nation with the most heavily taxed passengers is France, where over 60% of airport and passenger charges are in the form of state taxes to be paid by the passenger.

Maintaining existing services from regional airports and attracting airlines to open new routes is not an easy task, and such high levels of taxation make it harder still. Regional French airports appear to be compensating for high taxes by keeping their airport charges at relatively low, competitive levels; however, this leaves little room for discounting to attract new business. At the other end of the scale, UK regional airports appear to have higher airport charges, so potentially offer greater scope for new business discounting. But with state taxes already making up almost 30% of airport and passenger charges, any meaningful incentives to attract new services could push the tax element up to and beyond 50%.

The effect of reducing charges income to attract new services could put the profitability of small airports at risk, especially if low traffic volumes limit the potential for non-aeronautical revenue. In trying to support regional air links, and therefore regional economies, airlines and airports are taking significant business risks, yet only the state is guaranteed to make a profit.

by Richard Leigh

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