FRANKFURT – Airlines will have to pay up to 26 euros ($33.04) per passenger under the German government’s plan to impose an air travel tax to raise 1 billion euros a year, according to a draft law seen by Reuters on Thursday.

German Chancellor Angela Merkel last month announced the tax plan as part of 80 billion euros of budget measures, stunning the aviation industry and sparking protest from airlines and lobby groups.

German airlines and lobby groups protested the planned tax, which they said would lead to jobs and passengers moving abroad.

“The Dutch example showed us that an air travel tax that is introduced on a national level leads mostly to a shift of passengers abroad,” Ralf Teckentrupp, the president of German airline association BDF, said in a speech in Berlin.

The Dutch government scrapped its air travel tax last year after passenger numbers in the country dropped dramatically.

European airlines are struggling to return to profit after the industry’s worst downturn in decades.

BDF said it expected 10,000 jobs to shift abroad and German passenger volume to drop by 5 million per year due to the tax. In 2009, there were 182 million passengers in Germany.

Under the government’s plan, airlines are to be taxed according to the distance their passengers travel, starting on Jan. 1, 2011.

For shorter trips, within the European Union and other countries less then 2,500 km away, the tax is set at 13 euros. For longer trips it would be 26 euros.

A spokesman for German flagship carrier Lufthansa said the higher tax on long haul flight could result in more passengers choosing to depart from airports outside Germany.

“It is incomprehensible to us that the burden on long haul is double that of short haul since long haul can almost entirely be substituted with foreign airports,” the spokesman said.

The draft law showed that the air travel tax would be lowered from 2012, when airlines will have to start buying certificates as part of a European emissions trading scheme.

RAISING PRICES

Before details of the tax emerged, analysts had estimated the burden on Lufthansa could total about 200 million euros per year, more than for any other airline, assuming it could pass on about half of the tax to passengers by raising prices.

Analysts and industry groups estimated at the time that prices could rise by 8 to 16 euros per ticket but some executives, including Lufthansa Chief Executive Wolfgang Mayrhuber, said airlines’ pricing power was too low to charge passengers more.

Travellers have become more price sensitive in recent years as internet travel portals have made it easier to compare prices, and low-cost carriers such as Ryanair and EasyJet have lured customers with cheap no-frills offers.

Airlines, particularly in Europe, are having a hard time recovering from the slump that saw business travellers book tickets in economy class instead of the more expensive business class while holiday travellers turned to low-cost carriers.

Airlines body International Air Transport Association (IATA) warned last month European airlines would post total 2010 losses of $2.8 billion while those in other regions of the world would return to profit.

Air Berlin, Germany’s second-biggest airline, said it expected the proposed air travel tax would distort competition by placing German carriers at a disadvantage.

“This is a massive additional burden for our passengers,” an airline spokesman said.

Shares of Lufthansa were 0.6 percent lower at 12.34 euros by 0902 GMT, and Air Berlin was also down 0.6 percent, at 3.50 euros. That was in line with the STOXX Europe 600 Travel & Leisure index, which was 0.6 percent lower.

Source: business.maktoob.com