IATA Cautions Governments Against Imposing Tax Burdens On Airlines

From Yong Soo Heong GENEVA, Dec 7 (Bernama) -- The International Air Transport Association (IATA) has cautioned cash-strapped governments implementing austerity measures against using aviation as a soft target for imposing new or increased taxes. IATA Director-General and Chief Executive Officer Tony Tyler described such increases as counter-productive. Speaking at IATA'S Global Media Day here Wednesday, he said the only way out of a crisis was growth and that aviation could help but many governments were overlooking that fact. "Aviation can be a cash generator for governments but not if you strangle it with taxes that cripple traffic," he said. Tyler said the potential losses of some US$8 billion among airlines next year, if the Eurozone crisis was not tackled effectively, should serve as a wake-up call to governments around the world. He said government policies need to recognise aviation's vital contribution to the health of the economy, especially in the light of the forecast global Gross Domestic Product (GDP) growth dropping to 0.8 per cent next year because whenever global GDP growth rates dropped below two per cent, it could lead to falling passenger and cargo demand. Tyler also referred to the United Kingdom's recent eight per cent rise in air passenger duty (APD), the world's single biggest aviation tax, which was already bringing 2.5 billion pounds sterling to the British government before this. The latest tax increase would cost the UK economy four billion pounds sterling and 80,000 jobs by 2015, he claimed. On the other hand, Tyler praised the authorities in Northern Ireland for reducing the long haul APD rate to align with the short haul rate. Given that aviation's connectivity was the lifeblood of the global economy, he said that should lead politicians to make it cost efficient as possible to reap the economic benefits from the industry. Tyler also spoke of other proposals -- Germany's Euro transportation tax, Austria's departure tax, United States' plan for a per plane tax and RM1.5 billion annual increase in security fees -- that could hamper the growth of aviation. "Politicians seeking to raise money from aviation should remember the Dutch proposal of a few years ago. The government raised about 300 million euros with a passenger departure tax. But it cost the (Dutch) economy 1.2 billion in lost economic activity," he said, adding that the Dutch government had the good sense to repeal it and that other governments should take note. On the price of fuel, Tyler said some relief was expected when crude oil was priced at US$85 per barrel and this would translate into a fuel bill of US$183 billion or 31 per cent of operating costs. On another matter, the IATA boss also advocated a checkpoint of the future when talking about simplifying the business. IATA, he said, favoured a risk-based approach that would differentiate passengers on how much was known about them. "We are not asking for more information -- only to use what is already collected to support border control needs at the security check. But we would like to provide an option for passengers to voluntarily provide additional information to have their security process expedited. "Already this is being trialed in the US with known traveller programmes. So this part of the checkpoint is a near-term of solution," he said. However, Tyler said technology could take longer -- seven to 10 years -- to enable passengers to be screened without stopping, unpacking or disrobing. He revealed that many authorities and governments were supporting IATA on the matter and they include the European Commission, the US Transportation Security Administration and Department of Homeland Security, and Interpol, and the latest being China. -- BERNAMA