Business aircraft flight activity in Italy has nosedived since the approval last December of government-imposed "luxury" taxes on business aircraft, and the impact is being felt by the struggling sector.
According to a report by Flightglobal's advisory service Ascend, and Wingx Advance, business aviation departures in Italy have fallen by an average of 10% since January compared to 2011 activity, "while in Europe as a whole, flight activity in 2012 is between 2% and 3% off 2011 levels", it says.
In June alone, Italy saw a 17.6% drop in domestic and international departures compared to the same month last year, while domestic departures plummeted by more than 22% against the same month, says the report.
"The introduction of these punitive taxes on business aviation has a massive impact on the country's industry," says Brian Humphries, president of the European Business Aviation Association (EBAA).
The private aircraft parking tax, formally introduced in February, saw fees of up to €50,000 ($61,600) levied by the government on all privately owned aircraft that remained on Italian soil for more than 48h. "This tax has had a devastating effect on many Italian businesses, particularly MRO [maintenance, repair and overhaul] providers" says Vittorio Morassi, chairman of the European Helicopter Association. "Many owners stopped bringing their aircraft to Italy for maintenance as they could end up with a huge tax bill to pay," he adds.
Other owners chose not to fly to Italy, fearing a technical problem or bad weather would saddle the aircraft owners or lessee with a bill for thousands of euros, say the research partners.
The Italian government bowed to industry and diplomatic pressure and extended the parking window in April from 48h to 45 days. "Unfortunately they replaced this with another arbitrary tax," says Humphries. Now passengers in commercially operated business aircraft are charged €100 each way for a journey up to 1,500km and €200 for flights over that distance. "This tax is unfair and highly discriminatory," says Humphries. "The Italian government seems to think we are a cash cow - if you fly in a multimillion-dollar aircraft, you must be a multi-millionaire - this is simply not the case." He fears commercial operators will struggle as customers switch to airline travel to avoid paying the tax. "Many of these companies cannot afford to absorb the costs of this passenger tax as their margins are already very small," says Humphries.
The levy is particularly unfair for helicopter operators, Morassi says, as they typically travel short distances. He is holding a meeting next month with Italian government officials to discuss a new "fairer" graduated charge structure, while the EBAA is seeking advice "to see if it would be appropriate to mount a legal challenge" to the tax.