Possible re-think over German air passenger tax

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Germany is evaluating its air passenger tax and appears to be considering a withdrawal of the controversial environmental levy.

Transport minister Peter Ramsauer describes the tax as one corner of a "toxic triangle" of adverse factors against aviation, which also includes the European Union's Emissions Trading Scheme (ETS) and night flight restrictions at different airports.

The minister yesterday (23 May) met with Klaus-Peter Siegloch, president of Germany's air transport industry association BDL; Christoph Franz, Lufthansa Group chief executive; and Stefan Schulte, chief executive of Frankfurt airport operator Fraport.

He says that the meeting focused on the sector's most "pressing and threatening" issues.

This year's revision of the air passenger tax had been planned since the levy was introduced in January 2011. Germany's government claimed at the time the tax was "not merely meant to raise tax revenue, but as an incentive for more environmentally friendly behaviour". The government aimed to raise €1 billion ($1.26 billion) per year through the levy.

While Franz and Siegloch expressed confidence that the tax will be abandoned, Ramsauer says that "we should be open about what clear consequences may have to be taken" once the final report has been finished. The revision is expected to be completed in the next weeks.

Ramsauer adds that the review involved other government departments, such as the finance ministry, but he emphasises that his specialist civil servants would be at the centre of the revision.

In regard to the ETS, Ramsauer says that the EU had to find an immediate solution to the question of how payments by third-party countries will be handled in Europe.

Airlines are standing "with their backs against the wall", according to Siegloch. He says that jobs are being lost and the public's mobility is being reduced because the majority of airlines and airports find themselves forced to cut capacity in the current climate.

Franz adds that the global competitive environment is changing significantly and that individual German and European policies, such as air passenger tax and the ETS, are affecting airlines in the region adversely. He says the government should instead create conditions where these carriers can become more competitive, especially in times when growth is needed.

The Lufthansa CEO concludes that "an industry, in which the main players [Lufthansa and Air Berlin] do not achieve positive financial results is sick".