Airports Council International (ACI) World this week reiterated calls for an end to the economically inefficient and discriminatory taxation of aviation, including airports, which the organization said is hampering the industry’s recovery from COVID-19.
A new ACI World document, “Policy Brief: Taxation of International Air Transport and Airports – Economic Benefits and Costs,” explores – and provides potential remedies to – the imbalance between the current tax burden and the foregone global GDP impacts and missed jobs.
It also calls upon governments to follow the International Civil Aviation Organization’s (ICAO) Policies on Taxation in the Field of Air Transport.
“Aviation is one of the most strategically important sectors for national and global economies, generating 11.3 million direct aviation and 87.7 million jobs indirect jobs,” ACI-World said in a release that accompanied the new policy paper. “The global aviation industry generates approximately 4.1 percent of the global gross domestic product (GDP) as aviation jobs, on average, are 4.3 times more productive than jobs in other sectors.”
Airport operators alone directly pay more than US $10 billion in taxes at the global level, which represents around 7.6 percent of total airport costs. Assuming 2019 traffic volumes. the removal of the tax burden on aviation would have resulted in more than 750 million incremental passengers, 2.2 million direct aviation and aviation-related jobs, and $93 billion in direct contributions to global GDP.
The total macroeconomic impact of removing the tax burden on aviation could lead to a total of 5.2 million jobs and more than $180 billion in additional global GDP.
“The impact of inefficient and ineffective taxes has been made abundantly clear throughout the COVID-19 pandemic, where industries that rely on aviation have been seriously affected by the loss of air services globally,” ACI World Director General Luis Felipe de Oliveira said in the release .“To help simplify the situation for all parties and to support the recovery of aviation following the impact of COVID-19, ACI World is calling for fair, transparent and non-discriminatory aviation taxes.”
ACI World has put forward several remedies to address this imbalance, including ending the confusion between the terms “airport charges” and “taxes” when applied to levies on air tickets. It also called for taxes to be substantiated with cost-benefit analysis considering wider economic benefits and not designed simply to boost governments’ consolidated revenue.
