Topic of the Week: Ireland Dumps Its Air Travel Tax

Something very unusual (and excellent) came out of Europe this week. Though some taxes were increased in the annual budgeting process, Ireland decided to scrap its air travel tax entirely. The idea is that they want to stimulate more flights to come into the country, and eliminating the tax should help. Anyone want to make bets? Do you think they’ll get more service in Ireland because of this?

35 Responses to Topic of the Week: Ireland Dumps Its Air Travel Tax

  1. David says:

    Yes, lower taxes do increase economic activity, but the tax is just 3 euros or 3 dollars. Even with Ryanair’s cheapest fares (fly for 1 euro is long gone – 15 euros is now their minimum) this is still a very small increase on the fare. It sounds like the Govt is doing this so that it can say it’s doing something rather than this having a significant impact on air connectivity.

  2. Jared says:

    If it positioned itself correctly, Aer Lingus could make a great European gateway hub in Dublin or Shannon. Taxes are lower than LHR and you fly right over it basically on any flight from the US to Europe, so it wouldn’t be out of the way.m from LA, I usually end up going through London.

    • David says:

      Those flying via Ireland in transit on connecting flights (less than 24 hours apart I think) do not pay the tax anyway. The only people paying the tax are those whose overall trip starts or ends in Ireland.
      The only places where onward connections really make sense are between the USA and Europe – for connecting passengers the tax did not apply and for those who did pay, 3 euros was tiny in comparison to the main fare.
      I therefore do not think the 3 euro tax would have made any significant difference to Aer Lingus’ attempt to create a connecting hub

  3. AG says:

    Is this the sort of cut that causes Ryanair to triple flights?

    • Nah, they just triple the number of seats on the plane. They’re working with Boeing to modify the fuselage to have an exit at every third aisle. Or maybe thats Easyjet and Airbus?

  4. Sean S. says:

    As others have noted this “tax” is equivalent to dropping a PFC charge here in America, if not less in many cases. I’m not seeing how that will significantly change things.

    The reality is that consumption and use taxes for air travel, as well as other forms of transport, which have been around for decades (gas taxes, tonnage taxes for seaways and ports etc), are here to stay and are a legitimate means in which to make the large infrastructure investments self sustaining. People often bring up the Middle Eastern carriers, and their moves to supplant Euro legacies, but truthfully their base as economies and as airlines are nebulous at best. One only look at Dubai teetering on default and having to be bailed out by its neighbor to see that sovereign wealth funds are only a good replacement for a reasonable tax base when the markets are doing well. They are not a sound strategy when international markets go into turmoil.

  5. Bravenav says:

    This is a great move; especially in contrast to the obscene travel taxes across the way in UK.

    • Paul says:

      Agreed, great move in terms of leading the way. In reality, it’s not gonna change a thing. When considered in terms of expenses of a visit to Ireland the tax would probably be <1% of total expenditures.

    • David says:

      Those air passenger taxes in the UK are a remarkably good way for the UK Govt to extract a bit more cash out of non-residents coming to the UK instead of raising domestic income taxes – places like Heathrow are so full that even if tax was dropped you wouldn’t be able to squeeze any more flights in.
      Offer the average Brit living in the UK the choice of zero flight tax and higher income tax, and they’ll happily choose to put some of the tax burden onto foreigners instead…
      Taxing long haul flights (4+ hrs) much more heavily than short haul has also encouraged Brits to holiday in Europe rather than go to the Caribbean…

  6. I really have to wonder how many people really care about airline taxes. As an aside, I also wonder how many travelers know their tickets are being taxed. Every industry claims it’s the only one that’s over taxed. And most probably are.

  7. MeanMeosh says:

    While any easing of travel taxes is welcome news, I agree with David and don’t see this as a substantial game changer, at least in an aviation-related sense. We’re talking a few dollars each way here, so would that really stimulate a bunch of demand for people to visit Ireland? I have been there, and can testify that it’s a lovely country with lovely people, but I just don’t see that happening.

    Where it may have more of an effect is with the perception of Ireland’s business climate in general. Ireland for years has been touting itself as a “low tax alternative” to the rest of Europe, and they’ll use the dropping of the air travel tax to further bolster that argument. In other words, I see it as a way to encourage more businesses to come set up shop and invest in Ireland, and not really a way to encourage more air service per se.

  8. Even if you paid the Irish tax, it was still nothing compared to the horrid taxes it’s neighbor the UK charges. Those huge UK taxes and fuel surcharges the airliines charge has not slowed connecting travel via the UK or caused British carriers to shrink because no one travels to/from/via the UK.

    But like someone said most people don’t know that carrier fuel surcharges and British taxes combined can be over $1000.00 on a business class ticket depending on final destination but flying via another point would save so much money. They need to have ads comparing taxes you pay to travel via Ireland compared to other European cities if they want people to notice.

    It’s still all about connection options and via LHR/AMS/CDG/FRA gives a lot more of the world then via DUB.

    • David says:

      UK APD (Air Passenger Duty) is structured so that if you fly via the UK spending less than 24 hours between flights, you do not pay any tax. Thus a series of flights which are genuine connections will always pay no UK APD.

      Flying into the UK does not incur any tax, only journeys starting in the UK (exlcuding those on connecting flights) and depends on how far you fly and whether you are in the cheap seats or business class. UK-Europe costs US$20. The absolute maximum for flights over 6,000 miles, (mainly Argentina, SE Asia or Australasia) in business class is $300. I have absolutely no idea where you got the figure of $1,000, unless you are talking about costs related to chartering a private jet.

      Brief details:
      https://en.wikipedia.org/wiki/Air_Passenger_Duty
      Full details:
      http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_InfoGuides&propertyType=document&id=HMCE_CL_000505

      • Sean S. says:

        Wouldn’t want facts to get in the way!

        • J-Bob says:

          Pretty sure he said “carrier fuel surcharges and British taxes combined can be over $1000.00 on a business class ticket”. Don’t let reading comprehension stand in the way is more like it.

      • “”””” that carrier fuel surcharges and British taxes combined can be over $1000.00 on a business class ticket depending on final destination”””””

        I did say the combination of airline fuel surcharges and british taxes. Example if flying business roundtrip LAX-DEL-LAX connecting LHR both directions on BA you would pay a total (today) of 1624.73 in taxes with 1410.00 being BA fuel surchange and 95.40 british tax, the rest would be USA/India taxes.

        But same itin with stops in London in both directions that tax is now 2135.83 with BA fuel surcharge still 1410.00 and now British taxes 479.50 and 127.00 with the rest in USA/India tax.

        So if you don’t need to stop in the UK, another option via another country can be less.

  9. owd says:

    Well Ryanair has already said they intend to add 1 million extra seats in and out of Ireland as a result of this tax being dropped. If one can believe a single word that comes out of the Ryanair PR machine, that would seem like good news.

  10. malbarda says:

    The Netherlands had a flight tax from July 2008 – July 2009. Then it was abolished, only to surface again in the last round of budget discussions to prop up the ailing Dutch economy. Apparently it is now off the table again…

    During that time, as well as now, the whole air industry protested against it, as well as most of the business community. When it resurfaced, KLM and Schiphol even staged a protest at Parliament in The Hague.

    It did not however impact Schiphol’s business as 4th largest airport in Europe, although anecdotally people who live close to the border with Belgium and Germany booked cheaper airfares on the budget airlines flying from there.

    http://bit.ly/194txg6

  11. CF says:

    I think it’s important to remember that this is an industry that makes tiny margins. You may not think 3 euros is a lot, but it can easily be the difference between profit and loss.

    I would imagine that the airports in Northern Ireland are probably pretty unhappy about this. It may only be 3 euros, but it puts the gap in taxes between Belfast and Dublin (a sub-2 hour drive) higher. While I don’t expect people to drive from Belfast to Dublin just to save 3 euros, it could mean more flights into Dublin and that is what people drive for if their home options aren’t very good.

    The UK Air Passenger Duty is absurdly high for a tax, but this shouldn’t be a surprise coming from the most anti-aviation government in the world.

  12. To avoid horrible air taxes in UK, fly to Dublin on Aer Lingus from Boston using Avios. Stopover if desired. One (1) ticket rail-ferry-rail to/from London. See some scenery. Maybe 5 or 6 hours for the trip. Or fly from Dublin to Denmark/Netherlands/Belgium/ France for few Avios. Note: France and Germany have high air taxes. Or fast bus through Chunnel to mainland-more convenient the the train.

  13. mharris127 says:

    I have one question regarding the elimination of the travel tax in Ireland. Is this going to make air travel from there less safe because the money to pay their equal of the TSA is gone (and with it their airport security)? I think the tax should have been raised to cover security costs, not eliminated. Actually the US should raise the travel tax sharply as well so that those that don’t fly won’t have to continue to pay for airport security. I think $75 per segment with a $150 maximum per 24-hour itinerary would be adequate. It is dumb to tax those that don’t use the airports to fund cheap flights for those that do in any country.

    • There is a security fee on US itineraries. I’m not sure if it fully covers the costs of the TSA, but I hope its close.

    • CF says:

      mharris127 – I’m not exactly sure what the tax is used for in Ireland, but clearly this won’t have any impact on security. The government simply has to decide how to fund various activities and it would rather fund those airport-related functions through other manners, whether from the general fund or via private partnerships.

      What your proposal fails to realize is that air travel doesn’t simply benefit the person who travels, and that’s why the idea of requiring travelers to fund the entire system doesn’t make sense. Air travel benefits the economy. It creates jobs. It moves goods. It builds relationships. And that’s something that every government should be trying to encourage.

  14. Julia Ziobro says:

    So my daughter will be almost 14 the next time she flies to Granny in Norwich, UK, from Seattle… she used to fly direct to LHR but that costs a bomb so lately she’s flown SEA-AMS-NOR which is good and bad — the flight attendants assigned to her unattended minor ticket “lost” her once in AMS because she was curled up quietly reading in the lounge… should she fly via Ireland next time? If it were up to me, she’d be flying via RKV because it would be both more interesting and less chaotic, but it’s not.

    • Malbarda says:

      My son, who is 12, travels Leeds Bradford – NY (where we live) as an UM, as well as LBA – AMS (grandparents). He has never gotten “lost” thankfully. He prefers AMS over LHR as he likes KLM/Delta better than BA/AA. He also prefers the KLM UM lounge. I always have him fly business, and I, too, prefer AMS for the obvious tax reasons. Plus, if he gets stuck there due to any kind of travel mishap, he doesn’t have to stay at the airport but can go to his grandparents.

    • CF says:

      Julia – Do you mean that London flights were too expensive in general or because of taxes? If it’s because of taxes, then you can blame Heathrow.

      On that Delta/KLM option via Amsterdam, here’s how taxes and non-airline fees break down on a roundtrip:

      US Intl Transportation Tax 34.40 (17.20 each way)
      US Customs User Fee 5.50
      US Federal Inspection Fee 7.00
      US Animal/Plant Health Inspection Service Fee 5.00
      US Security Fee 2.50
      US Airport Passenger Facility Charge 4.50

      Total US Taxes/Fees – $58.90

      Dutch Airport Security Charge 19.40
      Dutch Passenger Service Charge 18.20
      Dutch Noise Isolation Charge 5.40

      Total Dutch Taxes/Fees – $43

      Great Britain Air Passenger Duty 107.10
      Great Britain Airport Passenger Service Charge 39.50

      Total Great Britain Taxes/Fees – $146.60

      Total Taxes/Fees – $248.50

      Now, if you flew nonstop to London, you would eliminate all those Dutch taxes. The British Passenger Service Charge would go up to $63.50, however, because Heathrow charges more than Norwich and I believe it might be more because it’s a longer flight in from Seattle than Amsterdam. So you would pay net $20.50 more in tax to fly nonstop.

      If you send her via Ireland, you’re now going to be introducing two stops to the equation. There are still charges in Ireland, such as the preclearance charges since they have US customs/immigration in Ireland. I wouldn’t consider doing this, personally.

      • Her dad buys the tickets and he’s notoriously cheap. Even with the connection resulting in extra taxes, apparently it’s still cheaper to fly with a stop than it is to fly non-stop. Personally, I ALWAYS choose the non-stop flight at up to a 25% premium because it dramatically shortens the journey. (SEA to AMS to NOR to granny’s house is 24 hours of travel… where SEA to LHR then to Norwich via car is more like 14 hours total, depending on the traffic and which services Granny likes to stop at that day. :-) I also prefer BA over Delta, though my Alaska miles matching to Delta could sway me these days since I probably have enough miles to get bumped to business class.
        Anyway, thanks for the thoughts… its not just about the money, it’s about shorter travel times and a more pleasant experience too. Joanne has been on planes regularly since she was 4.5 months old and has been flying by herself for 6 years now, and despite her travel experience, admits she finds Amsterdam “overwhelming” as many people do not speak English and there’s too much going on in a too-large space (I had asked her if she wanted to go without unaccompanied minor service next year, since she’s old enough). i’m guessing she won’t fly solo until she’s attempting a domestic flight to my sister in ATL or something. :-)

        • CF says:

          Julia – I agree about nonstop vs connection, and in some cases you might find the nonstops to be cheaper. (You’re about to get more competition with Virgin Atlantic starting the route, so that might help as well.) But I imagine Norwich is a pretty nice and easy airport, once you get passed Amsterdam. I haven’t been there but it can’t be very big.

  15. Jan-Paul says:

    Canadians drive “just” across the border to Billingham or Buffalo for cheaper flights originating in the US. Airport fees in Canada are 5 times as high as the US.

    Also – interestingly no-one mentions the pre-clearing for US customs/passport control at Dublin and Shannon airports. Flying via Ireland and clearing US controls already in Ireland make the arrival in the US so much easier.

  16. Eric says:

    This is definitely a step in the right direction. On my last vacation in Paris, I flew back from paris via dublin (and a separate ticket to dublin on ryanair) because the savings were enough to justify it. Much of that savings went to the local pubs (vs. overpriced french food) so in the end, I paid much more tax in dublin than 3 euros.

    This should be a marketed by the Irish gov’t for tourists to spend a day in Ireland before heading back to the US. APD between London and Dublin is low, and the difference in APD can pay for modest accommodations in Ireland for a night.

  17. John Hurt says:

    This decision does seem uncommon. Has any country done it before? I don’t think I’ve ever heard of anything like that.

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