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Closing Ranks: Aviation Industry Demands Elimination of Competitive Disadvantages Impacting Business Location Austria from the Future Government



• Representatives of the domestic aviation sector jointly hand over list of demands to the future government
• Ticket tax is a stumbling block for business and tourism
• Improved air traffic links to Europe’s railway system is necessary
• Harmonization of European air traffic control is long overdue

The domestic aviation industry, which accounts for 80,000 jobs and 1.8 percent of total Austrian economic output, is asking the future government to put an end to the competitive disadvantages adversely impacting the Austrian business location. For this purpose, it developed a list of demands which is currently being handed over to the responsible ministries. The aviation sector is calling on the Ministry of Finance to abolish the air transport levy, commonly known as the airline ticket tax. Austria is one of the few countries in Europe in which the government has imposed such a tax.

“Studies carried out by respected research institutes show that the domestic aviation industry loses some 1.1 million passengers each year due to the airline ticket tax. This corresponds to a GDP contribution of EUR 229 million and additional indirect tax revenues of EUR 6.5 million which are lost. At the same time, new mega-airports are emerging in regions outside of the EU, such as in Turkey and the Middle East, which are not subject to comparable limitations, and which can thus more quickly benefit from the global growth in air traffic”, comments Julian Jäger, Member of the Management Board of the Vienna International Airport and President of the Working Group of Austrian Commercial Airports (AOEV). “From the perspective of Austria’s airports, the ticket tax is a burden on Austria’s role as an aviation location, and weakens the country’s international competitiveness. An elimination of the tax would also create an additional 3,300 jobs”, he adds.

For Gerhard Kunesch, Managing Director of Linz Airport and thus the representative of a regional airport, there is no doubt that the airline ticket tax has backfired. “In particular, the airports in the federal provinces have been adversely affected by this competitive disadvantage. We already suspected last year that this was the case, but now we are sure. In 2012, all provincial airports suffered from a decline in passenger figures. The majority of provincial airports predict a renewed downturn in 2013“, he states. All of the country’s commercial airports are represented in the Working Group of Austrian Commercial Airports (AOEV), including those in Graz, Linz, Innsbruck as well as the airports in Carinthia, Salzburg and Vienna.

Ticket tax damages the tourism sector
“Ultimately the airline ticket tax negatively impacts tourism and Austria as a business location“, says Christian Lesjak, Managing Director of NIKI, in explaining the competitive disadvantages. “In this way, the economic significance of tourism for Austria, which is far greater than in Germany, is undermined and subject to unnecessary risks. Austria has imposed a competitive disadvantage on itself as a tourist destination compared to other destinations such as Italy and France. The entire business location suffers as a result“, he adds.

Jaan Albrecht, CEO of Austrian Airlines, is encouraging the government to make autonomous decisions: “It is time for a courageous Austrian decision“. The airline ticket tax was surprisingly introduced in April 2011 in accordance with German practices.

Passengers leaving on flights from Austria currently pay the following surcharges:
• €7 per short-haul route
• €15 per medium-haul route
• €35 per long-haul route (unchanged)

Harmonization of European air traffic control is long overdue
Another demand on the part of Austria’s aviation industry is the long-overdue implementation of Single European Sky, the uniform air traffic control system in Europe. The Single European Sky II package, an EU-law since 2010, is already included in the government’s program of measures for the years 2008-2013. However, unfortunately very little was done in this regard during the last legislative, although it offers considerable leverage: The annual costs of EUR 8 billion calculated by the European Commission could be cut in half by Single European Sky, and CO₂ emissions reduced by 50 million tons per year. In comparison: Europe has 38 regulatory authorities with 57,000 employees responsible for air traffic control, whereas the USA boasts only one supervisory authority with 35,200 employees, although airspace in the USA is much more crowded (see chart enclosed).

Improved air traffic links to the international railway network are necessary
Representatives of the country’s aviation industry welcomed the planned transport connections which will be created between air traffic and the Central Train Station in Vienna as of 2015. Some progress has already been made in Western Austria in this respect, and airports are increasingly accessible by train compared to the past. In contrast, the development of airport rail links in the eastern part of the country i.e. the catchment area of Vienna International Airport is lagging behind. Improved accessibility of Vienna International Airport by railway connections in Eastern Austria would massively upgrade the business location, and help to more effectively exploit the potential of the entire catchment area. The expansion of so-called intermodal traffic i.e. the enhanced integration of roadway, railway and air transport systems, is also part of the Roadmap2020.

“Most of our demands were already integrated into the government program in 2008. Now we expect the new government to implement the corresponding measures“ is the consensus of all representatives.


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