Leadership

Travel tax will cost Ireland 3,000 jobs - airline CEOs

26.11.2009
The €10 travel tax being levied on every passenger flying out of Ireland will result in 3,000 lost jobs and revenue losses of €482m, according to a new report.

The report by Amsterdam Aviation Economics was commissioned by Aer Lingus, Ryanair and Cityjet to quantify the effects of the air travel tax introduced in March. Between them the three airlines account for 83pc of air travel passengers to and from Ireland.

According to the report, the tax will result in 1.2 million fewer passengers departing from Irish airports.

In a joint statement, the CEO’s of Aer Lingus, Ryanair and Cityjet, Christoph Mueller, Michael O'Leary and Geoffrey O'Byrne-White, called on the Government to scrap the tax, saying it is “completely counter-productive and costing the country more than it can ever hope to generate”.

“It does not make sense to sacrifice huge revenues and lose jobs and passengers by imposing a tax which will generate just €116m,” the airline CEOs said.

“We have always warned that the direct revenue generated by the travel tax would be significantly less than it would cost the State when the adverse impact on business, tourism, jobs and lost taxation receipts were taken into account. This view has now been vindicated by the findings of today's report,” they added.

The report found that the three Irish airlines have absorbed most of the tax and have been forced to reduce capacity and move aircraft to bases outside Ireland as a direct result of its imposition.

“Our analysis clearly demonstrates that the travel tax in Ireland has resulted in a decline in revenues of a far greater magnitude than the tax likely to be collected,” said Jan Veldhuis of Amsterdam Aviation Economics.

“Airlines have had to absorb the tax in lower fares to maintain volumes and, as this will be unsustainable, capacity will further reduce as airlines continue to move aircraft to lower cost markets where no travel tax applies. This will have a further detrimental impact on the Irish economy and the tourism industry.

“The reduced airline network is impacting on connectivity to Ireland, making it less attractive to visit and to do business in Ireland, which is an impediment to economic recovery,” Veldhuis added.

Amsterdam Aviation Economics pointed to the fact that a similar tax that had been introduced in the Netherlands on 1 July 2008 was abolished one year later when it became clear, following a report carried out by it, that the tax had direct negative effects on passenger numbers and economic sectors linked to the aviation industry.