Germany accused of ‘policy madness’ after hiking airline passenger tax

Germany has been accused of “policy madness” over its decision to increase airline passenger taxes by nearly a fifth.

A group of the world’s largest airlines have warned that a 19pc jump in Germany’s aviation levies will damage the country’s economy and erode the industry’s ability to hit net zero. 

The change, which came into force on Wednesday, will mean that each passenger flying to and from German airports must now pay between €15.53 (£13.28) and €70.83 in tax on their fares.

Willie Walsh, director general of the International Air Transport Association (IATA) lobby group and former boss of British Airways, said: “When Germany’s economic performance is anaemic at best, denting its competitiveness with more taxes on aviation is policy madness.

“The Government should be prioritising measures to improve Germany’s competitive position and encouraging trade and travel. 

“Instead, they have gone for a short-term cash grab which can only damage the economy’s long-term growth.”

IATA said the tax rise – first announced in December – will make German exports, tourism and jobs market less competitive, while also holding back the recovery of the country’s air transport sector.

The recovery of Germany’s air sector post-Covid has been one of the slowest in Europe, as the country’s international passenger numbers are still down 20pc compared to pre-pandemic.

The tax increase will also hamper the airline industry’s goal of reaching net zero carbon emissions by 2050, Mr Walsh warned, as it will make it harder for carriers to invest in sustainable fuels.

He said: “Money taken out of the industry means that it has less money to invest in other decarbonisation measures.”

It comes as German policymakers propose the introduction of a Europe-wide jet fuel tax, which the industry says would make it more expensive to do business in Germany.

Mr Walsh added: “The German Government appears to have an unhealthy obsession with aviation taxes.”

In February, Tui’s group chief executive Sebastian Ebel hit out at Germany’s “regulatory madness and bureaucracy”. 

Mr Ebel criticised the Government particularly because the increase in aviation tax was announced after passengers had already booked tickets.

A spokesperson for Germany’s Federal Ministry of Finance said the increase in airfares would amount to an extra €3.05 charge for more than 80pc of passengers. “The increase was chosen to be moderate, so that the German government assumes that it will not lead to traffic being shifted to foreign airports.”