New European Taxes Meant to Discourage Air Travel

AskEd & AnswerEd
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Editor's Note: This story was originally published on September 20, 2010. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: airfare, AskEd & AnswerEd, Ed Perkins, Germany, taxes and fees, United Kingdom.

You can hardly visit a travel website, blog, or magazine these days without seeing something about all the extra fees and taxes. Some writers suggest ways to avoid them; others just bemoan them. Some rail against "hidden" fees that are, in reality, clearly disclosed. And the simplistic "tips" that often accompany these rants, such as, "Avoid baggage-check fees by not checking any baggage," are neither profound nor useful. A reader recently put a finger on the real question about fees:

"Are any airline fees and taxes high enough—and onerous enough—to alter my travel plans, rather than just forcing me to decide which options to take and which to refuse?"

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The short answer to this more pointed question is, "Yes, the British and German air taxes can be high enough to influence your choice of itinerary." Although several countries charge stiff fees for entry or departure, the European situation is a special case:

  • The new taxes are, at least in part, actually intended to discourage air travel.
  • Cross-border alternatives can sometimes be relatively painless.

The British Gouge

The British "Air Passenger Duty" is by far the most onerous you're likely to encounter. It applies to all flights that depart from any U.K. airport for trips ticketed to originate in the U.K. As of November 1, the amount in economy class will be £12 (about $18) on domestic flights and flights to most of Europe and £60 on flights to the U.S. or Canada. The duties in any premium cabin—premium economy to first class—will be double. Those duties apply not only to purchased tickets but also to "free" frequent flyer awards. That means adding almost $200 to what you'd pay for a frequent flyer seat in business class.

Contrary to some reports I've seen, however, the extra duty does not apply to flights from third countries that connect at a U.K. airport. Connecting in London can be a bad idea for other reasons, but at least not because of the passenger duty. Also, the duty applies only once, even if you take a connecting flight, say, from Edinburgh to London to fly to the U.S. or Canada.

Paying a minimum of about $100 and as much as $200 per person can add up to a big chunk of money for a couple and especially for a family. That can be enough money to select an itinerary that avoids a transatlantic departure from the U.K.

If you're planning a trip covering two or more European countries, the easiest way to do that is to visit the U.K. first, fly ($18 per departure) or take the Chunnel train (no duty) to the Continent to visit another country, and fly home from some other European gateway.

If you really don't want to visit anywhere but the U.K., avoiding the duty could be more hassle than you want. You can take the Eurostar from London to Brussels or Paris for $57, which is a bit less than the economy class duty—and a lot less than the duty on a premium seat—but I suspect not many of you would be willing to spend all that extra time and hassle for a comparatively meager reduction in travel cost. You could also go in the other direction—to Dublin—for about a $50 train/ferry trip, but that takes a minimum of about seven hours.

The New German Tax

Germany just announced a new tax, starting the first of the year, also based on flight distance and ranging from €8 (about $10) for the shortest flights to €45 (about $57) on flights to the U.S. or Canada. The tax is the same for all cabins. As with the U.K., the tax applies only to trips that originate in Germany; you don't pay twice for connecting flights from third countries through a German gateway, or if you connect from some other German city through another German gateway.

Because this tax is much less than the U.K. levies, you have less incentive to spend a lot of time or money to avoid it. Moreover, Germany has some offsetting advantages: Airfares to/from Germany are usually as low as—or lower than—those to neighboring countries, and German rental car rates are typically the Continent's lowest. Still, depending on where you're going, a couple heading to/from Germany might be able to shave more than $100 off their travel costs by flying home from Amsterdam, Brussels, Paris, Basel, or Zurich.

Misguided Priorities?

European governments are at least as hard-pressed for revenues as governments in the U.S., and much of the rationale for the new fees and taxes is purely a matter of collecting more cash—and collecting it from international tourists who don't have a vote on the matter. But just about everyone in the European travel industry claims that the new fees will cause the countries to lose more revenue than they collect: The decline in tourism will reduce associated revenues to the point that the new fees and taxes will be net losers.

The fee opponents have some excellent evidence to support their claim. Both Ireland and the Netherlands have dropped previously imposed taxes because of overall revenue loss.

But proponents of the fee in both countries—and in other places, as well—admit that loss of tourism is, in fact, another purpose of the fees. Air travel is a big contributor to atmospheric carbon, they say: They want people to fly less, and increasing the cost of flying is one way to reduce the demand for air travel. They hope, they say, that the higher cost of air travel will encourage people to take more environmentally friendly means of travel, chiefly Europe's efficient (and highly electrified) rail systems.

That argument, however, doesn't pass muster. If the real reason was to get people to switch from planes to more energy efficient means, the fees should be highest on short-haul, regional trips within Europe where trains are truly a viable alternative. Exactly how do they think that someone heading to Boston or Toronto can catch a train?

The European travel industry is virtually unanimous in condemning the new taxes, and they will undoubtedly mount ongoing opposition—especially if they can show a net economic loss. Meanwhile, however, if you're heading to Europe in 2011, you'll certainly face those charges, and maybe some new ones. For now, at least consider arranging an itinerary to avoid the worst ones.

Your Turn

Do you work around extra taxes and fees? How do you do it? Share your tips by submitting a comment below!

 
 
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