Upcoming Tax Hike Sparks Outrage in Aviation Industry Over Airline Ticket Costs – January 13, 2025

Upcoming Tax Hike Sparks Outrage in Aviation Industry Over Airline Ticket Costs - January 13, 2025

A proposal to increase the solidarity tax on airline tickets aims to achieve fiscal and ecological justice, but has met with strong opposition from the airline industry, which fears rising ticket prices could harm French tourism. The government, led by Minister Amélie de Montchalin, argues the wealthiest contribute disproportionately to air travel costs. Critics highlight potential negative impacts on market share and connectivity, as well as longstanding calls for fairer taxation within the aviation sector.

Advocating for an Increase in the TSBA: A Call for Fiscal and Ecological Justice

The newly appointed Minister of Public Accounts has put forward a case for raising the solidarity tax on airline tickets, asserting that this initiative aims to promote ‘fiscal and ecological justice.’ The proposed increase is expected to lead to a rise in the cost of airline tickets, a concern that has prompted the airline industry to voice its opposition. On January 13, representatives from the sector criticized the initiative as a ‘recessive’ measure and urged for its reconsideration in a joint statement issued by the National Federation of Aviation and its Professions (Fnam) and the Union of French Airports (UAF).

The federations expressed disappointment over the government’s decision to advance the tax hike without prior consultation or a thorough impact assessment as part of the 2025 finance bill. Pascal de Izaguirre, president of Fnam, emphasized the necessity for dialogue between the government and the aviation sector to ensure informed decision-making. It’s worth noting that airline ticket prices are influenced by various taxes and fees, which can constitute as much as 40% of the total fare, depending on the regulatory frameworks in different countries.

Last week, Minister Amélie de Montchalin reiterated her support for increasing the solidarity tax on airline tickets as a means to address the public deficit. The previous government had already suggested tripling this tax and raising fees for private jet travelers, potentially generating one billion euros, a move that has sparked backlash from industry stakeholders who called for a return to the ‘more balanced’ proposal previously approved by the Senate in November.

The Market Share Decline: A Growing Concern for French Airlines

However, Amélie de Montchalin remains steadfast in her commitment to the TSBA increase, framing it as a measure of ‘fiscal and ecological justice.’ She noted that the wealthiest 20% of the population is responsible for over half of all air travel expenditures, as she shared in an interview with the Parisien .

The federations reiterated their concerns, stating, ‘This measure will have the immediate consequence of increasing the price of airline tickets.’ They fear that such hikes could diminish the appeal of French tourism in favor of other European destinations, jeopardizing connectivity between mainland France and its overseas territories.

The proposed increase in the TSBA poses a direct threat to the future of French business aviation and could further erode the market share of French airlines, which are already losing one percentage point of market share in passenger transport annually. Additionally, the aviation sector, which contributes 2% to France’s GDP while accounting for 6% of CO2 emissions, has faced long-standing calls from environmental NGOs for equitable taxation, arguing that the industry has historically enjoyed excessive tax benefits in France.