Air France (AF, Paris CDG) "strongly disapproves" of a new government proposal for an ecological tax varying from EUR1.50 to EUR18 euros (USD1.68 to USD20.20) on fares for all outbound flights from 2020, the flag carrier said in a statement on July 9.
The reaction follows Transport Minister Elisabeth Borne telling a news conference earlier in the day that proceeds from the tax would be use to finance other forms of transport in France such as local trains, Reuters reported, a revelation that sent airline share prices plunging.
"This new tax would significantly penalise Air France’s competitiveness, at a time where the company needs to strengthen its investment capacity to more rapidly reduce its environmental footprint, notably as part of its fleet renewal policy," the French airline protested.
"France is one of the countries with the most heavily taxed air transport industry in Europe. These taxes are in addition to the particularly high burden of employer payroll taxation on airlines, whereas Air France’s activity contributes 1.1% of French national GDP, generates more than 350,000 jobs and Air France is the leading private sector employer in the Paris region," it continued.
The statement claimed that the tax would represent an additional cost of over EUR60 million euros (USD67.24 million) per year for Air France, which is the equivalent of measures it recently adopted to strengthen its competitiveness.
The move would penalise Air France in particular, it added, "notably for its domestic network, where losses amounted to above EUR180 million in 2018".
"The government’s decision is all the more incomprehensible as this new air transport tax would reportedly finance competitive modes of transport including road transportation and not the energy transition in the air transport sector. Such a transition could have been facilitated by supporting the implementation of sustainable biofuel industries or disruptive innovations," the statement said.
The government also slashed tax benefits on diesel for trucks. Non-governmental organisations commented that the new eco-tax was too low to reduce air travel, with Climate Action Network's Lorelei Limousin telling Reuters: "The government is finally targeting tax breaks for the most polluting industries such as trucking and airlines, but these modest measures will not significantly reduce greenhouse gas emissions."
