Airlines burdened by high taxes

Updated: 

European airlines are being

European airlines are being "burdened by high regulatory and infrastructure costs", according to a world air transport group.

"The inefficiency of European airspace" is one of the burdens affecting European airlines, according to the International Air Transport Association (Iata).

The European region is expected to generate a net airline profit of 2.8 billion US dollars (about £1.64 billion) this year, which represents only 3.23 dollars (about £1.93) per passenger. Source: PA

Overall, global spending on air transport is expected to reach 746 billion dollars (about £447 billion) in
2014, with the number of passengers likely to increase 5.9 per cent to 3.3 billion, Iata said.

It added that airfares are expected to fall 3.5 per cent in real terms (taking inflation into account).

The air transport industry was likely to facilitate 621 billion dollars (about £365 billion) in tourism spending, while aviation is supporting around 58 million jobs worldwide.

Airlines will take delivery of 1,400 aircraft this year worth around 150 billion dollars (about £90 billion).

Iata said airlines are expected to earn a net profit of 18 billion dollars (about £10.78 billion) in 2014 compared with earnings of 6.1 billion dollars (about £3.65 billion) in 2012 and 10.6 billion dollars (about £6.34 billion) last year.

Iata director general and chief executive Tony Tyler said: "Aviation is a catalyst for economic growth. Airline revenues now total 1% of global gross domestic product.

"Airlines themselves remain burdened with high taxes and weak profitability. With a net profit margin of just 2.4%, airlines will retain only 5.42 dollars (about £3.18) per passenger carried. There is a mismatch between the value that the industry contributes to economies and the rewards that generates for those who risk their capital to finance the industry.

"Airline efforts to improve performance further need a counterpart in governments. That means a regulatory structure that facilitates success, the provision of cost-efficient infrastructure to meet consumer and business demands, and a reasonable tax burden.

"Governments should understand that the real value of aviation is the global connectivity it provides and the growth and development it stimulates, not the tax receipts that can be extracted from it."

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