A simple, equitable and economically neutral tool
Easy implementation: the air-ticket solidarity contribution can be introduced easily by raising existing airport taxes and charges; collection costs are minimal and national tax sovereignty is not affected.
A limited economic impact: the air-ticket solidarity contribution will have very little impact on air transport, which is structurally very dynamic. It will not affect competition between air carriers or between the major airports. One of its advantages is that it can be implemented without waiting for universal participation by all countries.
A flexible and fair mechanism: the progressive nature of the air-ticket contribution is in keeping with the determination to improve distribution of the benefits of globalization. Internationally, differentiation between rates make it possible to consider the specific characteristics of all countries implementing this contribution, especially their level of development.
A mechanism that is easy to implement and fully respects national tax sovereignty
Implementation of an air-ticket solidarity contribution for all passengers departing from an airport located in a participating country does not raise legal problems. International air transport is governed by the Convention on International Civil Aviation (Chicago Convention) and by bilateral agreements and treaties. None of these treaties prohibit the creation of a flat air-ticket contribution on either international or domestic flights. Moreover, this type of contribution already exists in many countries, including the United Kingdom, Denmark and Malta, as a means to finance the State’s general budget. European regulations and WTO agreements also authorise the introduction of this type of flat contribution provided it is not applied in a discriminatory way.
From a practical point of view, the air-ticket solidarity contribution is very easy to introduce. As with airport security and safety taxes and charges, airline companies will be responsible for collecting this contribution. It can therefore be added very easily to the ticket price and paid when a ticket is purchased, regardless of where it is issued. As countries already levying similar levies have shown, collection costs are low (0.1% in the case of the United Kingdom).
Each participating State will adopt an air-ticket solidarity contribution in accordance with its own laws and constitutional requirements, which means that its tax sovereignty will not be reduced in any way. Each participant will be responsible for establishing the contribution rates and conditions. The participating countries will voluntarily coordinate the allocation of the proceeds.
In France, the solidarity contribution will take the form of an increase in the civil aviation tax for airline passengers. Rate caps are differentiated according to the flight destination and travel class (the actual rates will be set by decree in early 2006). For domestic flights or flights to an airport within the European Economic Area (EU + Iceland, Liechtenstein and Norway), the capped rate will be €1 per passenger in economy class and €10 when a passenger gets free services to which other passengers do not have free access (i.e. when they travel in first or business class). On other flights, rates will be four times higher depending upon travel class.
With these rate caps, revenue from this contribution - which will be collected by the civil aviation accountant already responsible for the civil aviation tax - could amount to about €200 million per year.
The law introducing the air-ticket solidarity contribution was adopted by Parliament on 22 December 2005. The contribution will enter into force on 1 July 2006 so airlines can prepare its introduction (tickets are sometimes purchased up to six months prior to date of the flight).
A virtually neutral contribution from an economic standpoint
Air transport is one of the industries that benefits most from globalization with an average annual growth of 5%. This makes it legitimate for the air transport sector to contribute to solidarity efforts being made for those left behind by globalization, whose benefits are far from equally distributed.
Some airline companies suffered temporary difficulties in the wake of 11 September 2001. However, the recent increase in the profits of several airline companies despite rising oil prices shows that a contribution of just a few euros will have very little impact on air transport and profitability of these companies.
The air-ticket contribution will not trigger any distortion in competition between airline companies because it will be based on territorial aspects rather than nationality. All airline companies, regardless of nationality, will have to levy the solidarity contribution when one of their airplanes departs from an airport located in a participating country.
Even with a limited number of participating countries, the air-ticket contribution does not result in any rerouting of traffic. Exemption of passengers on connecting flights ensures that airports located in participating countries will not be penalized. In theory, passengers in border areas could attempt to evade the contribution by travelling to airports located in countries that do not participate in this mechanism. This is however highly unlikely since it would be considerably more expensive than paying the solidarity contribution.
Finally, countries generating large revenues from tourism will not be penalized. The air-ticket contribution is very low compared to the average total cost of a holiday (several hundreds of euros). The best proof of this is that Malta, a major tourist destination, decided last summer to double its air-ticket tax to € 46 per ticket.
The law passed by the French Parliament exempts passengers on connecting flights , i.e. all those with less than 12 hours between the scheduled arrival time at a French airport and the scheduled departure time from the same airport system to an airport that is not their initial place of departure. Thus, a passenger arriving at Paris Roissy Charles de Gaulle Airport from London and departing a few hours later from Paris Orly Airport will not pay the contribution. Likewise, a passenger who is stuck in France for several hours because of a delayed flight will not have to pay this contribution either.
A flexible and fair mechanism
Basing the contribution on air tickets is consistent with the intention to redistribute some of the benefits of globalization. An air-ticket contribution is progressive since higher rates are applied to passengers travelling in first or business class.
At international level, the air-ticket contribution will be implemented by countries of both the North and the South. However, rates can be differentiated according to the level of development of the participating countries. For instance, Chile will levy a contribution of €4 on international flights only, half of which will be allocated to the promotion of tourism and half to development.
Countries with a larger surface area will not be penalized since different rates can be applied to domestic and international flights, and there may not even be a contribution on domestic flights (as in Chile).
The law passed by the French Parliament sets a rate cap for domestic and intra-European flights that is four times as low as the cap on international flights since such flights are used most often and their intermodal competition with trains is strongest. Moreover, rate caps applied to first and business class are ten times higher than those applied to economy class. This reflects the difference in ticket prices between travel classes and keeps the mechanism progressive.