Airlines body slams German air travel tax plans

BERLIN, June 8 (BestGrowthStock) – Airline industry body IATA lashed
out at German plans to impose an air travel tax while Europe’s
aviation industry is struggling to make a profit amid a weak
economic environment.

“The proposal should be axed. It is the wrong measure at the
wrong time,” the International Air Transport Association (IATA)
said on Tuesday.

German Chancellor Angela Merkel announced the tax plan on
Monday, stunning aviation industry executives gathering for
IATA’s annual meeting in Berlin and planemakers preparing for
the opening of the Berlin Air Show on Tuesday. [ID:nLDE6570JJ]

“The most vulnerable part of the industry is in Europe. The
last thing the industry here in Europe needs is additional taxes
and measures that will slow down economic growth,” IATA Chief
Economist Brian Pearce told reporters.

IATA on Monday raised its 2010 earnings estimate for the
global airline industry and said the only region in which
airlines would continue to post overall losses this year would
be Europe. [ID:nLDE6560L6]

The world’s airlines had their worst year ever in 2009, when
demand dropped faster than capacity could be cut as companies
and consumers shrank travel budgets to weather the global
economic crisis.

The Americas and Asia-Pacific have started to recover, but
Europe’s airlines have been dogged by airspace closures, labour
strikes and a weakening of the euro.

“European airlines are facing a pretty difficult time with
weak economies and governments seeking to generate revenues,”
Pearce said.

German flagship carrier Lufthansa (LHAG.DE: ), which said the
levy represented a “black day” for the airline industry, will
likely take the biggest hit, analysts said.

Commerzbank analyst Frank Skodzik said the burden for
Lufthansa would be about 200 million euros ($268.3 million) a
year, assuming the carrier is able to pass on half of the tax to
passengers.

Analysts and industry associations estimate the proposed tax
could raise the price of air travel by an average 8-14 euros per
ticket.

Stock Market News

(Reporting by Maria Sheahan; Editing by Mike Nesbit)
($1=.7453 euros)

Airlines body slams German air travel tax plans