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This Article is From Oct 16, 2019

German Air Travelers Get 6-Month Buffer Before Climate Levy

(Bloomberg) -- New climate protection surcharges on German air travel will begin in April, giving passengers a temporary reprieve before tickets become more expensive and providing airlines time to adjust pricing.

Lifting surcharges is an element of Chancellor Angela Merkel's plan to nudge consumers to opt for trains instead of planes, above all in domestic travel. The increased fees are aimed at offsetting a cut in value-added tax on rail tickets that will take effect from January, ministry officials reported Monday at a press conference in Berlin.

German domestic air travel has stagnated for years, falling 0.8% to 23.5 million passengers in 2018 compared with the year before, according to the Federal Statistics Office. International flights from Germany are soaring, rising 5.5% last year to 99 million passengers.

How tax on air tickets will rise in Germany from 2020:

  • Domestic and Europe: 13.03 euros ($14.33) from 7.50 euros, a rise of 75%
  • Mid-haul: 33.01 euros from 23.43 euros
  • Long-haul: 59.43 euros from 42.18 euros
  • Tickets at dumping prices -- meaning below cost-price -- will be banned

How rail and tax receipts will benefit

  • Rail ticket value-added tax drops to 7% from 19%, reducing prices by about a tenth
  • More expensive air tickets will raise tax revenue by about 740 million euros, easily covering lost rail VAT

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Jonathan Tirone, Lars Paulsson

©2019 Bloomberg L.P.

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