Tourism chiefs claim air travel tax will cost jobs

TOURISM leaders have hit out at the new air travel tax, which they claim will cost jobs in hotels, airports, airlines and other sectors of the industry against a background of falling visitor numbers.

In particular, they have expressed serious concern the €10 tax will have a detrimental impact on the viability of Shannon Airport and tourist-related businesses in the west of Ireland.

Tourism bosses claimed the levy, combined with other taxation increases announced in yesterday’s budget, would make Ireland less attractive as a tourist destination.

Finance Minister Brian Lenihan announced the controversial €10 tax, which will apply to all passengers on all continental and transatlantic flights, as well as many UK destinations.

A lower rate of €2 per passenger will apply on shorter flights.

The tax, which will come into effect on March 30 next, is expected to raise €95 million in 2009 and €150m in a full year.

The tax, which will be collected by airlines, will not apply to children aged under two, disabled travellers and their helpers as well as transit passengers. Other exemptions apply to people travelling on aircraft carrying less than 20 passengers and flights to and from offshore islands as well as aircraft operating from airports with annual passenger traffic of less than 10,000.

Introducing the measure, Mr Lenihan said the air travel tax was “consistent” with moves by other EU states.

Ryanair chief executive, Michael O’Leary, warned the tax may affect the airline’s level of operations in Shannon, already loss-making unless altered from a flat rate to a percentage basis.

Mr O’Leary predicted short-haul traffic from Shannon would collapse as the tax would represent a 100% increase on average air fares paid by Ryanair passengers using the airport.

He called on the Government to extend the tax to ferry companies in order to avoid distorting competition.

Aer Lingus said the tax was discriminatory and would further damage already falling consumer demand.

The airline also claimed that the €2 rate should have been applied to all UK destinations.

The Irish Tourist Industry Federation (ITIF) expressed disappointment with the tax, which it believed would undermine the competitiveness of Irish tourism.

“It would be regrettable even in normal times but its imposition at a time when the aviation and travel industries are in the most precarious position in living memory is unfortunate and unwise,” said ITIF chief executive, Eamonn McKeown.

The Irish Travel Agents’ Association said the Government should have used the proceeds of the tax to fund a compensation scheme for consumers in the event that airlines went out of business.