Air tax will cut revenue by €480m and slash 3,000 jobs, says report

THE controversial air travel tax will cut revenue by up to €480 million and result in up to 3,000 direct job losses, an expert aviation body has predicted.

A report commissioned by Ryanair, Aer Lingus and Cityjet said these losses compared with an estimated €116m likely to be generated by the tax.

Amsterdam Aviation Economics (AAE) said there would be an additional cost of about €50m in terms of reduced income tax and increased social welfare payments from those made unemployed.

The aviation experts said the three airlines – which make up 83% of the Irish market – will continue to move their aircraft out of Ireland to markets which don’t have the tax, further decreasing passenger numbers and industry revenues.

“The analysis clearly demonstrates that the imposition of the ATT (Airline Travel Tax) has resulted in a decline in revenue to specific sectors of the Irish economy of a far greater magnitude than the amount of tax likely to be collected,” said the report.

It estimated the fall in revenues to be between €428m and €482m.

It said that given airlines have absorbed the tax, it was likely those airlines would reduce their capacity in Ireland and continue to redeploy elsewhere in the EU where there was no tax.

The report estimated “a direct job loss of at least 2,000 to 3,000 affecting airports, airlines and the tourism industry”.

This would all mean less revenues from income tax, less revenue from corporation tax and less revenue from VAT.

The air travel tax was introduced last March and involves a tax of €10 per passenger on all flights from Irish airports to airports more than 300km from Dublin Airport.

Publishing the report, Michael Cawley, Ryanair deputy chief executive, said the tax was “creating a vicious downward spiral” of falling passenger numbers and revenues.