Finance Minister rules out any exemption for Shannon Airport from the introduction of Air Travel Tax – BREEN.

March 27th, 2009 - Pat Breen
The Minister for Finance Brian Lenihan T.D. has ruled out any exemption for Shannon Airport from the introduction of the controversial Air Travel Tax which is to come into effect from the 30th March next. Deputy Breen raised this matter with the Finance Minister Brian Lenihan T.D. by way of parliamentary question recently with Minister Lenihan confirming that he has “no plans to review this tax”.

Responding to the Ministers refusal to review the imposition of this Air Travel Tax, Deputy Breen said that “At a time when the aviation and tourism industry world-wide is in turmoil it is baffling as to why the Minister is continuing to purse the introduction of this travel tax.”

“Ryanair have already announced the reduction in the number of aircraft based at Shannon Airport from six to four this summer, they are reducing their route network from 30 to 25 and their weekly services will fall from 136 to 116 from the end of March.”

“As well as a reduction in short-haul services and in spite of the welcome return of Aer Lingus on the Chicago route the indications from the US market is that bookings are down considerably this year with a number of Group Tours cancelling trips to this Region in the last number of weeks.”

“Instead of introducing an Air Travel Tax, the Government should be reviewing the Tourism and Economic Plan for the Region and focusing their efforts on marketing and promoting the Region abroad.”

“It is expected that the US Customs and Border Protection facility will be in place in July next. A dedicated and ring fenced marketing budget must be put in place to market the unique facility and to promote Shannon Airport as an entry point to regional Airports in the United States.”

“The introduction of an Air Travel Tax at this time is bad for Shannon Airport, bad for Tourism and bad for this Region.”

 

DÁIL QUESTION

 

To ask the Minister for Finance further to Parliamentary Question Nos. 166 and 175 of 11 February 2009, if he will exempt Shannon Airport from the proposed €10 air travel tax; and if he will make a statement on the matter.

– Pat Breen.

* For WRITTEN answer on Wednesday, 11th March, 2009.

Ref No: 10485/09

REPLY

Minister for Finance ( Mr Lenihan) :

As the Deputy is aware, I announced in Budget 2009 that an air travel tax will come into force in respect of passengers departing from Irish airports on and from 30 March 2009. A general rate of €10 per passenger will apply, with a lower rate of €2 for shorter journeys.

The Finance (No.2) Act 2008 confirms the introduction of an air travel tax from 30 March 2009. However, I took account of concerns raised by the regional airports particularly those on the western seaboard. The lower rate of €2 will apply to departures from any Irish airport where the destination is 300kms or less from Dublin airport. This means that all Irish departures, subject to the tax, to locations such as Manchester, Liverpool and Glasgow will be subject to the €2 rate.

In addition, to assist the smaller airports I have increased the exemption threshold for airports included in the air travel tax, from 10,000 to 50,000 departing passengers in the previous calendar year.

 

We currently face significant financial challenges and the air travel tax is an important revenue raising measure.

Ireland is not unique in regard to applying a tax on air travel. A number of countries within the EU apply similar taxes including, the UK, France and the Netherlands, as do Australia and New Zealand. The proposed rates for the Irish air travel tax are not unreasonable both for shorter and longer journeys, when compared to rates in other countries.

It should be recognised that tourists will only be subject to the tax on their return journey. The additional €10 or €2 in the context of a much larger purchasing decision involving travel, hotel expenditures etc. shouldn’t have much of an effect on tourist numbers. I appreciate the airline industry continues to go through a difficult period. However, this difficult trading period has, in addition to weak world economic activity, been largely driven by a massive spike in oil prices. Oil prices have now halved from the all-time high prices experienced earlier in the year.

I tried to be as fair as possible in looking at areas for additional tax revenues. It is also worth noting that fuel used by commercial airlines is completely exempt from tax, so it’s a sector that already has considerable preferential treatment. I have no plans to further revise the air travel tax.