Air France’s position penalized by governmental eco-tax proposition

Air France strongly disapproves the announcement of a proposal to introduce an eco-tax varying from 1.5 to 18 euros on tickets for all flights departing from France as from 2020.

This new tax would significantly penalize Air France’s competitiveness, at a time where the company needs to strengthen its investment capacity to more rapidly reduce its environmental footprint, notably as part of its fleet renewal policy.

Air France claims air tax in France is already over the top

France is one of the countries with the most heavily-taxed air transport industry in Europe. These taxes are in addition to the particularly high burden of employer payroll taxation on airlines, whereas Air France’s activity contributes 1.1% of French national GDP, generates more than 350,000 jobs and Air France is the leading private-sector employer in the Paris region.

This tax would represent an additional cost of over 60 million euros per year for the Air France group, i.e. the equivalent of the measures adopted during the French Air Transport Conference, aimed at strengthening the French flagship carrier’s competitiveness.

Air France domestic flights already loosing 180 million euro in 2018

This measure would be extremely penalising for Air France, of which 50% of its flights are operated out of France, and notably for its domestic network, where losses amounted to above 180 million euros in 2018. In addition, last month, the government had ruled out taxation at the national level due to the unfair competition that this would cause.

The government’s decision is all the more incomprehensible as this new air transport tax would reportedly finance competitive modes of transport including road transportation and not the energy transition in the air transport sector. Such a transition could have been facilitated by supporting the implementation of sustainable biofuel industries or disruptive innovations.

The Air France group is committed alongside all the industry players to reducing its CO2 emissions by 50% by 2050, in accordance with the Paris climate agreement objectives. Air France has been contributing to the European Union’s Emissions Trading Scheme (ETS) since 2012 and will contribute to the CORSIA scheme for international flights as from 2021, representing already 200 million euros per year for the Air France-KLM group by 2025.