Fact Sheet: Aviation Charges, Fuel Fees and Taxes
- IATA drives cost efficiencies in airport charges, air traffic control charges, fuel fees and taxation
- IATA’s campaigns are aimed at infrastructure providers (airports, air navigation service providers (ANSPs) and fuel suppliers) as well as regulators and governments
- Airlines and passengers are estimated to have paid at least $92.2 billion for the use of airport and air navigation infrastructure globally in 2011, equivalent to 14.4% of the cost of transport. (1)
- In all its work, IATA emphasizes the key principles of infrastructure charges:
- Cost-relatedness of charges
- Consultation with airlines
- Equitable charges structure
- Timely and efficient investment
- Productivity and service level improvements
While there have been some recent successes, increased taxes, together with rising charges and fees, remain a threat across the globe.
- At London Heathrow, the regulator’s decision to cap charges at 1.5% below inflation for the 2014-2018 pricing period, as well as stipulate a capital investment program of US$3 billion sets a good example for other large international hubs.
- Campaigns to achieve more responsible airport privatization received a boost when the Brazilian government’s recent concession agreements for Rio International and Confins airports incorporated a capped charging model, an annual review including a productivity factor, as well as a service level agreement.
- Nevertheless, some airports continue to undertake large infrastructure development programs without adequate user consultation or justification.
- We are optimistic that ongoing dialogue with the Airports Company of South Africa (ACSA) on their development plans will prevent the large charges increases introduced in the past.
- Elsewhere in Africa there is a worrying trend towards charges for immigration and border control services — a state responsibility. Airlines should not have to bear the burden of these fees which reach US$80 per passenger in some countries.
- The Single European Sky, which would make European air navigation more cost-efficient, needs significantly more ambition and commitment from states
- The abolition of the two highest rates of the UK Air Passenger Duty from April 2015 is a small step towards mitigating this damaging aviation tax, however the lower two bands are still increasing in line with inflation
- Lack of open access to fuel supply and the continued imposition of various taxes on jet fuel for international operations is increasing the industry’s cost burden.
- There is also concern that changes in the jet fuel supply chain and increasing demand is leading to increased supply reliability challenges.
- As of April 2014, IATA’s successful campaigns include:
- China: the supply of bonded fuel which is exempt from VAT, for international operations at a further three airports - Chengdu, Xiamen and Zhengzhou - will save airlines an estimated US$140 million up to end 2016.
- EU: following a European Commission memo which implied that a 4.7% duty would be levied on jet fuel imported into the EU from Gulf Cooperation Council (GCC) countries, a joint campaign by IATA and airlines resulted in an EU regulation exempting jet fuel imports from duties from 1 January 2014.
- Italy: the splitting of charging zones by the Italian ANSP resulted in a reduction of US$24 million in terminal navigation charges.
- Kenya: following industry protests, the government has refrained from imposing a railway development levy on jet fuel for international operations, saving airlines an estimated US$23 million up to 2015.
- Libya: IATA worked with the government to achieve more transparency on the country’s fuel pricing formula which will result in savings of US$31 million per year.
- Mexico: an industry campaign to prevent the imposition of an environmental levy on jet fuel for international uplift avoided some US$55 million in extra costs for airlines.
- Peru: the introduction of an economic regulation for ATC charges, including the obligation to consult with users, marked the successful end of a long-term campaign following the ANSP’s unilateral imposition of a 19% increase in charges in 2012.
- USA: IATA supported the US airline association, Airlines for America (A4A) in fighting proposed increases in aviation fees in the 2014 US budget. While not prevented entirely, the budget stipulated that funds from increased fees would be used for funding aviation security, rather than go to the general Treasury.
- Aviation must not be treated as a cash cow for providers or an easy target for taxation by governments
- Providers should continue to build on the collaborative relationships established with airlines
- The industry must continue to seek opportunities for cost reduction and efficiency improvements
Note: (1) Total cost of transport is calculated as commercial aviation revenues plus portion of user charges levied via passenger ticket in addition to the fare. It excludes passenger taxes levied by governments. Source: ACI and revenues reported by major ANSPs where available.
Updated: May 2014