Study on the taxation of the air transport sector. Final Report.

Neiva, R., Pons, A., Horton, G., Lutz, C., Distelkamp, M., de Luis Iglesias, R., Brajterman, O., van Velzen, A. & Pirlot, A. (2021): Study on the taxation of the air transport sector. Final Report. Report for European Commission (DG TAXUD), Ricardo, Gesellschaft für Wirtschaftliche Strukturforschung (GWS) mbH, Ipsos. ED 14102, Issue number 2.1.


This study on the taxation of the aviation sector in the European Union supports the impact assessment of the Energy Taxation Directive (ETD) to address the problem of insufficient internalisation of climate-related externalities in this sector and to preserve the capacity to generate revenues for the budgets of the Member States. The study assessed the potential impacts of introducing a fuel tax, a ticket tax and a combined tax (fuel tax on intra-EEA flights and ticket tax on extra-EEA flights). The options were assessed against two baseline scenarios, reflecting the uncertainty around the recovery of aviation activity following the COVID-19 pandemic. The policy options for a fuel tax on intra-EEA flights would amend the current tax exemption of aircraft fuel. Possible tax rates were based on the tax levels for kerosene as defined in the current version of the ETD. The ticket tax options included a ‘flat rate’, a ‘stepped rate’ (with higher tax rates for longer distances, reflecting higher environmental impacts) and an ‘inverse stepped rate’ (with higher tax rates for shorter flights, as an incentive to use alternative transport options where available). The analysis assessed both impacts on the aviation sector (travel demand, environmental emissions, sector revenues), and wider socio-economic impacts (employment, GDP) providing a comparison across policy tools to guide decision-making. A case study was also performed on the potential impacts on selected island regions (the Canary Islands, Crete, Ireland and Malta) in the European Union.