The report compounded negative reactions from the US and other nations to an idea floated last February by French President Jacques Chirac. The EC study said a E1.00 levy on flights within the EU and
a E2.00 tax to places outside could curb demand for air travel by 0.5% and 1% respectively. Similar it concluded that a tax of E5.00 on intra-EU flights and E10 on international flights would reduce demand by 3% and 4% respectively.
‘The precise impact of these reductions in demand on the airline industry is difficult to predict, but it is certain that for an industry with high fixed costs, even a small reduction in demand could have a significant impact on the profitability of air carriers,’ the report said.
‘Moreover, airlines will not welcome the imposition of an additional levy on their passengers at the time when oil prices are at an all time high.’ Oil prices hit a record of nearly $71 per barrel this week, and steady rises for more than a year have been pushing up fuel bills for airlines.