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Thursday, April 18, 2024

Airline seat tax set for crash landing

The fate of a hotly contested airline seat tax in Norway looks set for a crash landing after the country’s competition authority refused to clear it for take-off. Its repeal before even being imposed could save the Rygge airport in Moss from threatened closure, if Ryanair decides to keep using the airport after all.

Ryanair has declared it will stop flying from Rygge if the NOK 80 tax starts being charged per seat from April 1 as the government has planned. Ryanair isn’t the only airline objecting to the tax, which was justified as a climate measure aimed at discouraging Norwegians from flying. The head of Norwegian Air has it branded as “stupid,” aviation authorities in the US are “concerned” the proposed tax violates the intention of the US’ and Europe’s “open skies” policy, and other major carriers have criticized it as well.

The objections from the competition authority Konkurransetilsynet, though, are likely to carry the most weight. Its analysts worry that the tax will lead to fewer airlines serving the Norwegian market and, thus, less competition. The tax can also be onerous for passengers needing to change planes on a route where the airlines involved don’t cooperate. Then the passenger can get charged twice on the same trip, while cooperating carriers would only charge it once.

The authorities also wrote in testimony sent to the government that they wanted to see “a closer evaluation of how the new tax can affect airlines differently, depending on whether the airline has most of its market in the low-fare or full-service segment.” The low-fare carriers may be hit hardest, authorities fear.

Opposition politicians called immediately on the government to drop plans for the tax. Frode Steen, a professor at the Norwegian business school NHH in Bergen who specializes in the airline industry, told newspaper Dagens Næringsliv (DN) that he thinks if will be “very difficult” for the government to impose the tax over the competition authority’s objections. Finance Minister Siv Jensen had no immediate comment. staff



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