German government prepares air traffic tax cut worth 1.5 billion euros by 2030

Germany’s government has prepared a draft law to cut the air passenger tax from July to strengthen Germany’s struggling aviation sector, reported the Frankfurter Allgemeine Zeitung (FAZ). The finance ministry’s draft, seen by FAZ, proposes a tax reduction of between 2.50 and 11.40 euros per flight per passenger, depending on distance. Environmental NGOs have criticised the tax reduction as a “fatal signal for the transport transition” given aviation’s climate footprint.

Chancellor Friedrich Merz said in November he hoped to increase passenger volumes to pre-coronavirus levels with the measure. The proposed tax cut would reverse a corresponding increase introduced by the previous government in 2024. 

According to the draft law, the government expects the tax cut to result in a revenue shortfall of 185 million euros in 2026, and between 340 million and 355 million per year from 2027 to 2030, thus adding up to more than 1.5 billion euros by 2030. The ministry of transport will have to compensate for the lost revenue, the draft says. 

Industry association BDL recently warned that Germany’s aviation sector is falling behind compared to other European countries. Whereas passenger capacity in the whole of Europe exceeded pre-pandemic levels by six percent last year, capacity at German airports was eleven percent lower. 

It remains to be seen whether the tax cuts will make flying cheaper for passengers, as this will depend on whether airlines pass on the cost reduction. Meanwhile, increasing government levies for security and air traffic control also lead to higher costs for passengers, and the rising oil prices as a consequence of the war in Iran are increasing costs for the airlines, the article said.

Transport policy NGO VCD lambasted the planned tax cut in November. With a view to price increases for public transport, it argued the government would subsidise “the most climate-damaging form of transport while at the same time putting further burdens on climate-friendly public transport.”