Policy Brief: Taxation of International Air Transport and Airports – Economic Benefits and Costs

Service Area

Policy Analysis & Regulations

Orange plan waiting at gate during sunrise.

Project Brief

InterVISTAS was commissioned by ACI World to prepare a policy brief on the impacts of taxation on aviation. The analysis included quantifying the current levels of taxation globally, and calculating the economic impacts associated with the travel demand suppressed by that taxation. The brief also discussed important policy implications associated with taxation and provides guidance for policy makers on issues to consider when taxing aviation. A series of case studies on taxation were also completed for each of the ACI World regions.

Approach

To obtain the necessary information to complete the study, InterVISTAS relied on a number of different sources, techniques and applications. This included using a variety of data sources to collect information on taxes globally, including ACI sources as well as other industry data.

Using multiplier analysis, direct, indirect and induced economic impacts were assessed, both on a global and regional level. Estimates of demand elasticities were also used to calculate the suppressed demand levels due to taxation levels.

Results

The key findings of the report are:

There is a common misconception between charges and taxes in aviation
Estimated taxes on aviation equate to US $90 billion globally
The removal of the tax burden could lead to additional passenger traffic (750 million passengers) and resulting GDP and jobs impacts (US$ 93 billion direct GDP and 2.2 million aviation jobs)

The report also covered a number of policy recommendations for countries globally, including the need to remove complicated tax regimes.