As a representative of nearly every major airline in the world, the Airline Passenger Experience Association (APEX) is encouraging governments worldwide to issue immediate tax relief for the airline industry due to the unprecedented disruption caused by COVID-19 (the novel coronavirus).
“APEX’s recommendations for governments reducing taxation, penalties and slot/gate bureaucracy in the midst of a crisis will go a long way toward ensuring economic recovery.” – Dr. Joe Leader, APEX CEO
With aviation remaining one of the most heavily taxed industries in the world – according to IATA, an estimated $136 billion will be paid by airlines in tax this year (ranging from 5% to more than 50% of the total passenger ticket cost) – APEX believes extraordinary measures are merited. As such, APEX has put forward three recommendations:
- To reduce all possible global tax burdens on airlines during this stressful time
- To suspend “hidden taxes” such as forced slot and gate utilization
- To remove any new aviation taxes / penalties from consideration
“Airlines are critical to our world’s economy and connecting the lives of billions,” said APEX CEO, Dr. Joe Leader. “APEX’s recommendations for governments reducing taxation, penalties and slot/gate bureaucracy in the midst of a crisis will go a long way toward ensuring economic recovery. Now more than ever, we need to enable airline resources and funds to go into both the health of our industry and to our customers worldwide.”
Furthermore, APEX’s position on the slot rates recommendation is aligned with IATA’s recent request to suspend global slot rules due to COVID-19. Following initial steps taken by the European Commission this week, APEX is of the opinion that the European Union slot rules should be fully relaxed through to the end of the summer schedule, effective immediately, as airlines expect to see a long-term impact on bookings. Just yesterday, United Airlines president, Scott Kirby, said the airline is planning the worst case scenario and predicts it could suffer a revenue decline of as much as 70% in the near-term, stretching to a 30% decline at the end of the summer season.
The US Department of Transportation’s Federal Aviation Administration (FAA) announced today it is temporarily waiving its minimum 80% slot-use requirement at US airports to help airlines that cancel flights due to the coronavirus. “In doing so, the FAA expects that US carriers will be accommodated with reciprocal relief by foreign authorities at airports in their countries, and may determine not to grant a waiver to a foreign carrier whose home jurisdiction does not reciprocate,” the agency stated in a press release. The FAA added it will give credit to airlines for flights that were canceled due to the coronavirus through May 31 as though they had been operated when it conducts schedule development in the future.
“To maximize airline efficiency and reduce carbon emissions, airlines need to be able to consolidate flights without any penalty whatsoever,” Leader continued. “This would allow airlines the opportunity to better manage the total number of flights at the over 200 slot-coordinated airports worldwide during these extraordinary times.”