The European Commission will allow France to defer some aeronautical taxes up to two years in order to help embattled airlines, after Brussels decided on Tuesday (31 March) that the plan is in line with its new looser state aid rules.
It paves the way for France to push back taxes that are due between March and December 2020 to January 2021. Airlines have been hard hit by the ongoing pandemic and will have 24 extra months to pay back some of what is owed to the state.
“The French scheme will partly compensate airlines for damages suffered due to coronavirus. This is the first state aid measure notified to us by a member state aiming to mitigate damages to the airline sector,” said EU competition chief Margrethe Vestager.
The Commission’s assessment “found that the measure is proportionate as the foreseen compensation does not exceed what is necessary to make good the damage”, given that the virus is now firmly established as a legal “exceptional circumstance”.
But the EU executive did not go into detail about which taxes will be deferrable or what the value of the delayed levies will be. France charges airlines a number of taxes, including a new environmental charge on all flights departing its airports.
Air France CEO Benjamin Smith urged governments in early March to waive any new levies in the pipeline to help out the aviation industry, citing France’s green tax and Dutch plans to deploy one next year.
The Air France-KLM group announced in mid-March cost-cutting measures worth more than €200 million adding that services would be cut by 90%. The sector could be facing revenue losses of more than €100 billion, according to the International Air Transport Association.
US airlines were granted a reprieve last week, when the senate passed an aid package worth $50bn, and UK carriers are already setting out their stalls for government money.
But consumer groups do not want taxpayers to foot the bill for aviation’s big bailout if airlines are not made to honour their commitments to the EU’s gold-standard passenger rights charter.
“Consumers must not be obliged to pay twice to support airlines: once as taxpayers financing bailouts and then again by being denied their right under EU law to a refund for cancelled flights,” said the European Consumer Organisation’s (BEUC) Ursula Pachl.
BEUC wrote to EU transport chief Adina Vălean this week highlighting a number of airline practices that the group insists are contrary to the bloc’s rights codex, which the Commission actually clarified on 18 March.
The letter cites examples of airlines offering only vouchers to passengers instead of a full refund, short expiry dates for flight vouchers and confusion over which carrier is liable when multi-leg journeys are cancelled.
[Edited by Benjamin Fox]