Germany approves aviation tax cut

The German federal parliament Bundestag approved an aviation tax cut per ticket starting in July to revitalize the sector.

The tax rates will be lowered to May 2024 levels as per the legislation passed late Thursday evening.

This step, approved by Chancellor Friedrich Merz’s Cabinet in April, is aimed at fulfilling the traffic light coalition government’s pledge to reverse the tax increase implemented by the previous government in 2024.

Additionally, taxes imposed on airlines will be reduced by a range of €2.5 to €11.4 ($2.9-13.23)⁠ per ticket, depending on flight distance.

As for whether ticket prices will be lowered, it will boil down to whether airlines pass these savings on to passengers.

Industry experts think it is unlikely that a discount will be reflected in ticket prices due to the recent sharp hikes in jet fuel prices amid the Middle East conflict.

These steps, expected to provide some relief to the aviation sector, are expected to generate a revenue shortfall of €170–€185 million (⁠$197.2–⁠$214.6 million) in the federal budget for the second half of this year.

The government’s annual tax loss is expected to reach €355 million ($411.9 million), with this shortfall continuing to grow through 2030.

*Writing by Emir Yildirim in Istanbul