09.11.2004
Lots of support for removal of Danish passenger tax

More than 20 representatives of the Danish business community and Danish labour market unions suggest that, in its Budget for 2005, the Danish government should remove or phase out the special tax levied on airline passengers. Abolishing the tax would make Denmark more competitive and could even add as many as 2000 jobs nationwide.

The Danish government currently levies a DKK 75 special tax on all air passengers leaving Danish airports. Denmark is the only country on the European continent which levies such a tax on air passengers. Both labour and management are joining forces to lobby for either immediate elimination or a phase-out of the tax.

The 20 representatives of the business community and unions are happy about the political initiative to abolish the tax presented by Jens Rohde, political spokesman for the Liberal Party, at the conference “Danish aviation in the future” held at Christiansborg (the Danish parliament building) on 4 November 2004, and they have noted that abolition or phasing out of the passenger tax is included in the current Budget negotiations.

Danish airlines hardest hit

As a result of the passenger tax, it can be as much as DKK 10-15,000 more expensive for a flight to take off from a Danish airport than from other airports around Europe. Since profit margins in the air transport industry are very narrow today, it is often relatively small amounts such as this that decide whether or not a flight is profitable at all.

Although the tax is levied on passengers travelling with all airlines operating in and out of Denmark, there is still a much greater effect on Danish-based airlines than on foreign airlines. For example, more than 40% of Sterling’s passengers are on flights to and from Denmark, as are all of Maersk Air’s passengers and more than half of SAS’s European and intercontinental passengers. To this should be added domestic traffic, which is 100% Danish-based, obviously: a return flight within Denmark results in the tax being charged twice, i.e. a total of DKK 150 per passenger.

Moreover, if the passenger tax is not dropped, it will inhibit growth in the Øresund Region. Global accessibility to the Øresund region is dependent on Copenhagen being able to hold its own as an international traffic hub, i.e. there must be enough airlines and flights using the airports. According to Copenhagen Capacity, the airport is the most important factor international companies consider when they are deciding where in Scandinavia to locate their headquarters. In the longer term, the tax could also lead to fewer jobs in the region, whilst abolition would result in the creation of between 1000 and 2000 new jobs in Denmark.

Optimal traffic connections are crucial

A statement from the unions and companies backing abolition of the passenger tax reads:
“The passenger tax creates a market bias that gives foreign airlines major competitive advantages. It is unreasonable that Danish companies should be discriminated against by such a tax. However, the secondary effects involve much broader – negative – perspectives. It is crucial to business development in Denmark, as a player in an increasingly globalised economy, that there are optimal traffic connections to and from the centres of the world.”

The passenger tax also inhibits tourism to Denmarkconsiderably:
“We have been seeing strong growth in recent years in people taking city breaks and similar short breaks, and low cost tickets play a key role in this market. To the extent airlines choose not to fly to Copenhagen and other Danish airports, a very substantial amount of lucrative business may not come to Denmark. In addition, if we are to attract international conferences to Denmark, we need a large number of direct flight connections,” adds Niels Nygaard, hotel owner and chairman of the Danish Tourist Board.

Please address any inquiries to:

Susanne Larsen, President and CEO, SAS Scandinavian Airlines Denmark, tel +45 3232 0000
Harald Andresen, President and CEO, Sterling, tel +45 7033 3370
Niels Boserup, President and CEO, Copenhagen Airports, tel +45 3231 3231
Lars Bernhard Jørgensen, President and CEO, Wonderful Copenhagen, tel +45 3325 7400