ACI EUROPE has expressed its concerns, urging the French Government to rethink the proposed transport tax, which would impact French airports. The airport association says the proposed tax could significantly reduce the airports’ financial capability to support their green initiatives, particularly their commitment to achieve net zero CO2 emissions between 2026 and 2030.
The Additional Tax and Its Implications
Policies underpinning ecological advancement are pivotal in a world vigorously steering towards sustainability. However, the proposed 2024 Finance Law by the French Government, which levies an additional tax on transportation infrastructure, impacting major French airports, raises critical concerns. Article 15 of the draft finance law for 2024 (PLF 2024) plans to introduce a tax on the operation of certain long-distance transport infrastructures in France, beginning in 2024. ACI EUROPE warns this initiative could potentially undermine the ambitious decarbonization plans these airports aim to implement and adversely impact the local economy.
Undermining Decarbonisation Efforts
Olivier Jankovec, the Director General of ACI EUROPE, pointed out a glaring contradiction in the government’s proposal. Labeled as an ecological initiative, the tax is perceived as counterproductive, potentially impeding the decarbonization efforts it purports to support.
“Squeezing airports that are leading decarbonization efforts for tax revenue is ill-advised and amounts to policy greenwashing,” Jankovec stated. “Achieving net zero for European aviation will require more than €820 billion in investments across the entire eco-system comprising aircraft manufacturers, airlines, airports, and air navigation service providers. Further taxing the sector will only make such investments more difficult and threatens our shared goals.”
The Economic Repercussions
Furthermore, this tax imposition risks these airports’ competitive positioning and connectivity. The fallout could negatively affect the local economy, affecting many stakeholders, from businesses to consumers.
French Transport Infrastructure Tax: Impact on Aéroports de Paris SA
Aéroports de Paris SA (ADP SA) took note of France’s proposed transport tax and reported on its impact. The airport company stated the tax is set to claim 4.6% of its revenue, with certain exceptions. After deducting a 120 million euros exemption, the tax base for ADP SA would be 2,175 million euros as of December 31st, 2022. This would result in an estimated impact of around 100 million euros on ADP SA’s operating expenses and an equal reduction in their EBITDA.
To offset the impact of the tax, Aéroports de Paris SA plans to gradually increase regulated expenses through tariff adjustments, subject to approval by the Transport Regulation Authority (ART). The tariff increase would be implemented over a period of two to three years, in line with the principle of moderate yearly tariff changes. The first increase, covering approximately half of the tax impact, would be applied for the 2024 tariff period. Subsequent increases may follow in the subsequent tariff periods. Higher airport tariffs will impact airlines and, ultimately, passengers.
The bill must be submitted to the National Assembly by October 3, 2023, where it will be reviewed and debated before being put to a vote in both chambers. The National Assembly and the Senate will have the opportunity to discuss the tax’s principles and potentially make amendments regarding its scope, nature, base, and rate.
Any changes to the bill will be reflected in the final finance law for 2024, which will be enacted by the end of 2023.
Critical Infrastructure Warning
Concessions, energy, and construction giant VINCI also responded to the French Government’s plan to introduce a new tax on certain transport infrastructures. The company said it intends to assert its contract rights and use all possible avenues for appeal.
Based on the revenue of the entities concerned (ASF, Cofiroute, Escota, and Aéroports de Lyon) for 2022, the new tax would result in an additional charge of about €260 million for the VINCI Group.
ACI EUROPE’s stance is unequivocal – policies should facilitate, not impede, the pivotal transition to a sustainable future. Under the guise of an ecological initiative, the proposed additional tax fails to align with the broader objective of fostering a green economy and supporting the ambitious goals of net zero emissions.
The proposed airport tax by the French Government prompts stakeholders to evaluate its implications critically. As the debate unfolds, the focus should be on implementing policies that strike a balanced approach. Decarbonization efforts and economic health are not mutually exclusive. Policy should be designed to ensure an economically and ecologically sustainable future for all.