Cuts In Airport Taxes May Help Airline Survival

Greece’s government, in late December, announced measures to lower costs for the airline industry. It said this should help fortify the sector, which suffers more than most economic sectors after the September 11 terrorist attacks against the U.S. The attack continues to deter the public worldwide from traveling at the rate it did prior to the terrorist attack.

To begin with, Transport and Communications Minister Christos Verelis said that airline charges at Athens international airport would be reduced after a joint decision arrived at with Athens International Airport (Hochtief of Germany), the airport’s operator.

In addition, he said, the Eleftherios Venizelos airport would be given an additional 15 percent of the government’s “spatosimo” tax levied on all passengers flying from the airport.

The airport rate reductions will be the second this winter. The airport cut landing and parking charges by 5 to 60 percent in October in an effort to boost traffic, which plummeted in the wake of the September 11 events. Declining demand also led a number of airlines to cut back on unprofitable routes, which dealt a further blow to airport’s revenues.

The airport’s decision to cut rates did little to mollify airlines and tour operators, who complained that the size of the reductions was not substantial enough. The airport operator, however, said its hands were tied by hefty loan payments and falling revenues.

The minister said that airport will be able to afford a second round of rate reductions as it will be allocated 10 percent more of the spatosimo, the tax imposed on departing passengers at Spata and meant for airport development projects. The tax is presently split 75:25 between the airport and the Civil Aviation Authority.

The airport is to receive 90 percent of the spatosimo instead of the current 75 percent, effective January 1, 2002. The airport operator thus has some flexibility to deal with the present crisis, said Mr. Verelis. The airport will enjoy the higher tax revenue for a year.

Furthermore, airplanes operating unprofitable air routes are relieved from take off and parking taxes and a similar subsidy program is being prepared for the Greek islands for which contests will be conducted beginning the summer of 2002.