EUROPEAN AIR TRAVEL TAX

Abstract

This paper evaluates the air travel tax in Europe and focuses on the tax levied in Germany. The current status quo and disputes of the air travel tax in Germany and in Europe are explored and recent decisions by the European Union Grand Court and the uropean Commission with regards to the tax are given. The paper contributes to the existing literature by analyzing the role the tax has on possible distortion of competition in Europe and argues that airlines with a point-to-point business model are placed at a competitive disadvantage with respect to their hub-and-spoke counterparts, when the tax is reasoned to encourage environmentally-balanced behavior in air travel.