Potential effects of tighter fiscal regime applied to Air Passenger Transport: the case for the European low-cost airlines

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7 The low-cost airlines (from this point forward LCCs) experienced a significant expansion in Europe, attracting significant traffic volumes (Bieger and Wittmer, 2006, p. 41), the introduction of lower fares stimulated in a few years a significant growth in the demand, especially for medium-short haul flights between the European Capitals. The Routes and prices offered result attractive to tourist traveller and increasingly the business passenger (Whitelegg and Cambridge, 2004, p.9). Civil Aviation is a main sector for the global and local economy; however, it doesn’t imply only economic consequences, but also social and environmental issues which have emerged dramatically in recent years. The extent to which air sector can affect the global climate changes, along with its local environmental and social impacts, are becoming increasingly important for public opinion. Whitelegg and Cambridge (2004, p. 45) argue that climate change risks represent in fact economic risks that should require a precautionary economic strategy, which is sought by different parts of society and by environmental groups. A widening debate about demand management has started being generated due to the numerous and conspicuous concerns related with the growth of aviation. Whitelegg and Cambridge (2004, p. 25) see Demand management as “crucial to the delivery of sustainable development”, as unconstrained expansion of the air transport sector presents a severe challenge for the sustainability of our economic system. Fiscal measures are seen as one of the most viable tools for demand management. It has been argued that “the growth in demand for passenger and freight air travel is assisted by a generous taxation and fiscal support regime” (Whitelegg and Cambridge, 2004, p.5). However, the British Government recently doubled the Air Passenger Duty (APD), with the stated purpose to help reducing the environmental damage caused by aviation. The increase in Air Passenger Duty (APD) applies to all flights leaving from UK airports, rising from £5 to £10 per person on short-haul flights departing from the UK. Similar measures have been adopted by the Dutch Government in 2007. The low-cost carriers (LCCs) are responsible for a great and growing number of short and medium-haul flights, which are considered to produce severe environmental impacts due to the scarce fuel efficiency of jet commercial aircraft on

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Autore: Pietro Crovato Contatta »

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