Austria Sets Minimum Airline Ticket Prices, Adds Controversial Flight Taxes

Filed Under: Austrian

Prior to the current pandemic, one of the biggest topics in the airline industry was environmentalism. These discussions have largely been put on hold given the situation the airline industry is in, though that’s not stopping Austria from introducing some new policies that many may not like.

Austria’s new flight taxes & minimum ticket prices

The government of Austria is in the process of providing financial aid to Austrian Airlines. In exchange for the aid, the government is looking for some guarantees from the airline, including Vienna continuing to be a key hub for the Lufthansa Group, and Austrian Airlines reducing emissions.

Beyond that, Austria is also introducing higher taxes on flights, and even setting minimum ticket prices… and that may actually be good for Austrian Airlines?

Austria adds 30EUR tax for short haul flights

The Austrian government will add a ticket tax of 30EUR (~34USD) for flights of under 350km (~217 miles). This is being done to encourage people to use other methods of transportation rather than flying.

This comes as CO2 emissions within Austria are supposed to be cut in half by 2030, and Austrian Airlines will be encouraged to shift passenger traffic to railways for situations where travel time would be less than three hours.

Taxes will be highest on the shortest flights

Flat rate 12EUR ticket tax being added for other flights

Austria currently has an Air Transport Levy that varies based on the length of the flight:

  • For short haul flights this starts at 3.50EUR (~4USD) one-way
  • For long haul flights this starts at 17.50EUR (~20USD) one-way

This will be replaced with a flat rate 12EUR (~14USD) Air Transport Levy for all flights (with the exception of flights under 350km, where the tax is 30EUR). It’s expected that this will raise more than an additional 100 million EUR per year. This increase will disproportionately impact short haul flights, where this tax is being nearly quadrupled.

This was initially only supposed to be introduced in 2021, but the implementation of that is now being moved forward.

Austria will set minimum ticket prices

Perhaps the most controversial change is that Austria will set a minimum ticket price. The fare of a ticket needs to be at least as much as all of the taxes and fees on a ticket combined. This will essentially mean that tickets need to cost at least 40EUR (~45USD) one-way.

Austria will set minimum ticket prices

This is terrible for low cost carriers

I can appreciate the concept behind what Austria is trying to do here. I don’t have a problem with countries adding higher taxes for short haul flights when there are rail alternatives. I think that’s fair.

Beyond that I have some concerns, though. Whether intended or not, these policies disproportionately impact low cost carriers:

  • Flight taxes on short haul flights longer than 350km being nearly quadrupled will hit ultra low cost carriers the hardest
  • A floor on ticket prices will no doubt reduce demand, since flying won’t be as affordable, and that will also negatively impact ultra low cost carriers

We’ve seen airlines argue these very points back and forth:

  • Lufthansa’s CEO has argued that it’s “economically, ecologically, and politically irresponsible” for airlines to sell 10EUR fares
  • Wizz Air’s CEO has argued has argued that business class should be banned on most flights in order to reduce per passenger carbon emissions

Airlines always conveniently make moral arguments that suit the narrative they need to continue their business model, and I suppose I can’t blame them. But it does seem to me like this is rather protectionist towards Austrian Airlines, and it coincides with the government providing funding for Austrian Airlines.

The new taxes & minimum ticket prices will hurt low cost carriers most

Bottom line

The Austrian government will be introducing a new 30EUR flight tax on flights under 350km, and will also be setting minimum ticket prices. This negatively impacts low cost carriers, which disproportionately operate inexpensive short haul flights.

Whether or not Austria’s policy is reasonable is something that people will likely disagree on.

I’m curious to see if there are any EU objections to this policy, since it’s one of the most drastic measures we’ve seen on air travel from any country in the region.

What do you make of Austria’a new minimum fares and flight taxes?

Comments
  1. Would be curious to see which airports would be impacted by the new taxes for <350 km flights and which LCCs fly them. This is definitely a way to help Austrian since it’s unlikely they would have fares less than 40EUR anyway.

  2. I’d prefer a straight tax on carbon. The easiest way to do this would be a fuel tax on aviation fuel and it would be a better, more efficient form of creating the incentive.

    However, this better than giving away billions to subsidize flying with nothing in return (see the US’s idiotic bailing out of airlines without getting equity, environmental guarantees, or anything really; classic US, “heads I win, tails you bail out hedge funds.”).

    In the US, we also subsidize fossil fuels massively throughout the extraction pipeline and especially fail to tax aviation fuels fairly (you pay way more in taxes at the pump than airlines do).

  3. @Ed

    If you’re serious – is this what the US education system does to its’ citizens? I do not particularly like all of the measures either, but “going full-blown marxist”?

    @Lucky

    “Adds 30€ Tax to shorthaul flights” as a headline is inaccurate. These are effectively only ultra-short haul flights such as Vienna-Salzburg, Vienna-Graz or Vienna-Budapest. Vienna-Munich is (conveniently) just beyond the 350km. Overall the affected routes make up a very small percentage of all short haul routes in the network. It is also highly likely that this does not apply for connecting flights, as one of the main goals is to still fill the long haul flights.

  4. The 350 KM 30 Euro fee seems to only cover some 7 airports from Vienna and not even all of them have flights in the first place.

  5. Language matters, it wasn’t so long ago you we’re promoting your one tree at a time programme. You ought to be supportive of small steps towards averting the disaster that is the climate crisis not calling it ‘controversial’.

  6. This makes sense for the really short flights that are quite doable by train. Vienna-Budapest, domestic Austria, etc.

  7. People often disagree over a person instead of an issue.
    10EUR fares are really irresponsible, despite I do think government intervention is not necessary

    Unless you are flying across a strait or whatever, I found it irresponsible in the first place to encourage flying instead of a train for any distance below 1000km, as you are having an unnecessary Carbon Dioxide emission when you give up Train/Bus/Car but insist in taking a flight.

    Travel by plane in long haul is a necessity, in short haul is however a luxury. The industry has been committed to design energy saving planes and reduce pollution but these ultra LCC just plainly negated their effort.

    I judge the people of a country by how responsible are they to the environment, how much they want to pay for human’s good.

    That being said, many Americans do not even recognize the existence of Climate Change, thus there is no place for a discussion to begin with

  8. Probably lead to the death of some Austrian airports.

    Munich is not far.

    Bratislava instead of Vienna?

    Verona for Innsbruck? Or even Munich

    Sure they’re far, but with shuttle busses like Narita I don’t think the Austrian government stands to gain from this.

    Ryanair is already flying people to Beragamo and calling it Milan.

    Shooting them selves in the foot if you ask me, post COVID lockdown nobody is going to be paying more.

  9. If it gets rid of low cost carriers and allows the full service airlines to thrive, I am all for it.

  10. Most of this destinations are already served by train payed in the same flight ticket.
    The VIE airport was missing a direct train connection between other cities by rail, but now that has been implemented and expanded.

    BTW AirFrance & KLM do the same for over a decade, and there is no complain.

  11. What’s the issue? ULCC’s business model damages the environment for everyone, therefore everyone is footing the bill. If you build your business on that, then expect legislation to eventually bite you in the ass.

  12. So they want to remain a key hub, but discourage everyone from flying. That should work out.

  13. @K4 You are right. Bratislava is conveniently 1 hour away on the highway and i am sure they will welcome the LCC business.

  14. I’m always amazed at the number of people who chose to go with short haul flight options within the EU countries with great high speed rail alternatives. Even with the environmental issues not cranked into the equation, often the cost of ground transportation to and from airports exceeds the cost of the ULCC fare over rail. There might be a little more time involved in the rail alternative but the risk of a delay and/or cancellation is much lower.

    If it results eventually in less flights, less airport congestion and cleaner air, then it’s all good in my view.

  15. I’m not necessarily fully supportive or against these measure, but the assumption that rail and other ground options are convenient and readily available is just flat out wrong. Austria specifically has an excellent rail network based on what I saw, but most places don’t. In many countries (Especially in the US, but also in parts of Europe), taking the train just isn’t a good or realistic options. Schedules are often terrible, seats often unavailable, and in some cases the price for a train ticket is 4 to 5 times that of an airline ticket with a LCC. Before such measures as described in the article are taken and taxes imposed, we really need to look at rail and bus networks and improve them significantly. I’d love to take Amtrak in the northeast of the US for example, but I NEVER do for the reasons I’ve listed above. Without significant improvements, imposing these fees is just an attempt to grab cash, nothing more.

  16. @David austrian is probably more damaging to the environment than any low cost carrier because of older fleet??

    On another note, I’m sure we’ll hear from O’Leary soon, they’ve invested heavily in Lauda.

  17. I really think that most comments here miss the mark. Has anyone tried to book a rail ticket in Europe recently? They have VERY dynamic pricing and the prices are through the roof, especially for faster ICE connections. LLC used to be a great way to connect. More connections and options are good not bad. And you do not know why people are travelling. What if you have very sick relatives and a convenient and fast connection means you can visit and care of them more often? I am not joking, just tried to book a train ticket out of Germany to a neighboring country – prices are hovering around 70-170 EUR for second class without a seat assignment! Could I get a cheaper price? Yes, at 1 am. This has nothing to do with the environment. This is TERRIBLE and sets an awful precedent for the continent. Enough of the babysitting by state.

  18. I just, for fun, checked rail fares for next month from Munich to Vienna, direct train, second class €38, seat assignment upon booking and a four hour journey. I don’t see the outrageous fares or bad trains or the other complaints above. Clearly some journeys are not viable or expensive. The rail from London to Paris is expensive, I’ll give you that one. The rail from Naples to Sicily (via the train ferry) is slow. It doesn’t always work out but as a business traveler, I use it often and it’s good value and I can work on the trains. And advance booking always saves money.

    During the COVID border closure and numerous train cancellations, I received refunds on all six rail trips I had reserved from both French and Italian rail services.

  19. I assume the airports around will jejoice, bet Beatislava will now turn to be a hub for LCC.

  20. Anyone who decries the lack of action against alleged anthropogenic climate change but still consumes animal products is a hypocrite. Greenhouse gas emissions related to animal husbandry dwarf those from aviation. The way the so-called experts have comported themselves during the pandemic does not inspire confidence in expert predictions about the climate anyway.

  21. I would like to see ticket taxes include Covid testing on arrival. That would be smart policy.

  22. 38 EUR or almost 90 $ return for TRAIN booked a month in advance is expensive. Especially if that’s your cheapest option! And also as these are hugely subsidized by our taxes (taxes and various charges basically eat up 50% of your salary in Europe). So if you’re left with the pittance you have the government should F off and not force you to travel more expensively. And yes there are way more polluting industries – manufacturing, meat production etc etc…but if Vienna wants to kill themselves as a transport hub be my guest….

  23. The second Ed post was me, I want to disassociate myself with idiotic comments equating a small (and sensible) Tax on travel that would be better undertaken by rail with ‘Marxism’.

    I would like to re-emphasise that Austria ( and the rest of the civilised world) has committed to a CO2 neutral mode of existence by 2050, so a modest tax on unnecessary air travel, where there are good alternatives, is hardly ‘controversial’ and could be considered insufficient when facing the climate crisis.

  24. According to Ben : ” I don’t have a problem with countries adding higher taxes for short haul flights when there are rail alternatives. I think that’s fair. ”

    No that’s just stupid !

  25. Some prices for trains are fair, but most are very much not. Beyond Italy/vienna/Berlin/londen/Madrid the options are very few and booking is hard.

    Try booking a ticket Lisbon to Paris, that should basicly be one transfer.

    Now look at tap…

    Now look at the Balkan…

    Vienna is only a llc hub because they tried to pull in wizz and lauda with low landing fees. As soon as that end they scale down.

    Bratislava was always there and never had much activity. I guess they figured that after Frankfurt hahn, Barcelona girona, Brussels charlois, Stockholm skavasta and Paris Bauvais (and that other ever worse one), selling tickets to another country was the limit.

  26. if they want to be so eco friendly they shouldn’t offer ultra short haul flights at all

  27. Oh, Barcelona gerona, Stockholm vasteras, warschau modlin, dusseldoff weeze, London standsrad, London Southend, Munich west…

    Bergamo doesn’t bother me tbh, as i love that town. Point is that people don’t bite when it says “Vienna, slowakia”.

    At least wizz is mostly fair at this point. Kutasi and tuzla are advertised with “take a bus to Tbilisi and Sarajevo”.

    Fuck i have spend a lot of time on these flights. 22 Ryanair, 16 wizz, 13 easyjet and 32 transavia in the last 3 years …

  28. @ed wouldnt matter. Then all feeder flights for bud and Zagreb would run to muc, fra and zrh.

  29. The railjet train in Austria is a very pleasant experience especially in 1st and Business Class. 4 hours between Vienna and Munich. Salzburg is 2:30 from Vienna. I don’t like government intervention in the marketplace and infringement of individual freedoms. However, this has little real effect. The trains are high speed and nice. We don’t need domestic plane travel in Austria.

  30. Repeating myself, but even though €30 ~ doesn’t bother me, I would rather give €30 to a taxi driver in Bratislava or Munich than to Vienna or Salzburg.
    This might have worked in the U.K. (where I live) but given Austria is surrounded by countries with no border restrictions (Schengen) and airports on all sides this just wont work.
    Would you rather support a government which openly admits deficit, but is still not called bankrupt or a hard working self employed taxi driver?
    Schwechat might be closer to Vienna, but once you’re in a car and on your way what difference does 20 mins make?
    Salzburg and Innsbruck perhaps have less to loose, the airports are too close to the city centres, but people shouldn’t forget that for the sake of an hour, they’re supporting authoritarian regimes and blocking the free market.
    Bolzano also has an airport, but I’m sticking to Verona and Munich for Salzburg and Innsbruck because flights to Bolzano are quite limited.

  31. The train within Austria is now a great alternative to domestic flights.
    I once tried LHR – FRA – LNZ on LH. As Frankfurt was closed due to weather I was rerouted on OS LHR-VIE and then train to LNZ.
    That connection was actually faster as there was a shorter layover from plane to train than plane to plane and the train station is in the center of town which also saves time.
    The only reason why I would fly short-haul to VIE and connect onward is that some train stations can be inconvenient for people with large suitcases. It easier to check in at your origin airport.

  32. Unlike FRA, MUC isn’t on a main Munich rail line, so no direct service. To get from Salzburg or Vienna to Munich airport would require a transfer at the main train station (or maybe Ostbahnhof) to the Munich u-bahn. Adds an hour to the process.

  33. Well, I think it’s a sensible move to define minimum fares. Actually, EU competition legislation has always prohibited “dumping pricing”, which was defined as prices below marginal cost. Now, this was obviously very hard or even impossible to prove by an outsider. In that sense, it makes sense to define it. The alternative would be a requirement to open their internal cost accounting to interested parties.

  34. It’s not protectionist meassure. It’s a compromise with Greens who were against subsidies to OS. They finally agreed in return for adopting meassures to reduce ultra-shorthaul air travel.

    Frankly, I agree with this approach as long as it doesn’t apply to connecting passengers, e.g. if someone flies itinerary like INN-VIE-KBP, they are not paying the increased tax, even though one of flights is under 350 km. I’m not sure if this is the case.

    At the same time, I can’t see how many people will be discouraged, since planes were unattractive on such short routes anyway – trains are usually cheaper and faster.

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