Historically the UAE has charged very low taxes (there’s still no income tax), which is part of their growth plan. For them it’s an investment in the future, as the goal is to make it attractive for people to visit the UAE, in hopes of the country having a future after the oil dries up.
That’s why it’s often said that many of the Gulf carriers aren’t after financial profits, but rather are a mechanism by which their respective nations can build their infrastructure and position in the world.
Emirates A380 at Dubai Airport
Dubai Airport has the capacity for 90 million passengers per year, so that does a lot to put Dubai on the map. Regardless of whether you’re terminating your travel there or just connecting, the airlines are almost entirely to thank for making these countries as visited as they are.
Dubai Airport
At the same time, I think it’s safe to say that some of the Gulf countries are finally coming to the realization that their pockets aren’t in fact bottomless. While they’re still raking in the cash, with oil prices having plummeted, their margins aren’t what they once were.
Dubai Airport wants to keep expanding, and now they want passengers to foot the bill directly. Passengers traveling through Dubai Airport (either connecting or originating) will have to pay a new fee of 35AED (~$9.50) for tickets booked starting June 30, 2016.
Per Arabian Business:
Dubai’s Crown Prince has approved a resolution to introduce a fee of AED35 ($9.50) to be collected from passengers using the emirate’s airports.
It was reported on Wednesday that Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, also chairman of the Dubai Executive Council, has approved Executive Council Resolution No (8) of 2016.
Every passenger leaving the UAE from any of Dubai’s airports, including transit passengers, will be charged AED35 as a service fee for using airport facilities, news agency WAM reported.
The $1.2 billion investment aims to enhance service and boost capacity for the more than 70 international airlines that will operate from the facility.
Airlines will be tasked with collecting the fee while issuing tickets for flights departing Dubai’s airports after June 30.
What’s interesting is that this is the first time Dubai Airport will tax connecting passengers (at least that I can recall).
If you look at fare structures now, you’ll notice that there’s a $20.40 tax for passengers originating in the UAE, which is the UAE Passenger Service Charge.
Meanwhile if you’re just connecting, there’s no such charge.
There’s a good reason it has been this way, and that’s to penalize foreign carriers. A vast majority of passengers flying to/from Dubai on Emirates are connecting, while a majority of passengers flying to/from Dubai on foreign carriers are terminating their travels there. So it has been this way so that the government can charge foreign carriers while largely exempting Emirates.
Bottom line
The 35AED fee ultimately isn’t unreasonable, and pales in comparison to the likes of the UK Air Passenger Duty, which can be $200+ for a one-way ticket.
However, it represents an interesting development for a country which has up until now done everything they can to transport passengers through the UAE, even if it comes as a loss. Because that’s their plan for putting their country on the map.
Tough times in the Gulf!
Could you please tell me. A single woman can go to visit Dubai alone. Thank you for your help. Cristina
Although APD is ludicrously high, it isn't charged on connections. LHR passenger fees sadly are...
$35 isn't too bad on a $7K F ticket.
Who cares? I'll pay for it
Its sometimes confusing when you say they don't mind making losses or they are infact making losses just to get the passengers to them, when airlines like Emirates have been reporting profits for a very very long time.
Ben,
Is the new service fee on top of the existing Passenger Service Charge?
Does the new fee also apply to tickets for flight dates after June 30, but booked before June 30?
Thanks,
Jeff
AUH, DOH, and DXB only exist as massive hubs because of the sheer incompetence of the Indian government. The vast majority of US O&D ME3 traffic is going to India (with some other portion going to Bangladesh, Pakistan, and other subcontinent countries mainly because no European carriers fly to those countries).
If Air India was a half decent airline run for a profit and not for favors, DEL would be a massive connecting hub and...
AUH, DOH, and DXB only exist as massive hubs because of the sheer incompetence of the Indian government. The vast majority of US O&D ME3 traffic is going to India (with some other portion going to Bangladesh, Pakistan, and other subcontinent countries mainly because no European carriers fly to those countries).
If Air India was a half decent airline run for a profit and not for favors, DEL would be a massive connecting hub and put these folks out of business. Hardly anyone actually wants to go to AUH or DOH and DXB is just a Middle Eastern LAS with less fun stuff to do and more regulations.
Furthermore, DEL would be a far better positioned hub for Europe - SE Asia vacation/leisure travelers. See here: http://www.gcmap.com/mapui?P=LHR+-+BKK,+LHR+-+DEL+-+BKK,+LHR+-+DXB+-+BKK
To be fair re low taxes in Dubai. Hotel taxes are quite expensive
This makes sense. It's one thing for the government/leader (the lines can be fuzzy sometimes) to invest their capital in the infrastructure. It's another to subsidize ongoing operational costs.
Collecting a per passenger fee is just one part of the puzzle. Some costs scale per passenger, others scale per aircraft movement. It makes sense to collect some on each side.
Yea, I think you've got the reasoning the wrong way. It's the national carriers that will have to pay now
I find your reasoning a bit odd. The foreign carriers already pay the departure tax, according to your text. Now, connecting passengers will also pay an amount. Then it's Emirates that will be affected most, not the foreign carriers.
@ JMR @ Jake from MSP -- Sorry, my wording was confusing. What I was trying to say is that up until now foreign carriers have been penalized by the charge for passengers originating in Dubai, which meant Emirates was largely exempt. The new system is the opposite.