A recent UB study analyzes the environmental and economic impact of flight ticket taxes in Europe

A recent study led by our researchers Xavier Fageda and Jordi Teixidó, and Valeria Bernardo (UPF) examines how flight ticket taxes affect airline operations and carbon emissions across Europe. By analyzing a comprehensive dataset on European flights, the study reveals that these taxes have a notable impact on low-cost airlines and the environment.

In the article published in Transportation Research Part A: Policy and Practice journal, researchers found that flight ticket taxes reduce the number of flights operated by low-cost airlines by an average of 12%, leading to a 14% reduction in CO2 emissions. This effect is attributed to the higher costs imposed on airlines, which are passed on to passengers, particularly affecting those who pay lower fares. The study also highlights that low-cost airlines, which mainly serve point-to-point passengers, bear the brunt of these taxes as connecting passengers are generally exempt.

The analysis utilized a staggered difference-in-differences approach and considered various biases to provide a robust evaluation of the tax impact. Findings indicate that ticket taxes not only reduce flight frequencies but also influence fare structures, with a median cost pass-through rate ranging from 20% to 56%. The burden of the tax is heavier for passengers with lower fares, impacting less essential flights more significantly.

The study draws on data from 61,964 airline-route pairs and covers various European countries with flight ticket tax schemes. It offers new insights into the distributional effects of flight ticket taxes, particularly how these measures impact different segments of the airline market and fare classes.

---