Wednesday, November 29, 2023

For Air France, the government’s “climate tax” on airports is a gift to Ryanair

For Air France, the government’s “climate tax” on airports is a gift to Ryanair Are Ryanair, Wizzair or Volotea the big beneficiaries of the new government tax on airports in the name of the climate? This is the point of view of Air France, whether Anne Rigail, general director of Air France, or Benjamin Smith, general director of Air France-KLM, who even sees it as a gift to low-cost companies. If it was foreseeable that the national company would confront the airlines together with, among others, the ADP group (Aéroports de Paris), the most affected by this measure that will affect “long-distance transport infrastructures”, the government would probably it did not. Wait for this angle of attack. Questioned about this issue in the context of the budget presentation, Clément Beaune, minister delegate in charge of Transport, was not very incisive when explaining the reasons for this inopportune effect.

Since this new tax became known, which affects highway concessions and airports due to the impact of road and air transport on greenhouse gas emissions, airport managers were the first to react, the image of the Union of French Airports (UAF) and Vinci Concesiones in La Tribune. All denounced a tax that will slow their decarbonization efforts by reducing their own investment capacity or attracting new private investors. But, like this tax that will affect the rest of air transport, the second wave came from the airlines themselves. Air France in the lead. In the evening, the company that opened its 90th anniversary festivities with an exhibition at the Galeries Lafayette started the movement.

Distortion of competition

Aware of the efforts the aviation sector must make to decarbonize, Benjamin Smith did not address the tax issue head-on, but from the angle of a “level playing field,” that is, the need for fair treatment. competition conditions in French. “For us it is absolutely essential that Air France can act on the international market under the same conditions of competition as everyone else, at least with companies based in Europe. “This proposed airport tax will distort the market because it will only affect the four largest airports in France,” he stated.

This Thursday, on RTL, Anne Rigail also criticized this bill that only affects “large airports”, where mainly “Air France, but also all French companies” operate, and not an “airport like Beauvais, in which foreign low-cost companies operate.

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In fact, according to the calculation method used by the government in its 2024 finance bill (PLF), only the airports of Paris, Nice, Marseille and Lyon should be affected by this new tax. These are the operating income (and not the profits) of transport infrastructures that exceed 120 million euros, provided that said infrastructures present an average net profitability of more than 10% in the last seven years. To overcome the two years of abysmal losses due to Covid, the two best years and the two worst are not taken into account in the calculation of this average profitability.

Low cost goes unnoticed

Therefore, smaller regional airports and secondary airports should not be affected. However, they are the ones that host the lowest cost companies. Ultra-low-cost operators, such as Ireland’s Ryanair and Hungary’s Wizzair, are abandoning major airports, considered too expensive, in favor of smaller, cheaper platforms more likely to grant discounts to develop their traffic. The best-known example is the Ryanair base located at Beauvais airport (also renamed Paris-Beauvais) instead of Orly or Roissy. Likewise, the Spanish low-cost operator Volotea has specialized in operating on secondary lines now neglected by the Air France group.

In 2022, according to UAF figures, low cost represented just over a quarter of the traffic at the two Paris airports, the heart of the Air France network. This proportion increased to 57% at large regional airports and 70% at smaller regional airports. The champions of the sector, namely Beauvais (99%), Nantes (80%), Bordeaux (72%), Basel-Mulhouse (71%), to speak only of the platforms that accommodate several million passengers, are not are affected by the new tax. .

Benjamin Smith considers this situation absolutely unacceptable, which gives an advantage “to companies like Ryanair or Wizzair, which are not based in France, which do not have their headquarters there, which do not have the majority of their employees there.” “This goes against reason. This tax should not penalize companies that are based here in France. If it is absolutely necessary that there be a new tax or a new fee, at least it should be done in a way that does not affect Air France more harshly than the others,” he protested before concluding: “It is a gift for other companies, it is a gift for other companies.”

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The head of Air France-KLM was also joined by Anne Rigail: “When we look at the traffic levels of the last 15 years, the weight of French companies has been decreasing year after year. For us this means a new distortion of competition that will harm us. »And she did not hesitate to add that Air France “pays 3 billion (euro) a year in taxes, duties and royalties”. These arguments were also taken up in a press release denouncing that “Air France and Transavia would be, by far, the companies most affected by this measure, to the detriment of the recovery of their profitability.”

Bercy has decided

The task has therefore not been easy for Clément Beaune when he spoke on the subject this morning at a press conference on the transport budget. Especially since, for its part, it was more inclined towards a tax on airline tickets that would affect all companies leaving France, but Bercy decided otherwise, determined to be able to include motorways in the scope of application.

After having rightly recalled that there were “several hypotheses”, the Minister of Transport explained that the formula chosen with “long-distance transport infrastructure” will focus three quarters of the effort on motorway concessions and a quarter on large airports. And this for a total objective of 600 million euros raised in the first year.

“It is the big infrastructure managers who will pay. This seems more fair to me,” the minister justified before adding: “Certain regional airports, which sometimes have a low cost, will be exempt, but these airports objectively have fewer financial means and less taxable capacity. Therefore, it was necessary to set a threshold. This applies to both highway and airport managers. » An explanation that somewhat minimizes the importance of low cost at secondary airports.

“Obviously we are very attentive to the competitiveness of the sector. That is why we are reinvesting part of the credits in the decarbonization of air travel. Ultimately, this will benefit businesses. And we are very attentive to the balance between the large companies, in particular Air France,” said Clément Beaune at the time.

And he did not fail to point out in passing that “as Bruno Le Maire (Minister of Economy and Finance) said, we have always supported Air France a lot in difficult times like the Covid crisis.” In fact, Bercy granted Air France a shareholder loan of three billion euros in May 2020, as well as a State Guaranteed Loan (PGE) of four billion euros. Suffice it to add for the minister that “that is why we are happy that Air France can today invest massively and decarbonize its fleet by placing a historic order.”

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However, the application of this tax still seems contradictory to the speech given at the beginning of the month by Clément Beaune, who later expressed his desire to set a minimum price for tickets to reflect the true ecological cost of the plane. He declared that “a simple measure should make it possible to fight against social and environmental dumping while protecting the most serious companies like Air France.” He then highlighted the efforts made by the national company, particularly in terms of decarbonization, compared to certain foreign low-cost operators (although they use more recent and therefore less polluting aircraft than traditional companies).

Air France-KLM will open 3% of its capital to employees

After its order for 50 Airbus A350s, Air France-KLM continues with the big maneuvers. The French group is preparing to launch a major employee engagement operation. This plan « Partners for the future » It will be open to around 75,000 employees, that is, 95% of the group’s workforce in France and the Netherlands, but also in more than fifteen other countries. The subscription period runs from November 13 to 24.

This operation will allow employees to acquire up to 3% of the share capital of Air France-KLM, through a capital increase that must become effective on December 21. The acquisition of shares will be carried out within the framework of corporate savings plans (PEE), group savings plans (PEG) and international group savings plans (PEGI).

Benjamin Smith, general director of the group, assures that this plan “It testifies to our desire to recognize the commitment of our employees to the service of the company. With this plan, we propose that you become increasingly involved in the development of the Group, in its perspectives and in sharing the value that we work to create collectively. »

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