The paper summarises results from a study on the external costs of aviation commissioned by the Federal Environmental Agency of Germany (UBA). After a description of the methodology used, the paper examines subsidies granted to the following areas of the aviation sector: airports as infrastructure providers; national air traffic control; airlines as air transport service suppliers; and aircraft industry as vehicle suppliers (subsidies to Airbus Industries as a joint European venture). The analysis of direct financial flows from several administrative levels to the aviation sector and the estimation of indirect financial support is summarised as follows. German airports on the whole do recover their infrastructure related costs (valued at a social cost basis) by revenues from landing fees, fees and charges for ground services, short-term and long-term aircraft parking and turnover/concession charges. However, they benefit from indirect subsidies of not paying land property taxes. German Air Navigation (DFS) was not subsidised in 1998. All costs are recovered by navigation charges and revenues from additional DFS services. It can be assumed that German Meteorological Services DWD was subsidised but the study was not able to quantify the amount of subsidies. Indirect subsidies were the major subsidies found within this study: indirect subsidies to airlines due to tax exemptions (kerosene tax, VAT on the price of tickets for international flights). There are several types of additional indirect support such as provision of land at lower costs, VAT exemptions on deliveries, construction work, maintenance activities and extraordinary depreciation of aircraft which could not be quantified in this study. According to U.S. sources, Airbus Industries has received the equivalent of about $30-35 billion in subsidies, net of repayments to governments over the past three decades. Using these assumptions, the subsidies given to Airbus manufacturers total up to a share of about 10-15% related to the accumulated turnovers of Airbus Industry during the past three decades. The overall subsidies to the Airbus Industry were found to be declining. For the covering abstract see ITRD E126595.
Abstract