EC tax disaster for flight training

The European Commission has ordered states to conform to standard tax levels on general aviation fuel in an extraordinary decision which threatens to damage flight training, end alternative fuel research and drive more general aviation companies to the wall.

The EC is demanding that all states impose a minimum of 0.45 euros per litre in tax on avgas and has rejected requests from France, Portugal, the United Kingdom, Malta and Sweden for ‘derogations’ to allow their current tax levels to remain.

The effect in some countries will be dramatic. In Sweden, the price of avgas is expected to almost double, while in Britain – where the cost of flight training is already the highest in the world among countries which have a significant flight training industry – costs will be driven higher and more flight training will be lost to America.

Flying costs are hugely disparate across Europe, and higher taxes will make the situation worse rather than better. In Britain, a student pilot can expect to pay 160,000 euros for an integrated ATPL course with type rating which would allow him or her to apply for an airline job. By contrast, in Germany avgas is heavily taxed and the price of fuel is higher, but the airlines pay for flight training – Lufthansa trains 300 pilots a year at its own expense. In Britain, the aviation industry meets the entire cost of the Civil Aviation Authority, a massive drain on general aviation resources, while in other European countries such ‘services’ are free. And everywhere, conventions on retail margins are vastly different.

In Sweden there is no tax on avgas, partly in recognition of the fact that oil companies there have invested millions of euros to create unleaded and ETBE avgas – a research program which is no longer affordable under the EC’s tax regime. Consumption in Sweden is expected to fall by 50 percent as the retail price, currently around 0.90 euros a litre for unleaded avgas, almost doubles. By convention, the rule of thumb is that a tax increase should be doubled to find where the price will settle. Tax increases reduce consumption while overheads remain the same, and distribution efficiencies disappear. The EC’s tax sledgehammer is particularly inappropriate in the tiny avgas market, where specialist companies provide fuels in pharmaceutical quantities.

Avgas production in Europe equals one quarter of the motor fuel that evaporates from car tanks. Revenues from the additional taxes will be utterly negligible, and as some countries have pointed out, will cost more to collect than they will raise. Portugal sought an exemption on these grounds. Malta cited competition from non-EC countries, to whom we are exporting our flight training industry. The United Kingdom made the same point, while complaining of compliance costs and raising the issue of safety, as users were tempted to forsake avgas for motor fuel. Sweden quoted the requirement for access to remote communities, and the need for affordability in flying to foster currency and therefore safety. The EC, however, brusquely dismissed every request, and failed even to consider those from Denmark and Poland at all.

While the EC’s tax directive describes avgas as being used for “private pleasure flying” its definition is so loosely written that few users will escape. Some GA companies are worried that their national governments will raise taxes beyond the EU minimum, using the EC order as an excuse, and several national AOPAs have scheduled meetings with their governments to try to keep the damage to a minimum.

SPONSOR'S MESSAGE

If you are buying, selling, importing or operating an aircraft - THINK ABOUT THE VAT. We can assist private or corporate aircraft owners and operators inside or outside the EU and have handled more aircraft than all other providers combined.

Call us for the best solutions and references available.

www.opmas.dk

EC ducks inspections issue

The European Commission has decided to ignore pleas for an end to multiple national inspections for aircraft being bought and sold across intra-European borders.

After three years of prompting from AOPA-Sweden the EC has announced it will take no action to end the costly and pointless practice which would seem, on the face of it, to be exactly the sort of thing the European Union was set up to put a stop to.

At present, an aircraft being exported from most European countries must undergo an export inspection, usually at a cost of several thousand euros payable to the national aviation authority or its agents. When it is flown to another European country it must undergo an import inspection to satisfy that country’s aviation authority, again costing a lot of money. In 2003 AOPA-Sweden requested action from the EC to end this situation, but their requests were ignored. After repeated reminders from Sweden, the EC announced in December it would do nothing.

AOPA-Sweden’s Lars Hjelmberg says: “It seems that Europe has no interest in general aviation other than to tax it. What is the European Union for, if not to end such practices as these? We believe it is illegal because it obstructs the free movement of goods and possessions across national boundaries within the EU. It is regrettable that the EC now chooses to run away from the issue.”

SPONSOR'S MESSAGE

The Flying Shop – recognized as among the best of the UK’s pilots’ supplies outlets – offer friendly advice and detailed knowledge of Headsets, Avionics, Safety Equipment, Instruments, GPS, Charts, Books, Clothing, Stationery and Gifts.

Access to everything you need whether shopping online, by phone, in person or from the catalogue. Visit www.flyingshop.com

Airspace forum in Spain

AOPA-Spain has participated in the first meeting of a new forum designed to improve co-operation between air navigation service providers and airspace users in Spain.

The forum, established in order to comply with the requirements of the Single European Sky, brings the national air navigation services operator AENA together with airports, airlines, general and military aviation and other users. Its objective is to create a clear channel of communication on airspace issues – something that has been lacking in the past. The first meeting, on December 18th, established the constitution and ground rules of the forum.

AOPA-Spain's Marlies Campi said the forum was a positive step forward, and a means by which solutions to long-standing problems could be found. Among the first topics on the agenda will be changes to the Madrid TMA which have had severe consequences for GA. AOPA-Spain is compiling a list of priority problems affecting the GA sector for discussion in the forum during the new year.

The car you always promised yourself…

Still a few places left on AOPA-Germany's Porsche junket this summer. Get your name down quickly – there are only 40 places, and if you miss this one, you'll always regret it. The group will visit the Porsche factory in Leipzig from June 14th to 16th, and members will drive a Porsche 911, Carrera or Boxster on a Formula 1 track and a Cayenne on Porsche's off-road course, accompanied by a professional driver. They also get the chance to fly Cirruses, Columbias, Diamonds and Cessnas at Leipzig airport. Go on, make that call – life's too short to pass up opportunities like this. The package includes two nights in a first class hotel, with food and drink, and costs 1375 euros. For details email info@aopa.de or phone +49 (0)6103-42081

SPONSOR'S MESSAGE

AERO 2007 FRIEDRICHSHAFEN : Gateway to the robust European general aviation market

The world is coming to Friedrichshafen...

The number of global exhibitors at Aero 2007 is already up by 17 percent as worldwide interest in the European GA market reaches new heights.

Aero Friedrichshafen project manager Thomas Grunewald says the number of companies who have signed up for the German show this year already stands at 319, compared to 286 in 2005. The final number of exhibitors is expected to exceed 500. Exhibition space sold has increased from 23,693 square metres in 2005 to 27,285 square metres, with more than three months still to go. More than 50,000 visitors are expected.

In 2007, Aero will be highlighting the VLJ market, with companies such as Cessna, Diamond and Eclipse presenting their new fleets. Other participating companies include Adams Aviation, Beechcraft, Bose, Cirrus, Columbia, Socata, Czech Aircraft, David Clark, Evektor, Gippsland, Jeppesen, JetPROP, Kelly Aerospace, Lycoming, Mooney, Pilatus, Piper, Roland Aircraft, Shell, Vulcanair, and xtremeAir.

Friedrichshafen's position bordering Austria and Switzerland, and its close proximity to France, Italy and Eastern Europe make it the most convenient location for an aviation expo in Europe, and more than 50,000 visitors are expected this year. The show will run from April 19 to April 22, 2007.

Aero covers every aspect of the general aviation industry and provides an important business platform for companies involved with business aircraft, gliders and ultra-light aircraft, avionics, maintenance products and services as well as accessories. Aero's business aircraft sector in particular has grown significantly over the past few years.

For more information please see www.aero-friedrichshafen.com

A happy New Year to all pilots from IAOPA-Europe

If you have any comments on this newsletter or would like to have information from your country included in it, please email iaopa@richmondaviation.co.uk