France plans new tax on outbound flights, airline shares fall

PARIS: France will introduce an eco-tax on airlines flying out of France, which is expected to raise around 180 million euros ($201.67 million) from 2020, transport minister Elisabeth Borne said on Tuesday.

Borne said France will gradually introduce the tax, which will amount to about 1.5 euros for an economy class ticket on flights within France or the European Union, 9 euros for business class tickets, and up to 18 euros for business class ticket for flights out of the EU region. There will be no tax on transit flights.

"We have decided to put in place an eco-tax on all flights from France," Borne said during a news conference, adding that the funds will finance daily transport in France.

Shares of Air France and Lufthansa extended losses and were down 4.5% and 2.5% respectively following the announcement.

French President Emmanuel Macron's government wants to tighten environmental regulation but had to abandon an attempt to increase tax on diesel fuel late last year following the "yellow vest" protest movement.

France wants the new European Union Commission to push for an end to global tax exemptions for jet fuel to reduce CO2 emissions, and has also linked up with the Netherlands try and convince fellow European nations to tax airline travel more.