The effect of the Dutch flight ticket tax on the demand for flight tickets in the Netherlands: a look at the price elasticity of flight tickets.
The flight tax has been extensively in the National media for the last couple of months, because the Dutch government wants to implement a flight tax in 2021. This tax will either be a flight ticket tax or a tax based on emission or noise pollution. The flight ticket tax had been implemented earlier in the Netherlands, in July 2008. Following the implementation of this ticket tax, there was a fall in passenger demand of 4% in 2008. However, the fall in passenger demand was a combined effect of the ticket tax, the economic crisis, the evolution of low cost carriers (LCCs), the trend that travellers from eastern and southern parts of the Netherlands made more frequently use of airports near the border in Germany and Belgium, and rising oil prices. This research tries to examine the effects of the implementation of a flight ticket tax on the number of passengers travelling from and to the Dutch airports. We assume that the flight ticket tax will be levied only for passengers departing from an airport in the Netherlands. These effects will be estimated by examining the price elasticity of demand for air travel from and to Dutch airports. Price elasticity of demand for air travel will be estimated by estimating a panel data fixed effects two-stage least squares model. This research shows that air travel demand is inelastic, which means the elasticity is closer to zero than to -1. Air travel demand is more elastic on the leisure segment than on the business segment, and it not significantly different between the short-haul and long-haul segment. Furthermore, the research shows that there will be a small decline in passenger numbers (approximately 0,99% to 1,64%) when a flight ticket tax would be implemented. Our conclusion is that the implementation of a flight ticket tax will not have an huge effect on the number of passengers, therefore it will not influence the number of flight movements, which implicates that the implementation of a flight ticket tax will have no positive environmental effect. However, the flight ticket tax will provide revenue for the State treasury.
|Keywords||flight ticket tax, air transport, 2sls|
The effect of the Dutch flight ticket tax on the demand for flight tickets in the Netherlands: a look at the price elasticity of flight tickets.. (2019, August 14). The effect of the Dutch flight ticket tax on the demand for flight tickets in the Netherlands: a look at the price elasticity of flight tickets.. Business Economics. Retrieved from http://hdl.handle.net/2105/47799