Business Irish

Saturday 20 January 2018

Aer Lingus sues the State for €61m over air travel tax

Aer Lingus plane lands at Dublin airport
Aer Lingus plane lands at Dublin airport

AER Lingus is suing the State for more than €61m over the air travel tax.

The case came before Mr Justice Peter Kelly earlier today but he refused the airline's application to  fast-track it into the Commercial Court list. This was due to the delay in bringing the proceedings in circumstances including the tax was introduced by the 2008 Finance Act and deemed in breach of EU regulations two years later.


Aer Lingus' then chief executive had written to the Minister for Finance in October 2008 expressing the airline's "firm view" the then proposed tax was contrary to EU law, the court heard.


The State had opposed the action being fast-tracked and it will now proceed via the normal High Court procedures.


The case arose after the 2008 Finance Act introduced a €2 air travel tax payable per passenger departing on flights from an airport within 300km of Dublin Airport and a €10 per passenger tax on passengers departing on any other flights. The taxes were to be paid by the airline operators and to come into effect from March 2009. All flights to and from destinations within the State fell within the €2 tax band.


Aer Lingus paid the tax from March 2009 until the measure was repealed in March 2011 arising from a complaint to the European Commission the higher €10 tax rate breached EU regulations.


The European Commission found the €10 tax did breach the relevant regulations because it imposed more onerous conditions on the operation of intra-EU services than those imposed on domestic services.


That decision led to the €2 and €10 taxes ultimately being replaced from March 2011 with a single €3 tax applicable to every departure of a passenger from an airport within the State regardless of distance travelled.


In its action, Aer Lingus claims the provision of the Finance Act allowing for an additional €8 sum to be imposed on some passengers (via the €10 tax) was unlawful and breached the airline's rights to property, freedom to conduct business and to provide services under EU law.


The airline claims, until the €10 tax was repealed in March 2011, it paid €61.4m under that tax and consequently suffered loss and damage.

It wants orders requiring the State repay that sum and/or damages.

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