KLM slams Dutch parliament’s plan to tax transfer passengers

Dutch airline KLM warned that proposals from the Dutch parliament’s lower house to tax transfer passengers will be detrimental for flight connections in the Netherlands, where the Amsterdam Schiphol hub has carved out a major business connecting global travelers.

The proposals, which include taxing private jets, were approved by a majority of Dutch lawmakers late Thursday. The measures are aimed at raising funds which will be used to lower the energy bill for households in the Netherlands.

The Dutch arm of Air France-KLM said the Netherlands is the first country in the world to propose this kind of taxation and warned it will have a “detrimental” effect on flight connections from the Netherlands. Ticket prices will rise by about €80 ($85) to €100 from January next year and travelers in the Netherlands may no longer be able to fly directly to certain destinations from Amsterdam’s Schiphol Airport, the airline said.

“It goes without saying that KLM cannot simply accept a proposal that will have such immense consequences for us as a company and for the Netherlands as a whole,” the airline said in an emailed statement, adding that six out of 10 KLM passengers transfer at Schiphol Airport.

The levy could see ticket prices for transfer passengers at the Amsterdam hub increase by 6.1% on average and result in a loss of as many 34% of transfer passengers, according to data commissioned by the government in May and conducted by CE Delft.

Schiphol Airport’s hub function provides major value for the Dutch economy, said Hans van Kastel, a spokesperson for Schiphol Airport. “There is a risk that the Dutch competitive position will be affected too severely,” he said. 

The finance ministry is looking into the implications and feasibility of the tax, a spokesperson said.

“The air passenger tax will most likely have a negative effect on Schiphol’s hub function,” said Prime Minister Mark Rutte during the Thursday debate on the proposals. “Ideally, you do something like this in an EU context.”

The proposal, which was put forward by the Christian Democrats or CDA party, will need to be approved by the Dutch senate. –BLOOMBERG