Short‐run impact of the flight departure tax on air travel

Abstract

Abstract This study investigates the short‐run impact of the flight departure tax introduced in Germany and Austria in 2011 on the number of flight passengers. The analysis covers 310 airports in 30 European countries for the period 2008–2016. Dynamic panel difference‐in‐differences estimations show that the flight tax reduces the number of passengers by 9% in the year of introduction and 5% in the subsequent year. However, separate estimations for airports predominantly frequented by low‐cost airlines reveal that the reduction of the number of passengers is mainly driven by these airports, whereas the regular hubs are not affected.