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Europe

KLM CEO Rebukes Dutch Proposal to Tax Transit Passengers at Schiphol

Edward Russell
September 22nd, 2023 at 11:52 AM EDT

Travelers at Schiphol Airport

KLM CEO Marjan Rintel offered a firm rebuke of a proposal in the Netherlands’ legislature to tax transfer passengers at the airline’s hub, Amsterdam’s Schiphol airport.

“You stack tax on tax and chase passengers away to airports abroad,” Rintel said in a LinkedIn post Friday. “That does not ensure cleaner aviation.”

Rintel claimed that, if implemented, it could reduce KLM’s transit traffic over Schiphol by as much as 36%. Six in 10 KLM passengers are transferring, she added.

The potential tax was proposed Thursday as part of the Netherlands’ climate policy in the Dutch House of Representatives. The motion, which is not law, called on proceeds from a tax on transfer travelers and private jet passengers be used to lower energy bills for Dutch residents. It did not propose an amount or tax rate.

Roughly 36% of the 40.7 million passengers that passed through Schiphol airport from January through August this year were transiting between flights, airport data show.

The threat of a transit passenger tax is just the latest in a series of setbacks for KLM. At the beginning of September, the Dutch government decided to pursue plans to cut the number of flights at Schiphol. The plan would reduce aircraft movements — a takeoff or landing counts as one movement — to 452,500 annually from next summer. The number is better than the previously planned reduction to 440,000 movements but still a 9.5% cut from the 500,000 allowed today.

The flight caps, the government said, would reduce noise pollution around Schiphol by 20%.

If Dutch government officials want to reduce noise at Schiphol, they “need to follow the balanced approach,” Rintel told Airline Weekly in June. “It’s a really structured process describing [that] you need to look at fleet renewal first, then you need to look at everything you can do in operational measures … and then, as a last resort, what’s left is movement reduction.”

The planned flight cuts were put on hold in July after the collapse of Prime Minister Mark Rutte’s government which came days after the Dutch government won an appeal allowing it to move forward with the plan.

Capping flights and then taxing transfer passengers would threaten the unrivaled success of KLM and the Schiphol hub, two “golden geese” of the Dutch economy.

KLM generated a €257 million ($274 million) operating profit in the second quarter. That was on par with four years ago but, owing to a tight labor market and other operational issues at Schiphol, its historic role as the profit leader in the Air France-KLM Group was ceded to Air France. The latter carrier succeeded significantly in restructuring costs during the pandemic and has not faced significant operational issues at its Paris Charles de Gaulle hub.

Schiphol itself has struggled to recover from the pandemic. Staffing issues last year forced it to cap passenger numbers — and flights — that hit KLM hard. Operations have been smoother this year but the airport remains below pre-pandemic passenger numbers.

To be clear, airlines can grow at a capacity-constrained airport. However, that growth occurs by some combination of flying larger planes on existing routes and better-utilizing slots for the most lucrative routes, something that often comes at the loss of flights to smaller communities. One option available to KLM at Schiphol — and not to airlines at other hubs — is replacing more flights with high-speed trains to Brussels, Paris, and even London. To date, the airline has only replaced one flight to Brussels with a train.

Rintel, in her message Friday, said KLM does “not accept” the proposal. The airline will highlight the potential consequences to members of the Dutch Senate and in the run-up to the national election on November 22.

KLM also faces increased carbon taxes on flights under the European Union’s emissions trading scheme from January.

Edward Russell
September 22nd, 2023 at 11:52 AM EDT

Tags: Europe

Photo credit: A new proposal in the Dutch legislature would tax transit passengers at Amsterdam Schiphol's airport. Flickr / Paul Robertson

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