Armenia’s parliament debated on Tuesday a proposed aviation tax break which the government says would attract foreign low-cost airlines to the country.
One of those carriers, Ryanair, announced in October that it will start flying from Yerevan to Milan and Rome in January and open two more routes next summer. The announcement was widely welcomed in Armenia, with government officials predicting a significant drop in the cost of air travel and major boost to the domestic tourism sector.
Ryanair’s decision is understood to be tied to a government pledge to exempt the company from a fixed $21 tax levied from every air ticket sold in the country. The tax break would also apply to any other airline launching flights to new destinations from Armenia.
Tatevik Revazian, the head of Armenia’s Civil Aviation Committee, again defended the proposed financial incentive as she presented a relevant government bill to the National Assembly.
“We are spurring the launch of new routes which have not been operated for the past 12 months,” she told the parliament. “We have set this condition … so that airlines currently operating [in Armenia] do not close their existing routes and apply for this [tax] privilege.”
“At the same time we will require airlines to carry out their [tax-free] flights for a whole year,” added Revazian.
Armenia -- Ryanair's David O'Brien (C), Armenian Civil Aviation Committee chief Tatevik Revazian (R) and Marcelo Wende, chief executive of Armenia Internatonal Airports, announce the upcoming launch of Ryanair flights, Yerevan, October 16, 2019.
Many parliament deputies, including members of the ruling My Step alliance, seemed unconvinced. Some of them were worried that new entrants in the domestic civil aviation market would thus gain an unfair competitive edge over foreign and domestic airlines that have long flown to Armenia.
Two lawmakers, including My Step’s Karen Hambardzumian, suggested that the government scrap the so-called “air tax” altogether. Hambardzumian claimed the loss of an estimated 11 billion drams ($23 million) in annual proceeds from this duty would be offset by revenues from more tourists visiting Armenia.
The parliament committee on economic issues approved the proposed tax break while voicing reservations about it. The committee’s pro-government chairman, Babken Tunian, said he hopes the bill will be amended before being passed by the parliament in the final reading.
“I see serious risks here because there are airlines which could find themselves in trouble as a result of this [bill,]” Tunian told fellow lawmakers. “Take Air France, for example, which flies to Armenia from the Charles de Gaulle Airport [near Paris] … A budget airline could take advantage of this privilege and fly to Armenia from another Paris airport.”
The bill should therefore be amended to make clear that new flight destinations mean new cities, rather than airports, added Tunian.