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You mean a tax a percentage? One of France's neighbours taxes petrol sales at 65c/l, not the percentage you might be thinking of as tax. It was done that way b
by Arnt 3y ago
You mean a tax a percentage?
One of France's neighbours taxes petrol sales at 65c/l, not the percentage you might be thinking of as tax. It was done that way because a flat tax fit the political purpose of the tax.
So what's the political purpose? I'd guess that the goal is to reduce the difference between the apparent very low price of flights and the average price actually charged by the airlines, so that flying won't seem so cheap. Ie. the goal of the initiative is to correct a false impression of the price of flying, which is not a matter of economics at all and not something economics can sort out.
- stavros 3y agoHm, I don't understand this. What causes the apparent low price? Do you mean that they make it so the cheap flights are extremely cheap, and subsidized by the more expensive flights, as a marketing ploy?
- Arnt 3y agoThe apparent low price is caused by advertising and word of mouth. Everyone knows that Ryanair sells €10 tickets from A to B, see? And Ryanair really does, a few seats per plane. The average actual price is the average of the total price paid, which is not just the first few seats per plane, and which also includes all those taxes and extras. If people make travel decisions before buying the tickets (as they're almost forced to), then some/many of them will base the decision of how to travel on the word-of-mouth price they've already heard rather than on the price they'll see at the end of the purchase process.
- stavros 3y agoI see, thanks, so the EU is basically trying to stop the marketing tactic. That makes sense, though it's not about stopping "cheap flights" then (I haven't seen a 10 € ticket with Ryan in years).
- Arnt 3y agoIt's what I assume is the motivation. An example of the kind of motivation for which a minimum price is a sensible action.