The global airline industry lashed out at the German government's plans to impose an air travel tax at a time when Europe's aviation industry is struggling to post a profit amid a weak economic environment.
Berlin's plans and warnings of weak European growth this year overshadowed the closing day of global airlines body IATA's annual meeting on Tuesday.
Germany intends to impose a tax of up to 1 billion euros ($1.3 billion) a year as part of a package of budget cuts and taxes to shore up stretched public finances.
"This is simply a cash grab by a cash-grab government, painted green with no environmental benefit," IATA Chief Executive Giovanni Bisignani told reporters in a briefing.
German Chancellor Angela Merkel on Monday stunned aviation industry executives gathered at the IATA meeting, and planemakers preparing for the opening of the Berlin Air Show, as she announced the air travel tax plans, part of 80 billion euros of budget measures.
The move comes as governments across Europe vow to become more frugal and rein in their budget deficits to bolster their economies against the region's debt crisis.
The planned tax became one of the biggest topics of discussion at IATA's AGM, where top executives spent three days milling around meeting rooms with engine suppliers, planemakers and back-office cost-cutters in what one aerospace official likened to speed dating.
It added to concern over IATA's warning that Europe's aviation industry was recovering more slowly than expected, hit by a volcanic ash cloud that closed airspace across a large part of the continent in April, as well as by a weaker euro.
"European airlines are facing a pretty difficult time with weak economies and governments seeking to generate revenues," IATA Chief Economist Brian Pearce said.
The tax is seen raising the price of air travel by 8-16 euros per ticket, and German flagship carrier Lufthansa would be hit the hardest.
The airline, which said the levy represented a "black day" for the airline industry, will take an annual hit of about 200 million euros a year, Commerzbank analyst Frank Skodzik said, assuming the carrier can pass on half of the tax to passengers.
But Lufthansa CEO Wolfgang Mayrhuber, asked whether Lufthansa could pass on the tax to customers, said: "No way."
Lufthansa shares fell 2.4 percent at 10.49 euros by 1231 GMT, while the Stoxx Europe 600 Travel & Leisure index eased 1.3 percent. Shares of Air Berlin, Germany's second-biggest airline, fell 1.0 percent to 3.469 euros.
The world's airlines had their worst year ever in 2009, losing a total $9.4 billion, when demand dropped faster than capacity could be cut as companies and consumers shrank travel budgets to weather the global economic crisis.
IATA on Monday raised its 2010 earnings estimate for the global airline industry as Asia-Pacific and other regions are recovering faster than expected, and said the only region in which airlines would continue to post overall losses this year would be Europe.
"The most vulnerable part of the industry is in Europe. The last thing the industry here in Europe needs is additional taxes and measures that will slow down economic growth," Pearce said. ($1=.7453 euros)
