Dubai to introduce passenger taxes

DubaiFalling oil prices have forced Dubai to introduce a tax for passengers leaving  by air. With oil prices having dropped over 70%, pressure has been put on the more than ambitious infrastructional projects that should turn emirate into a world port.

Work on Dubai International Airport continues as passenger traffic continues to grow. In 2015 the airport welcomed 78,475,336 passengers, an 11.4% increase compared to 2014. With the airports maximum capacity of 90 million passengers nearing, it is important to keep investing in the current facilities.

Next to that, Dubai is working on Dubai World Central Airport or Al Maktoum International Airport, which handled 463,236 passengers in 2015 and is expected to handle 26 million passengers by 2017 and should handle up to 200 million passengers when fully operational. The price label to this mega-aiport: $32 billion, with a total investment of $82 bn in the aviation sector.

Passengers (with some exclusions) will be charged 35 dirham, starting in July 2016. This could bring the income from these taxes up to $750 mln annually.  The majority of this tax will be collected from passengers flying Emirates, which carries almost 50 million passengers annually and operates over 230 aircraft.

The company has over 250 aircraft on order, meaning that the airline will almost double its fleet in the coming years. It can be concluded that the growth profile of Emirates, matches the growth aspirations of the Dubai airports.

Low oil prices, a two-sided stories: A pain for oil states such as Dubai, but heaven for airlines that see their margins surging due to lower fuel costs.

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