Airline ticket levy_information sheet

Information sheet on the airline-ticket levy

1. Details of the airline-ticket levy in France

On 1 July 2006, the airline-ticket levy, designed to provide finance to implement

Millennium Development Goals (MDG), in particular in the health sector, entered into force in

France. This obligatory levy goes from €1 to €10 per ticket for European flights and €4 to €40

for long haul flights, based on the category of tickets. The tax is levied on the passengers

who boarded in France, is not applicable either on connecting flights or the transport of air

freight.

The income from the levy is monitored and collected by the Directorate General for Civil

Aviation (DGAC) which transfers it to the French Agency for development (AFD) Solidarity

Fund for Development account (FSD). The collect and the use of the income from the levy is

unique as it is not transferred to France’s general budget. Its allocation has been formalized

through a decree stating that it should finance organizations implementing health programs

for developing countries.

2. An innovative financing mechanism, a source of more predictable income as a

complement to ODA

The predictability of resources and their means of allocation are particularly consistent

with the needs of development aid. This is particularly adapted to financing HIV/Aids

programmes, a disease where patients must receive chronic daily treatments. Predictability

also enables France to arrange multi-year contributions to organizations which develop

international health programmes. Since 2010, revenues from the French air ticket levy

account for ODA. However, France keeps promoting this instrument as a way to levy

financial resources for development as a complement to budgetary efforts made each year

for that purpose.

Since 2006, Cameroon, Chile, the Republic of the Congo, Madagascar, Mali, Mauritius,

Niger and South Korea have also implemented an airline-ticket levy to finance development.

Thus, the airline-ticket levy redefines the traditional approach of development assistance by

changing traditional beneficiary’s countries into donors.

The table below sums up UNITAID’s cumulative contributions since its creation. The

countries which are not listed above make budgetary contributions. Certain countries have

adopted special mechanisms:

- Brazil, which pays from its budget but which calculates its annual contribution on what

an airline-ticket levy would have potentially raised;

- Norway which allocates a portion of a carbon tax to UNITAID.

Other countries are in discussion to implement the levy (Benin, Burkina-Faso, Senegal,

Cambodia…).

3. A levy assessed as having no impact on air traffic or tourism

No impact has been observed on French air traffic or on tourism following the establishment

of the airline-ticket levy. This was noted in several reports commissioned by the French

authorities:

According to a Government assessment report submitted in early 2009 to the French

parliament: “The introduction of the levy had no apparent effect on the volume of air traffic

passing through French airports nor on the volume of air traffic affecting France" and "the

symbolic sum of €1 paid in 2007 by 72% of passengers explains that this initiative to boost

development has shown itself to be relatively affordable for passengers and had no impact

on purchasing power. Furthermore, once established, the levy did not raise any major

objections from carriers.”

In a 2010 assessment on the use of airline-ticket levy income, the French Court of Audit

included a paragraph entitled "an efficient collection with no negative consequences", adding

“the levy has had none of the presumed negative effects: no loss of French air traffic or of

paid employment in the aviation sector has been noted".

Airline companies can benefit by reporting on the positive outcome of the airline-ticket levy,

such as Air France which in January 2010 released an article entitled “UNITAID says

thanks”.

4. Organizations financed as a result of French income from the airline-ticket levy:

The airline-ticket levy has raised between €162 million and €175 million per year, totalling

one billion euros since its creation. By 31 August 2012, this income had enabled the payment

of:

- €716m to UNITAID;

- €125m to reimburse the loan from the International Financial Facility for Immunization

(IFFIm), a lending mechanism which finances the Global Alliance for Vaccinations

and Immunizations (GAVI);

- €60m to the Global Fund to fight AIDS, Tuberculosis and Malaria

a) UNITAID:

The UNITAID initiative was officially launched in September 2006 by Brazil, Chile, France,

Norway and the United Kingdom. The airline-ticket levy represents the most important source

of funding for UNITAID. France has contributed almost 60% of the organization’s resources

since the outset. UNITAID is hosted by the World Health Organization and finances

programmes for access to health products (treatments, diagnostic tests and preventive tools)

to treat the three major pandemics: HIV/Aids, Malaria and Tuberculosis. UNITAID is most

active in Africa as at least 85% of its funding is channelled towards the least developed

countries. What is unique about UNITAID is that it has chosen to act on public health by

remedying market shortcomings such as high prices, supplier monopolies and stock

shortages. UNITAID develops a product driven approach complementary to the country

driven approach of the Global Fund. In practice, the aim of UNITAID’s actions is to lower

prices, speed up the development of more suitable medications and improve the quality and

availability of health projects (market shaping).

Since 2006, funds from UNITAID, and thus from the French airline-ticket levy, have enabled:

- the creation of a previously non-existent market for anti-HIV paediatric medication;

- 400,000 children living with HIV to receive treatment, i.e. 75% of worldwide cases;

- the stabilization of a market for second-line anti-HIV reducing by up to 60% the price

of medication;

- HIV screening for eight million pregnant women;

- the treatment of over 800,000 HIV-positive pregnant women in order to prevent

mother to child transmission of HIV;

- the financing of high-tech laboratory facilities to detect forms of multi-drug-resistant

tuberculosis in eight high-prevalence countries;

- the distribution of 1.5 million first and second-line treatments in 72 countries; UNITAID

is the world’s largest supplier of paediatric medication against tuberculosis;

- the provision of 200 million artemisinin-based combination therapies (ACTs), the most

effective treatment against malaria;

- the creation of ACT markets in seven countries where malaria is endemic through an

innovative subsidization approach which enables prices to be lowered from 25 cents

to 2$ per ACT (as opposed to their former price of 6 to 8 euros);

One dollar invested in UNITAID represents:

- a HIV screening kit for a pregnant woman;

- vital anti-malaria treatment for two children;

- a day of HIV treatment for an adult;

- a week of treatment against tuberculosis;

- a week of HIV treatment for a child.

b) IFFIm/GAVI:

GAVI was launched in January 2000 in order to improve and facilitate vaccination in the

poorest developing countries and to increase their access to new vaccinations. Since 2006,

GAVI's major source of funding has been the IFFIm (International Finance Facility for

Immunization). IFFIm uses pledges from donor governments to sell bonds in the capital

markets, making funds immediately available for GAVI programmes.

By the end of 2011, GAVI:

- has contributed to avoid over 5.5 million deaths ;

- had supported the immunization of over 325 million additional children;

c) Global Fund to fight AIDS, Tuberculosis and Malaria:

The Global Fund is a Swiss foundation based on an international public-private partnership

whose mission is to raise and disburse funds towards the prevention and treatment of AIDS,

tuberculosis and malaria.

The Fund carries out vital work towards the achievement of the health-based MDGs, in

particular MDG 6: “Combat HIV/Aids, malaria and other diseases”. The Global Fund alone

accounts for 20% of international funding against HIV/Aids, 63% of international financing

against tuberculosis and 60% of the financing against malaria.

In the past 10 years, the Global Fund has achieved impressive results:

- 3.3 million people receiving antiretroviral treatment;

- 8.6 million new cases of infectious tuberculosis detected and treated;

- 230 million insecticide-treated mosquito nets (ITNs) distributed to protect families

against transmission.