Israel Proposes New Aviation Tax, Potentially Raising Ticket Prices

Israel's Tax Authority has proposed a new tax on aircraft departing from Ben Gurion Airport, calculated based on aircraft weight and flight distance. The proposal, outlined in a position paper released on November 8, is still under consideration and has not yet been enacted. If implemented, the tax could lead to an increase of approximately 58 shekels for passengers on medium-haul flights, such as those to Europe, and around 274 shekels for long-haul journeys to the United States and East Asia. Shorter flights might see an increase of about 12 shekels. The tax would be levied on the aircraft itself, with amounts ranging from roughly 1,300 shekels for planes weighing up to 50 tons to approximately 100,000 shekels for aircraft exceeding 300 tons on long-haul routes. Airlines may pass on some or all of these costs to passengers by raising ticket prices. The Tax Authority estimates the tax would represent 4% to 5% of the average ticket price and generate about 1.1 billion shekels annually for the state treasury. The justification for the proposal includes the environmental damage caused by aviation and the sector's existing tax exemptions, such as on aviation fuel. The proposal's introduction does not guarantee an immediate rise in ticket prices, as it is part of discussions for the upcoming state budget. The final impact on travelers will depend on the finalized version of the tax and the extent to which airlines choose to transfer the cost to flight prices.