Abu Dhabi Airport Introduces New Passenger Tax

Historically the UAE has charged very low taxes (there’s still no income tax), which is part of their growth plan. For them it’s an investment in the future, as the goal is to make it attractive for people to visit the UAE, in hopes of the country having a future after the oil dries up.

That’s why it’s often said that many of the Gulf carriers aren’t after financial profits, but rather are a mechanism by which their respective nations can build their infrastructure and establish their position in the world.

That’s why it was a bit surprising when a couple of months ago it was announced that Dubai Airport would add a new passenger facilities charge of 35AED (~9.50USD). That’s not a lot and pales in comparison to the UK Air Passenger Duty, but it’s still an interesting departure from the UAE’s former system.

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Dubai Airport

However, it’s worth noting that this fee also applies to connecting passengers, and not just passengers originating in the UAE, as is the case in the UK with the APD.

Well, it looks like one of the other Emirates will be adopting Dubai’s policy.

Per The National UAE, Abu Dhabi will begin charging a passenger facilities charge of 35AED for travel as of June 30, 2016. This applies to both passengers originating in the UAE, as well as those connecting from elsewhere. This is in addition to the 75AED passenger service charge which applies for passengers originating in the UAE.

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Abu Dhabi Airport

You’ll see that this new charge already applies for travel as of June 30, 2016. If you choose a departure before then, you won’t see the 35AED fee:

Abu-Dhabi-Airport-Fee-1

However, if you choose a flight after then, you will see the 35AED fee:

Abu-Dhabi-Airport-Fee-2

As you can see, this fee is being charged directly through airline tickets, rather than at the airport. So I assume if you have a ticket which is already booked, the airline will absorb the fee, or perhaps the government simply won’t charge it.

I’d say the most interesting thing about this fee is that it applies to connecting passengers as well. Airlines are typically pretty competitive on prices in various markets, so now if Emirates/Etihad and a few other airlines have the same pre-tax fare, the fare will likely be higher on Emirates/Etihad, due to this new fee, given that passengers will be connecting through the airlines’ hubs in the UAE. Studies have shown that these kinds of fees can impact passenger demand.

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Emirates A380 in Dubai

Bottom line

This fee isn’t a big deal in the grand scheme of things, though I think it’s at least worth mentioning, given how these fees are being added at multiple airports in the UAE now. Clearly the UAE isn’t quite in the financial position they once were, so they’re trying to look at other ways to increase revenue.

Dubai Airport has the capacity to serve 90 million passengers per year, so a ~$10 per passenger fee translates to an extra ~$900 million per year. That’s a lot of money.

Comments

  1. I am surprised by the comment “these kinds of fees can impact passenger demand.”.
    After all its only about 1% extra for a Americas – Asia round-trip flight.

  2. Gulf countries have been tax free since their constitution. Demographic has always been low and income good due to a large oil production concentrated within a small region known as GCC (Gulf Cooperation Countries). But Dubai (most important city state in the Emirates after Abu Dhabi) has almost finished oil which prompted to seek alternative income. No wonder that they are trying to limit subsidies. In 2015 vehicle fuel subsidies ended and the prices now fluctuates every month. The new airport tax (which to me seems still reasonable) is one of the many initiatives to limit government subsidies which still today stands at billions. Yet services excel almost everywhere, so residents like myself have little to complain about.

  3. Lucky describes the new charge of AED 35.00 (USD ~9.50) as “not that bad,” yet a few weeks ago a similar new Norwegian airport tax of about the same value was described by this very blog as “nasty.”

    Which is it?

  4. They also added a tax for hotels recently in Abu Dhabi. I have a stay at the St Regis in a few weeks and they emailed me about the new room tax

  5. I haven’t received any feedback from the Etihad booking and I fly 7/7 out of Abu Dhabi. Guessing they’re absorbing the fee or for new bookings only like you noted. But the hotel fee, they are definitely charging that because they emailed me. I copied and pasted some of that email below.

    We would like to inform you that the Abu Dhabi Tourism and Culture Authority have recently announced the introduction of a new municipality fee and additional charge for each night of your stay. This will be applicable to all Hotels in Abu Dhabi and will come into effect as of 1st of June 2016.

    The new charges will be as follows:

    · 4% of the value of your hotel invoices as Municipality Fee

    · AED 15 per night per bedroom of your selected room category.

    The above charges are in addition to the existing current tourism fee and service charge which are as follows:

    · 10% service charge & 6 % tourism fee.

    We hope the above is clear, and please do not hesitate to contact us, if we can be of any further assistance. It will be our privilege.

  6. @Smitty
    Oslo has a lot more LCC carriers flying short haul so they will be affected more heavily.

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