Travel tax error may cost millions

By the Editorial Team · Thursday, June 25, 2026

The Albanese government is facing pressure to delay the planned increase of Australia’s passenger movement charge from $70 to $80 starting January 1, 2027, after airlines warned they may incur millions in losses on pre-sold tickets that cannot be adjusted for the higher fee. Industry groups argue that the tax hike, expected to raise $755 million over five years, was announced without prior consultation and could hurt airlines' profitability and deter international service expansion if implemented without a transition period.

The Albanese government faces mounting pressure to postpone the scheduled increase in Australia’s passenger movement charge (PMC) after airlines warned that the tax hike could cost them millions due to pre-sold tickets not reflecting the higher fee. The federal budget announced the PMC would rise from $70 to $80 per passenger, effective January 1, 2027. This increase is projected to generate an additional $755 million in revenue over five years, including approximately $90 million in the first six months of 2027.

However, concerns have emerged from airlines operating in Australia, which note that thousands of tickets for flights departing early next year were sold before the tax change was announced and thus do not factor in the higher charge. Since the increase has not yet been formally legislated or gazetted, carriers are legally unable to apply the extra $10 to fares already sold for trips after January 1. As a result, airlines could be forced to absorb the cost themselves.

Stephen Beckett, chief executive of Airlines for Australia and New Zealand, highlighted that the Department of Home Affairs appeared unaware that the industry routinely sells tickets up to a year in advance. He noted that with current profit margins on tickets as low as $6.50 per passenger, some airlines would incur losses to cover the increased tax without an implementation delay.

Three key industry groups—the Airlines for Australia and New Zealand, the Board of Airline Representatives of Australia (BARA), and the International Air Transport Association—sent a joint letter to Transport Minister Catherine King expressing their concerns. They described the planned tax increase as imposing an “irrecoverable industry cost on thousands of seats already sold and ticketed.” The letter emphasized that until the tax change is formalized, airlines can only collect the existing $70 levy and cannot recoup the higher charge from passengers who purchased tickets before the announcement.

The industry groups also expressed disappointment over not being consulted prior to the tax hike’s announcement, suggesting that advance engagement could have prevented the current complication.

In response, Ms. King’s office indicated on Wednesday that the government is exploring a “path forward” with airlines regarding the implementation timetable. However, any delay would reduce or eliminate expected revenue from the $90 million anticipated in the first half of 2027.

The last PMC increase, implemented in 2024 when the charge rose from $60 to $70, was introduced with more than a year’s notice to airlines. Industry representatives voiced broader dissatisfaction with the continuous rise in the PMC. BARA executive director Stephen Pearse described Australia’s departure tax as already among the highest globally and warned that the latest increase could deter international airlines from expanding services to the country.

“Decisions that directly impact passengers by adding a direct cost to airfares should not be made without meaningful engagement with the international airline industry, particularly in this challenging global environment,” Pearse said.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.