Taxing the skies - A study on the Swedish air passenger tax and its impact on the number of passengers

Abstract: The purpose of the thesis is to analyze the impact of the Swedish air passenger tax on the number of air passengers in Sweden. The tax was implemented in April 2018 with the aim to reduce air travel demand and decrease the aviation industry's greenhouse gas emissions. Since aviation emissions contribute significantly to climate change and are not adequately priced or accounted for, the tax serves as a corrective measure for these negative externalities. Using the difference-in-differences method and utilizing Denmark as a control group, this study evaluates the effect of the tax on the number of passengers in Sweden. The analysis covers the time period between 2016-2020 and shows a likely effect of the tax, leading to a reduction in the number of passengers traveling to and from Sweden.