The Swedish Air Passenger Tax : The impact on passenger numbers

Abstract: In this essay I have estimated what impact the Swedish air passenger tax that was introduced in Sweden on April 1st in 2018 has had on passenger numbers in Sweden. The tax was introduced to lower demand for air travel within the public and thus, decrease the aviation industry´s greenhouse gas emissions as aviation contributes through these emissions to a large extent to climate change and is expected to have an even greater impact in the future as the number of air travels are expected to grow continuously. Besides that the emissions from aviation have this large negative impact on the climate, a large part of these emissions are not included in any pricing system or market. Therefore, aviation is a source of negative externalities and the Swedish air passenger tax is an instrument implemented to correct for these negative externalities. Previous studies that have evaluated similar taxes and their effects have reached different conclusions. I have used the difference-in-difference method to estimate any effect from the introduced aviation tax in Sweden. Denmark is used as the control group to compare the development in Sweden with. I found that the tax has had a decreasing effect on passenger numbers in Sweden. It is discussed however if this estimated decrease in passenger numbers might be biased and thus overstated. It is also discussed if this decrease might be due to other reasons than the air passenger tax itself.