Greece to support air transport sector to soften coronavirus blow

ATHENS (Reuters) - Greece on Thursday announced a package of measures amounting to 115 million euros to support the country's air transport sector, hit hard by the lockdown to contain the spread of the new coronavirus including the grounding of flights.

"Sectors such as air transport which is directly linked with tourism ... are in need of a special support framework as they have a systemic significance for the country's economy," Greece's finance, labour and transport ministries said.

The package includes a cut in VAT tax to 13% from 24% from June 1 to end-October, estimated to cost the government foregone income of about 30 million euros.

The government will also replace the income tax on pilot, cabin crew and technical staff pay with a permanent 15% tax rate, which will lower the wage cost for companies in the sector by about 7.7 million euros annually.

It will also pay airlines servicing routes partly subsidised by the government, such as to remote islands, an extra 20 euros per offered seat including VAT, estimated to benefit the sector by 6 million euros.

Greece's air transport sector employs about 11,000 and is important for tourism as up to 85% of tourism revenues from the total of 18 billion euros earned last year comes from tourists arriving to Greece by planes, the ministries said.

The government will also social security contributions for all employees in the sector for the entire period when they will not be working, estimated to cost about 50 million euros.

Greek carriers, ground handling and airports have performed strongly in the last years thanks to high inflows of tourists and are not in need of huge amounts of support, or capital injections as in other EU countries, the ministries said.

(Reporting by George Georgiopoulos, editing by David Evans)