Business

SAN FRANCISCO — Microsoft on Thursday posted quarterly earnings that trounced expectations, citing growth in partnerships with companies on technology and cloud computing services.

The US technology titan, shifting in recent years to business services from consumer tech, reported its net income rose 49 per cent to $13.2 billion on revenue that was up 12 per cent to $33.7 billion.

Microsoft’s profit in the fiscal fourth quarter that ended June 30 was helped by at $2.6 billion tax benefit, according to the company.

The results showed the “strongest commercial quarter ever”, for Microsoft, said chief financial officer Amy Hood.

Chief Executive Satya Nadella said the results closed out a record fiscal year for the tech giant, which has the largest market value of any company at more than $1 trillion.

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” said Nadella.

“Every day, we work alongside our customers to help them build their own digital capability...This commitment to our customers’ success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack.”

Net income for the fiscal year more than doubled to $39.2 billion on revenue that was up 14 per cent to $125.8 billion, according to the earnings report.

Microsoft shares rose 1.4 per cent to $138.35 in after-market trading that followed release of the earnings figures.

“Microsoft is firing on all cylinders now, growing big in growing markets and even managing growth in mature markets like PCs (personal computers),” said technology analyst Patrick Moorhead of Moor Insights and Strategy.

The Redmond-based company is “cementing its spot” as a provider of software, infrastructure and platforms hosted as services in the internet cloud, according to Moorhead.

Microsoft reported growth across all it businesses except Xbox gaming unit where revenue declined 10 per cent.

A reason is likely that the latest generation Xbox console that debuted nearly six years ago is getting “long in the tooth”, with a successor on the horizon, Moorhead said.

Microsoft in June gave the world a first glimpse of a powerful next-generation Xbox that it aims to release late next year.

Xbox head Phil Spencer pulled back the curtain on “Project Scarlett”, a successor to the Xbox One that will give game makers “the power they need to bring their creative visions to life”.

The new Xbox was promised to be released in time for the Christmas holiday shopping season in 2020.

Xbox battles in the console gaming arena with Sony, which is working on a new generation PlayStation.

The commitment to consoles by longtime contenders in the market comes with the rise of video games hosted as subscription services streamed Netflix-style from data centres in the Internet cloud, which plays to Microsoft’s cloud and Xbox strengths.

Revenue from productivity and business processes division that includes business and consumer cloud services as well as career-focused social network LinkedIn was up 14 per cent to $11 billion, according to the earnings report.

Money taken in at LinkedIn jumped 25 per cent with the service seeing record levels of engagement, Microsoft said.

The company also saw revenue rise from server products; Windows operating software; online search advertising, and its Surface table computers.

Surface revenue growth was “surprising” considering the overall personal computer market was flat, according to Moorhead.

“This quarter was an absolute ‘blow out quarter’ across the board with no blemishes and in our opinion speaks to an inflection point in deal flow as more enterprises pick Redmond for the cloud,” Wedbush analyst Daniel Ives said in a note to investors, referring to Microsoft’s headquarters in Washington State.

“While the stock has been very strong and a trillion dollar market cap is now reached, we believe the cloud party is just getting started in Redmond.”

CHANTILLY, France — Ministers from G-7 top economies on Thursday reached consensus on steps towards an accord on taxing digital giants, an issue that has divided the United States and its allies Britain and France.

French Finance Minister Bruno Le Maire, who hosted the two-day meeting in Chantilly outside Paris, hailed the consensus as unprecedented, although US Treasury Secretary Steven Mnuchin insisted there was more work to be done.

The French parliament this month passed a law that would tax digital giants for income amassed inside a country even if their headquarters are elsewhere, a move the United States complained discriminated against US firms like Google, Apple, Facebook and Amazon.

Britain has announced plans for a similar tax and the G-7 meeting in the tranquil French town — usually famed for its horses rather than horsetrading — was dominated by tough talks to find some common ground.

Le Maire said finance ministers and central bankers had reached an agreement "to tax activities without physical presence, in particular digital activities".

"This is the first time that G-7 members agree in principle on this," he told reporters.

 'Minimum tax' 

France issued a statement saying the G-7 had agreed a two-pronged solution — confirming the principle of companies being able to accrue revenues outside their legal base but also on a minimum tax to be agreed internationally for their activities.

Ministers "fully supported a two-pillar solution to be adopted by 2020", the statement said.

"Ministers agreed that a minimum level of effective taxation... would contribute to ensuring that companies pay their fair share of tax," it said.

A French official, who asked not to be named, said the tax rate would have to be agreed in the future.

German Finance Minister Olaf Scholz said he was happy with the "progress" achieved and in particular with the reference to the minimum tax level in the final statement.

Further talks would now be needed in the wider context of the G-20 group of top economies for an international agreement which would be overseen by the Organisation for Economic Cooperation and Development (OECD).

Scholz expressed hope that a full international consensus could be reached next year under the OECD.

 'Step forward' 

The French parliament's move infuriated President Donald Trump and the US had announced an unprecedented probe against France which could trigger the imposition of tariffs.

Mnuchin struck a slightly more cautious tone than his French counterpart Le Maire while making clear he was well satisfied with the talks.

"We made some significant progress at this meeting, there is more work to be done," Mnuchin told reporters, adding that ministers had made a "big step in the right direction".

He said the United States has "significant concerns" with the French law and planned British legislation and was pleased that both Paris and London would dump the domestic laws if an international agreement was forged.

"Everyone here wants to reach an acceptable international solution," said Mnuchin. "Creating certainty for global multinationals is very important," he added.

 'Warning on Libra' 

The G-7 ministers had far less trouble agreeing a position on new cryptocurrencies such as Facebook's Libra, saying such new and untested digital money risked destabilising the international monetary system and were not ready to be implemented.

"They agreed that projects such as Libra may affect monetary sovereignty and the functioning of the international monetary system," the French statement said.

The other key issue at the meeting was finding a replacement for Christine Lagarde, who has led the International Monetary Fund since 2011 but has resigned to become head of the European Central Bank.

CHANTILLY, France — France on Wednesday expressed defiance in a row with the United States over taxing tech giants that threatens to dominate a G-7 meeting, saying an international accord was the only way to solve the dispute.

French Finance Minister Bruno Le Maire was set to meet Treasury Secretary Steven Mnuchin on the sidelines of the meeting of finance ministers from the world’s seven most developed economies in Chantilly outside Paris. But there was no early sign of any compromise.

The French parliament earlier this month passed a new law that will tax digital giants on revenue accrued inside the country, even if their European headquarters are elsewhere, in a move that will affect US groups Google, Apple, Facebook and Amazon.

The move infuriated the United States which announced an unprecedented probe against France which could trigger the imposition of tariffs.

“It is going to be difficult, I know. The American position has hardened recently,” said Le Maire ahead of his meeting with Mnuchin, which was pushed back due to the US official’s delayed flight.

Le Maire said he would make clear that the French parliament had agreed the tax and this could only be withdrawn if there was an international agreement.

‘Won’t back down’ 

In comments to France Inter radio, Le Maire said France would not back down with its plans to impose a 3 per cent tax on revenue that tech firms earn from French sales, despite the threat of US retaliation.

“The possibility of US sanctions against France exists,” Le Maire said. “There is a legal instrument for that and clearly there is the political will.”

Even before the final vote by French lawmakers, the US announced it was opening a so-called Section 301 investigation into the measure.

A Section 301 investigation was used by the Trump administration to justify tariffs on China. 

But Le Maire said: “France will not back down on the introduction of its national tax. It was decided upon, it was voted upon, it will be applied from 2019.”

The minister had late Tuesday expressed confidence that the G-7 could find a consensus for an international accord which would be overseen by the Organisation for Economic Cooperation and Development (OECD).

“This would be the best way to solve this problem,” said Le Maire.

France became the first major economy to pass such tax legislation last week when parliament gave its final approval.

Britain unveiled legislation last week and Spain said on Wednesday it would move forward once a new government is in place.

But smaller EU states such as Ireland and Luxemburg — low-tax countries which host the European headquarters of digital giants — have prevented a consensus in the EU.

While the measure does not specifically target US internet giants, the French commonly call it the GAFA tax, an acronym for Google, Amazon, Facebook and Apple.

Work has been under way for several years on a reform of the international tax system to ensure that multinationals are not able to escape paying taxes in countries where they do large amounts of their business.

Libra not liked 

Several other thorny issues await G-7 ministers when they begin their meeting against a mixed global economic picture.

Plans by Facebook to launch a virtual currency called Libra have stoked concerns among regulators in numerous countries about regulation and market oversight of cryptocurrencies.

“We’ll reiterate our intention not to allow a private company to acquire the elements of monetary sovereignty,” a French official told AFP last week on condition of anonymity. 

Le Maire has publicly voiced his concerns about Libra, a virtual currency to be backed with a basket of real-world currencies that Facebook says will facilitate online financial transactions.

“The conditions are not yet in place today for Libra to be introduced,” Le Maire said Wednesday before meeting Mnuchin, adding that a regulatory framework was needed.

The ministers are also expected to discuss who will take over at the International Monetary Fund (IMF) after Frenchwoman Christine Lagarde was named to head the European Central Bank. The IMF post has traditionally been held by a European.

WASHINGTON — IKEA said it will close its only US factory at the end of the year, cutting 300 jobs, as it will be more cost effective to make the products in Europe and import them.

The global big-box furniture store, known for its Swedish meatballs and sometimes incomprehensible assembly instructions, said raw material costs were too high compared to plants in Europe meaning prices at the plant in the southern Virginia town of Danville were “significantly higher”.

“We made every effort to improve and maintain the competitiveness of this plant, but unfortunately the right cost conditions are not in place to continue production in Danville, VA for the long-term,” Bert Eades, the company’s site manager, said in a statement last week.

The factory, which opened in 2008 to produce wood shelves and storage units for the US and Canadian markets, will close in December. 

“We will do everything we can in the coming months to support our co-workers through this change as they look for new jobs and training opportunities,” Eades said.

IKEA, which has production units at 24 sites in nine countries, with about 20,000 workers, said it will work with labor representatives and US agencies to provide job search assistance.

LONDON — World stock markets were slightly firmer on Monday, mostly posting modest gains after initial doubts on news that China's economy grew at its weakest pace in nearly three decades as US President Donald Trump's trade war hit home.

Wall Street opened little changed to weaker after its record-breaking run, with the market still counting on the US central bank to cut interest rates sooner rather than later despite recent strong jobs data.

Investors were also waiting to see earnings from JPMorgan Chase and the other banks, as well as other major companies such as Netflix, United Continental and Johnson & Johnson.

In Europe, London's benchmark FTSE 100 index closed 0.34 per cent higher and Frankfurt's DAX 30 put on 0.52 per cent while the Paris CAC 40 edged up 0.10 per cent.

"It was a day without much movement. The markets are really just waiting for a stronger lead on the macroeconomic data front," Yann Azuelos of Mirabaud France told AFP.

Asian equities initially stumbled but then staged a recovery as traders digested Chinese second-quarter gross domestic product (GDP) numbers.

China's economy expanded 6.2 per cent in the second quarter, the slowest headline reading since the early 1990s, official data showed. The outcome was in line with forecasts and within the government's target range.

"There's no doubt in anyone's mind that the trade war is a major contributing factor here," noted Oanda analyst Craig Erlam.
"The Chinese data, while confirming slowdown fears, seems to be lifting basic resource stocks," Erlam said.

"A decent rebound in industrial production is naturally driving this, easily exceeding expectations, and along with retail sales and investment figures, arguably indicates that worst fears are not being realised."

The GDP number, nevertheless, highlights the negative impact the US tariffs stand-off is having on China, as leaders also try to recalibrate its growth model from exports and state investment to one driven by consumer spending.

Observers pointed out that the weakness raised the chances of further monetary easing measures from the central People's Bank of China, with investors also tracking the progress of the latest trade talks between Washington and Beijing.

Fed rate cut 

Amid concerns about the possible impact, some expect the US Federal Reserve (Fed) will cut borrowing costs at the end of the month, though there is speculation about how far it will go.

While bank boss Jerome Powell's congressional testimony last week flagged a reduction, data indicating inflation remains reasonably healthy has kept investors guessing.

"The Fed is under pressure to cut the interest rate this year," noted ThinkMarkets analyst Naeem Aslam.

BEIJING — China’s Fosun Group is considering nearly a billion dollar rescue of embattled British tour operator Thomas Cook, the Hong Kong-listed conglomerate confirmed on Friday.

The Chinese company said in a stock market announcement that there are “ongoing advanced discussions” about a capital injection which would see a debt-for-equity swap at the British travel agency, which has struggled with its debt pile.

The deal would equate to a £750 million ($940 million) rescue of the London-based firm.

Fosun Group is already a minority investor in Thomas Cook — with a stake of around 18 per cent — and owns French luxury holiday resort group Club Med which it bought for more than $1 billion in 2015.

The plan, which is still subject to the approval of shareholders and regulators, would involve Fosun’s tourism group taking a controlling stake in Thomas Cook’s tour operating business and a minority share in its airline arm.

The British firm in May revealed that first-half losses widened on a major write-down, caused in part by Brexit uncertainty that has delayed summer holiday bookings.

In a note to the London stock exchange ahead of the market opening Friday, Thomas Cook said the “new money that would provide sufficient liquidity to trade over the Winter 2019/20 season and the financial flexibility to invest in the business for the future”.

The group had total debt of about 1.9 billion pounds as of March 31, according to data compiled by Bloomberg, and its shares have tumbled 87 per cent over the past 12 months.

“Fosun is hoping that Thomas Cooks’ brand name and global reach will expand its business among wealthy Chinese tourists,” Andrew Collier, managing director at Orient Capital Research, told Bloomberg News. 

“Bondholders are expecting this synergy to work, otherwise they wouldn’t convert debt to equity.”

Shares in Thomas Cook dived almost 40 per cent in early London trade Friday, having risen 20 per cent earlier in the week on rumours of a Fosun bid. 

“Thomas Cook’s largest shareholder Fosun is in advanced talks with management over a deal that would effectively hand over the company to the Chinese firm. Shareholders face significant dilution — basically it’s wipe out time, said Neil Wilson, chief market analyst at Markets.com.

The Shanghai-based Fosun Group conglomerate has been on a buying spree in recent years, and taking control of Thomas Cook would significantly expand its business in Europe.

As well as tourism it has interests in property, finance, pharmaceuticals, steel, and entertainment.

It is one of China’s so-called “grey rhino” companies — along with Wanda, HNA and Anbang — that have come under growing scrutiny in the last few years from mainland authorities wanting to crack down on debt-fuelled foreign acquisitions.

WASHINGOTN — It started as a simple sales promotion, but Amazon's Prime Day has now morphed into a major phenomenon joined by scores of retailers jockeying with the US colossus for a bigger slice of the e-commerce pie.

Amazon's Prime Day, now in 17 countries, will be held over Monday and Tuesday, highlighted by a pre-recorded Taylor Swift video concert and promotions across a range of products and services from the e-commerce leader.

Rival retailers including Walmart, Target and eBay are offering their own versions of the blockbuster event.

According to the tracking group RetailMeNot, some 250 retailers will be offering promotions that aim to expand their market share ahead of the key back-to-school shopping season.

"Mid-July used to be one of the sleepiest times for retailers, and Prime Day has really reshaped the dynamics," said Andrew Lipsman of the research firm eMarketer.

Prime Day sales for Amazon are expected to hit $5 billion this year, up from $3.2 billion in 2018, which at the time represented its biggest ever global shopping event, JP Morgan analyst Doug Anmuth says in a research note.

"While the numbers are impressive, we believe there are also additional benefits of Prime Day across Amazon's ecosystem as it allows Amazon to better gauge customer demand for the second half [of the year], acts as a critical peak-day test to ready fulfilment centres and logistics for the holiday season and brings in new Prime members well ahead of the holidays."

Amazon began the event in 2015 across nine countries to promote its Prime subscription service. The original event brought in more revenue than "Black Friday", the key shopping day opening the holiday season in November.

Online rival eBay is calling its event "Crash Day", poking fun at technical glitches that Amazon has experienced in past years.

"If history repeats itself and Amazon crashes that day, eBay's wave of can't-miss deals on some of the seasons top items will excite customers around the world," eBay said.

Walmart meanwhile is expected to launch big online promotions for electronics, appliances and other items over a four-day period starting Sunday, touting the fact that, unlike Amazon, it does not require an annual membership.

Target, another large retail group, has announced it will offer discounts on hundreds of thousands of items ranging from furniture and apparel to "must-have kitchen appliances" on its website.

Others expected to join in the promotion include retailers such as Macy's, Nordstrom, Best Buy and even the Google Store.

A survey of US consumers by research firm Adlucent found 75 per cent will be shopping for deals on Prime Day — many comparing prices between Amazon and other retailers to get the best price.

"Although Amazon was one of the first to create a sensational cyber holiday of its own, it's no longer acting alone, as competitors have begun to respond in force," the group said in a report.

Amazon is facing a walkout in at least one of its US warehouses over working conditions, and it has drawn scrutiny from antitrust enforcers over its vast reach.

Now one of the world's biggest companies with its retail, music and video streaming, cloud computing and other services, Amazon is the undisputed leader in e-commerce, although not quite as dominant as previously believed.

eMarketer recently revised down Amazon's share of US online commerce to 37.2 per cent from a prior estimate of 49 per cent, following data released in Chief Executive Jeff Bezos's shareholder letter on third-party sales on the platform.

Still, eMarketer said it expected the number of US households that subscribe to Prime to jump 8.6 per cent this year to 65 million — meaning more than half of American homes will be on the programme.

"Prime membership is the fulcrum on which Amazon's commerce flywheel spins," Lipsman said.

Lipsman said Amazon is facing more competition around Prime Day but has been successful in using the event to underscore the value of the subscription programme and promote its smart speakers, media and other offerings.

"Amazon typically gains significant market share during the event," he said.

PARIS — France on Thursday became the first major economy to impose a tax on digital giants, with parliament passing the legislation in defiance of a probe ordered by President Donald Trump that could trigger reprisal tariffs.

The new law aims at plugging a taxation gap that has seen some internet heavyweights paying next to nothing in countries where they make huge profit.

The legislation — dubbed the GAFA tax — an acronym for Google, Apple, Facebook and Amazon — was passed by a simple show of hands in the Senate upper house after previously being passed by the national assembly lower chamber.

But the French move drew an angry response from Trump even before the legislation was passed, with the president ordering an investigation that the French economy minister said was unprecedented in the history of French-US relations. 

The law will levy a 3 per cent tax on total annual revenues of the largest tech firms providing services to French consumers.

“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” US Trade Representative Robert Lighthizer said in a statement.

But French Economy Minister Bruno Le Maire France rejected the US reaction on Thursday, saying “threats” were not the way to resolve such disputes.

“Between allies, I believe we can and must resolve our differences in another way than through threats,” he told the French senate ahead of the vote.

“France is a sovereign state and it alone decides on its taxation mechanisms and it will continue to do so,” he said.

Unfair trade practices? 

Le Maire said he was warned about the so-called Section 301 investigation during a “long conversation” with US Treasury Secretary Steven Mnuchin on Wednesday, saying it was the first time such a step had been taken in the history of French-US relations.

This type of investigation is the primary tool the Trump administration has used in the trade war with China to justify tariffs against what the United States says are unfair trade practices.

The measure was initially adopted by the lower house on July 4.

Last month, top G-20 finance chiefs meeting in Japan agreed there was an urgent need to find a global system to tax Internet giants like Google and Facebook but clashed over how to do it.

But they welcomed a set of proposed measures laid out by the Organisation for Economic Co-operation and Development, a forum for advanced economies.

“We will redouble our efforts for a consensus-based solution with a final report by 2020,” they said in a statement.

Washington has been pushing through the G-20 for an overarching agreement on taxation.

Such a move is supported by Google which believes it would mean Silicon Valley tech giants would pay less tax in the US and more in other jurisdictions, in a departure from the longstanding practice of paying most taxes in a company’s home country.

The section 301 investigation, which is being run by the US trade representative’s office, has said it will hold hearings to allow for public comment on the French tax issue for several weeks before issuing a final report.

The move was applauded by the Computer & Communications Industry Association (CCIA) which said the French law would retroactively require US internet giants to turn over a percentage of their revenues from the start of 2019. 

“This is a critical step toward preventing protectionist taxes on global trade,” CCIA official Matt Schruers said in a statement, calling on France “to lead the effort toward more ambitious global tax reform, instead of the discriminatory national tax measures that harm global trade”.

DOHA — The US and Qatar have agreed a raft of contracts worth billions of dollars during a visit to Washington by the Gulf state's emir, including an $8 billion deal on a petrochemical project.

Qatar Petroleum and US energy giant Chevron Phillips Chemical inked the deal to develop a "world class" petrochemical plant in the US Gulf Coast region, Doha's state-owned petroleum company said on Wednesday.

Qatar's Energy Minister Saad Al Kaabi and Chevron Phillips Chemical head Mark Lashier signed the agreement on Tuesday at the White House.

US President Donald Trump and Sheikh Tamim Bin Hamad Al  Thani attended the signing ceremony held in front of US flags and the Qatari colours, according to an image published by Chevron Phillips Chemical.

The plant, scheduled to be onstream in 2024, will boast the world's largest ethylene cracker with a capacity of 2 million tonnes per year, Qatar Petroleum said.

Trump and Sheikh Tamim reiterated their "commitment to further advancing the high-level strategic cooperation between our two countries", according to a joint statement carried on Wednesday by Qatar's official QNA news agency.

"We discussed our extensive and increasing economic partnership, including these mutually beneficial transactions," they said.

Sheikh Tamim, who arrived in the US on Monday, also met with Treasury Secretary Steven Mnuchin and National Security Adviser John Bolton, according to Qatari state media.

Qatar's defence ministry has committed to acquiring advanced surface-to-air NASAM and Patriot missiles made by US arms manufacturer Raytheon, the statement said, without providing further details.

National carrier Qatar Airways will purchase five Boeing 777 freighters and large-cabin aircraft from US business jet maker Gulfstream Aerospace, it added.

The airline Tweeted an image of its chief executive Akbar Al Baker and Boeing chief executive Kevin McAllister signing the deal as Trump and Sheikh Tamim looked on.

"The US and Qatar are partners, allies, and friends. We look forward to continue that friendship, for the prosperity and happiness of our two peoples," Sheikh Tamim Tweeted.

PARIS — France announced on Tuesday it would impose new taxes on plane tickets of up to 18 euros per flight, joining other EU states seeking to limit the environmental impact of air travel.

The government said that the funds from tickets for flights originating in France would be used to create less-polluting transport options as concerns grow about carbon emissions from planes.

The move, which will take effect from 2020, will see a tax of 1.5 euros ($1.7) imposed on economy-class tickets on internal flights and those within Europe, Transport Minister Elisabeth Borne said.

It will rise to 9 euros for within the European Union in business class, three euros outside the EU in economy class and a maximum 18 euros for flights outside the European Union in business class, she added.

The new measure is expected to bring in some 180 million euros a year which will be invested in greener transport infrastructure, notably rail, she said. 

"France is committed to the taxation of air transport but there is an urgency here," she said.

It will only be applied on outgoing flights and not those flying into the country, Borne added.

Flights to the French Mediterranean island of Corsica and also the French overseas departments — which are hugely dependent on air links for their existence — will be exempt, she said.

'Penalise competitiveness' 

Shares in Air France fell sharply, down almost 4 per cent to trade at 8.54 euros. Its German competitor Lufthansa also traded lower with its shares falling 2.50 per cent to 14.8 euros.

Air France slammed the measure, which it said would "strongly penalise its competitiveness" at a time when it needed to invest, notably in renewing its fleet, to reduce its carbon footprint.

A similar tax was introduced in Sweden in April 2018, which imposed an added charge of up to 40 euros on every ticket in a bid to lessen the impact of air travel on the climate.

Sweden has seen the development of a movement called "flight shaming" (flygskam) spearheaded by 16-year-old schoolgirl Greta Thunberg who has become a symbol of the fight against climate change.

The industry has been under fire over its carbon emissions, which at 285 grams of CO2 emitted per kilometre travelled by a passenger far exceed all other modes of transport.

Road transportation follows at 158 and rail travel is at 14, according to European Environment Agency figures.

"The sector is under considerable pressure," Alexandre de Juniac, the chief executive of the International Air Transport Association (IATA), admitted at a meeting of the industry body in June.

‘Won't deter from flying' 

So-called ecotaxes have met with heavy criticism from the IATA.

It argues that the effectiveness of such taxes is "doubtful" and said "no government that introduced a ticket tax has been able to demonstrate that such tax reduced CO2 emissions".

The industry is already subject to the EU carbon emissions trading system and, from 2020, to a new global mechanism called the Carbon Offsetting and Reduction Scheme for International Aviation. 

Andrew Murphy, aviation expert with the NGO Transport & Environment in Brussels which presses for cleaner transport, said that the tax was far from unique in Europe with similar measures in Britain, Germany, Norway, Italy, as well as Sweden.

"I don't think that because there is a 18 euro tax it will deter anyone from flying," he told AFP. "It will have some minor impact on demand."

French President Emmanuel Macron is seeking to cast himself a champion of the fight against climate change and ensuring that the 2015 Paris accord on fighting global warming is respected.

He went into this month's G-20 summit in Japan declaring that climate change was a "red line" and emerged with a statement from 19 of its members endorsing the Paris agreement — but without the United States after President Donald Trump pulled out of the agreement in 2017.

Macron is aware he needs to tread carefully on climate issues after rising fuel taxes — which aimed to help France meet its Paris climate accord goals — helped spark the yellow vest street protests against his government last year.