Airlines slam EU air tax findings

Leading airlines hit out at a European Commission study suggesting a 10% aviation tax be added to air fares in Europe to cut aircraft emissions.

The study on ‘Taxes in the Field of Aviation and their Impact’ was published on Thursday

The Airlines for Europe (A4E) group, which includes Ryanair, easyJet, Lufthansa, Air France-KLM, and British Airways and Iberia-owner IAG, dismissed the report as “simplistic” and claimed it “does not accurately reflect the negative impact such taxes have on the economy”.

The report, which was leaked last month, suggests an EU-wide tax could cut emissions by 11% with no real impact on jobs or the economy.

It estimates that applying a tax on jet fuel of €330 per 1,000 litres would raise fares by 10% and reduce passenger numbers by 11%.

The report conceded a tax would cut jobs in the sector but said it would have little overall impact on European employment rates.

European rules currently allow member states to tax aviation fuel (kerosene) for domestic aviation, although none do.

The report explores applying a levy on the fuel aircraft take on board at a destination to get around a prohibition on aviation tax on international flights.

The Transport and Environment federation has pointed out the 1944 agreement which prohibits aviation fuel taxes “does not explicitly prohibit the taxation of jet fuel, only the taxation of fuel on board an aircraft upon arrival from another state”.

The EC report suggests member states could develop bilateral agreements to tax the fuel taken on at destination airports.

Dutch finance minister Menno Snel raised the idea of an EU-wide aviation tax at a finance ministers’ meeting in February and the Netherlands will host an international conference on carbon pricing and aviation taxes on June 20.

The finance ministers of 11 EU member states, including the UK, Germany, France and the Netherlands, joined a Coalition of Finance Ministers for Climate Action in April.

In a statement, A4E said: “The study assumes an 11% decrease in passengers would lead to a corresponding 11% decrease in flights and hence 11% fewer CO2 emissions. Yet recent studies found aviation taxes have a limited effect on reducing emissions.

“A number of so-called ‘green taxes’ introduced in member states have not helped to reduce emissions or been used to fund environmental initiatives.”

It argued: “The study incorrectly assumes job losses in the aviation sector would be compensated by new jobs in other sectors. The fact is, 600,000 highly specialised jobs cannot be easily replaced.

“The report also fails to account for shifting CO2 emissions to other transport modes or countries.”

A4E added: “A tax study which excludes the EU Emissions Trading Scheme (ETS) is remarkable. Aviation is currently the only transport sector that is part of the ETS scheme.”

Thomas Reynaert, A4E managing director, insisted: “Taxing passengers or flights will not cut emissions.”


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