Incentivising companies rather than taxing them is the best way to encourage development of more sustainable aviation, according to a panel of experts.
In a session discussing the future of aviation, the panel was asked if taxing airlines would have a positive or negative effect development of greener technologies like electric aircraft and renewable fuels.
Neil Cloughley, managing director of Faradair Aerospace, which is developing hybrid electric aircraft, said: “I’m a big fan of incentives. You could incentivise the airlines, operators and airports by telling them we will drop your APD (Air Passenger Duty) if they convert to using green fuel.
“You would ask them to do X, Y and Z and audit them but it gives them a reason to work towards it. You are reducing the tax and incentivising them. Passengers will go with those companies [which adopt green practices] because they support what they are doing.”
Angela Foster-Rice, principal at Aerial Consulting and a former United Airlines managing director of environmental affairs and sustainability, said: “There’s a lot we can do on incentives. There is [currently] no incentives for RND (research and development).”
She called for capital investment and said taxing flying “really depends on what those funds are used for”, adding: “There really hasn’t been a good track record of those funds actually supporting technology developments.”
Chris Lyle, chief executive of consultancy firm Air Transport Economics, said “taxation is coming” but called for it to be ringfenced so it will be used to develop cleaner aircraft.
“Not all [tax] should go into the central treasury,” he said. “It should be hypothecated towards Power-to-Liquid fuels. That way you will get the airlines on your side.”
He said Power-to-Liquid electric fuels (PtLs) is the most viable option for renewable aviation but “will cost a lot of money”.
Peter Castellas, chief executive of Tasman Environmental Markets, which is working with Qantas to improve its sustainability credentials, warned that extra tax could lead to airline failures and potential monopolies that would disincentivise clean aviation.
“It’s really important to understand the economic impact rather than just thinking it’s a top-down solution,” he said.
But Justin Francis, chief executive of Responsible Tourism, said a tax was essential and that projects such as carbon offsetting, biofuels and electric short haul aircraft were well-intentioned but not enough.
He said research suggested it will be 2050 before long-haul aviation can be electrified, and pointed out that the timescale is too late to meet the conditions set out by the Paris Agreement on climate change – and the only way to do so is by cutting overall flight capacity.
Francis said billions needed to be invested in RND before it would have any tangible effects and said tax was the only way to raise the capital required.
He added: “I would like to see a fair tax on aviation and the proceeds of that ploughed back into the industry [to be spent on research and development of cleaner aviation].”
Francis suggested the tax be aimed at flyers and based on how frequently they travel, and cited Department for Transport statistics that show 10% of flights taken by English residents are taken by 1% of the population and that the top 10% of frequent flyers account for more than half of all flights.