Newswire

Statement by EU Finance Ministers requesting EU coordination on aviation pricing is full of flaws

Economic measures

A joint statement signed by nine national Finance Ministers requesting EU coordination on aviation pricing is full of flaws. For example, there are important differences between the taxes and charges paid by different transport modes in Europe.

Unlike road transport or railways which receive a significant amount of government subsidies the aviation industry pays for the majority of its infrastructure costs – on top of paying for the majority of its security costs. According to IATA estimates, airlines paid almost €31 bn for the use of airport infrastructure in Europe in 2017. In addition, European aviation has been paying for its emissions in Europe since 2012 via the EU Emissions Trading System (ETS). The price of emission allowances has tripled since 2018. The EU ETS is, in fact already a coordinated economic instrument for aviation carbon pricing. This fact was noticeably absent from the Ministers’ statement.

A European Commission study from June 2019 also showed that the external societal costs of various transport modes were 1.8% for rail, 5% for aviation, 10% for maritime and 83% for road transport. Similarly, CO2 emissions from aviation are dwarfed by emissions from road transport at both EU and global levels.

“It is simply inaccurate to claim that aviation is not taxed at all or that is insufficiently priced. In 2018 alone, European airlines paid more than €5 bn in ETS and environmental taxes. The maritime sector, for example, is also exempt from excise duties and 21 EU Member States grant rail operators a VAT exemption for cross-border travel”, said Thomas Reynaert, Managing Director of Airlines for Europe (A4E).

Sustainable growth is a top priority for European airlines so that aviation can continue to create social and economic value for Europeans. The aviation industry currently supports 9.4 million jobs and contributes €615 billion in EU GDP3 (4.2% of total). The industry is committed to reducing carbon emissions from air transport and has halved its carbon footprint per flight over the past three decades.

Aviation needs a global solution to a global issue. It is the only industry to have a globally agreed mechanism to tackle carbon emissions (CORSIA), which begins in 2021. Through this scheme airlines will be financing climate mitigation projects across the world.

A4E airlines are also investing €169 billion over the next decade in new aircraft technologies and sustainable aviation fuels, which are meaningful long-term solutions. By contrast, aviation taxes are an ineffective way to pursue environmental objectives, especially if the revenues are not used to invest in cleaner aviation technology, such as new generation aircraft, engines or sustainable fuels.

Finally, people living on islands and in countries at Europe’s periphery have no real alternative to flying. 80 per cent of emissions come from journeys of over 1,500 kms. Taxes would undermine the competitiveness of these regions. The industry’s dependency on fossil fuels means that it’s critical that governments support its efforts to decarbonise by providing incentives to accelerate investment in new technologies.

“At this critical juncture, the EU must focus on supporting our efforts to decarbonise and implement effective measures rather than resorting to symbolic gestures such as taxes, which do not have a material impact on carbon reduction. We need a much higher production of sustainable aviation fuels in the coming decades. These fuels, which already exist, could reduce emissions from flying by up to 80%. Last but not least, EU Member States could also do their share by implementing the longoverdue Single European Sky, which could reduce aviation emissions in Europe by up to 10 per cent”, Reynaert added.