Ryanair in April became the first airline to be included among Europe’s top ten polluters, with some calling the airline company ‘the new coal’ industry. Large economies like France and Germany have begun seeking impact-reducing alternatives to air travel by imposing new taxes.
On 9 July, France announced that a tax would be applied on all departing air travel, causing share prices of some of the largest airlines in Europe to drop.
Various member states, including Germany and the Netherlands, also have aviation taxes in place or are currently designing them. Countries that depend on tourism revenues, boosted by air travel, are not so keen.
The ultimate goal is to reduce air travel’s environment impact, support alternative greener options and generate an extra €39 billion in profit a year for EU countries, according to some studies. Leading airline companies, including Ryanair, feel that this is not a long-term solution.
In response to the ongoing efforts to discourage European air travel by anti-flying organisations, Ryanair chief executive Michael O’Leary hit back on Wednesday (10 July) explaining that “taxation is a very separate concept from improving the environment”.
“We are sensitive to the criticism that we are getting a free ride on the environment because frankly it is not true,” he told reporters, as he recalled the green taxes that airline companies already pay and the investment in fuel-efficient airplanes.
O’Leary, currently the chairman of Airlines for Europe, an industry group, said that airlines represent only around 2% of global emissions, but they are in the crosshairs of decision makers and environmentalists.
If no further action is taken, emissions are projected to be around 70% higher in 2020 compared with 2005. The International Civil Aviation Organization (ICAO) forecasts that by 2050 they could grow by a further 300-700%.
O’Leary emphasised that, instead of taxing the airlines, the money should be invested into aircraft research and development, exploring issues like biofuels and airplane efficiency. Another longtime demand of the airlines is improving air traffic management for more efficient routing.
He also warned that an increase in taxes will cost European jobs and hinder economic growth, as well as punish consumers with higher ticket prices.
But a leaked European Commission report, first published by the Financial Times in May, concluded that kerosene tax of €330 per thousand litres would cut emissions by 11%, with only a “negligible” impact on employment and the European GDP.
The CEO of International Airlines Group, Willie Walsh, agreed that R&D was needed and said, “this will not be a quick fix, this is a structural issue.”
The green taxes imposed by the French government would apply a charge of up to €18 per flight, with an expectancy to bring in approximately €180 million a year.
The move, which will take effect from 2020, will see a tax of €1.50 imposed on economy-class tickets on internal flights and those within Europe, Transport Minister Elisabeth Borne said. Connecting and arrival flights will be excluded from the tax.
The French government declared that the money accrued from the taxation would be used to further advance less-polluting transport alternatives – city buses, trolleybuses, light rail and ferries.
The German aviation tax is a departure tax on commercial air transport. The amount due per passenger depends on the distance of the biggest commercial airport in the country of destination from Germany’s largest airport, Frankfurt am Main. Prices range from €7.38 to €41.49 per passenger, depending on distance.
The Dutch government has accompanied various other member states in the search for eco-friendly travel substitutes by formulating a plan to introduce air travel tax by 1 January 2021.
The government announced that a European tax on aviation is preferable but has temporarily chosen to draft a national bill that would automatically apply a tax of €7 to all European departing flights.
The bill will, theoretically, act as a safety net in the event that a Europe-wide tax is not implemented. That looks likely, given that tax policy is the sole domain of national governments and changes at EU level require unanimous decisions.
The exact rate under the Dutch plan will be established in the 2021 draft budgetary plan, but the government has anticipated prices to stay below €7.50, taking inflation into consideration.
Dutch State Secretary for Finance, Menno Snel said that, “unlike travel by car, bus or train, international flights from the Netherlands are not in any way taxed by the Dutch government.”
“This is a key reason for introducing a flight tax. It will also close the price gap between plane and train tickets,” he added.
[Edited by Jorge Valero and Sam Morgan]