US airlines attack Germany’s planned air ticket tax

Germany's plan to tax international flights has provoked the ire of US airlines. [Photo: douglasmack / Shutterstock]

A group of US airlines has insisted that Germany’s plan to tax air tickets undermines a UN agreement on offsetting emissions from international aviation, a line of argument that is also casting doubt on the EU’s flagship emissions trading scheme (ETS).

Airlines for America (A4A), an interest group that represents US carriers American, Delta and United, wrote to the European Commission last week to express its concerns over the German government’s new climate plan.

Angela Merkel’s government wants to increase taxes on passenger tickets, both domestic and international, in order to reduce VAT on train tickets. The Bundesrepublik’s plan could net three-quarters of a billion euros, €500 million of which would be spent on its railways.

But A4A says this plan is illegal, violates the EU’s aviation agreement with the US, and undermines the UN’s proposed carbon offsetting and reduction scheme for international aviation (CORSIA).

“The cross-subsidisation of the railways at the expense of the airlines violates the US-EU Air Transport Agreement,” writes A4A president Nicholas Calio in his letter to Henrik Hololei, the head of the European Commission’s transport directorate (DG MOVE).

“The burden on international aviation in this way is unnecessary and counterproductive for reducing emissions,” adds the letter, first reported by German newspaper Die Welt.

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Germany’s Greens plan to make domestic flights ‘largely obsolete’ by 2035. To this end, they want to introduce a tax on kerosene and gradually increase rail traffic. The EU, however, is far from finding a solution on how to tax air travel. EURACTIV Germany reports.

Germany’s carriers are also opposed to the plan.

“We do not believe this additional tax revenue will contribute to the nation’s or the industry’s climate goals. It will reduce German airlines’ financial resources to invest in new technologies and fleet,” said airline group BDL.

A spokesperson for Cologne airport said the increase will only benefit the Benelux countries, whose airports “will be very happy to accommodate German passengers fleeing this increased airline tax”.

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The next European Commission should make curbing aviation emissions a priority in its work programme for the next five years, according to lawmakers at a special summit on Thursday (20 June) dedicated to taxing flights.

Stay the CORSIA

Calio also claimed that Germany’s plan is “problematic” because it undermines CORSIA, which UN members agreed in October will be the only global emission offsetting option to be used for international flights.

Commission officials told EURACTIV that DG MOVE had received the letter and that the services are currently analysing its content but refused to be drawn on Germany’s tax plan, which is still only in its draft form.

Final approval is still needed from lawmakers. If supported, the new measures would come into force in April 2020.

The EU executive and member state delegates faced criticism in October for allegedly failing to defend sufficiently the bloc’s flagship climate policy tool, the ETS, at a meeting of the International Civil Aviation Organisation (ICAO) in Montreal.

UN agency vote complicates EU’s aviation emission efforts

The International Civil Aviation Organisation (ICAO), a United Nations agency, decided on Friday (4 October) to press ahead with plans to make its emissions offsetting scheme the only global option available to its 193 member states, teeing up a dilemma regarding the EU’s own system.

UN members signed up to an agreement on CORSIA that has cast doubt on the EU’s capacity to regulate international aviation emissions at its own discretion, an issue that has now been confirmed by the A4A letter.

But the Commission told EURACTIV that ”the EU confirmed its commitment to implement CORSIA [at Montreal] but also preserved its policy space to pursue a higher climate ambition in the EU.”

A spokesperson added that “not a single state explicitly challenged the ETS or the European right to go beyond the international system CORSIA in the EU. The adopted Assembly Report confirmed this.”

The offsetting scheme enters its trial phase in 2021 and is meant to go fully live in 2027. A review of the ETS will be conducted between those two key dates, in 2024.

CORSIA and the ETS differ in that the UN scheme will obligate polluters to pay into offsetting programmes around the world that should compensate for the amount of emissions produced by airlines. These include but are not limited to reforesting schemes.

Meanwhile, the ETS is a carbon market, where a fluctuating price dictates how much emitters must pay. Currently trading at around €25 per tonne, climate experts insist that a price nearer to €50 will be needed to provoke significant change in polluting industries.

[Edited by Frédéric Simon]

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