Airlines attack green taxes: “They do not help reduce C02”

The Ministry of Finance has advanced its intention to establish a new excise tax on air transport to combat CO2. With this measure, Spain joins the group of European countries led by the Netherlands, France, Belgium or Germany that have announced strong tax increases to discourage the use of the plane and, by extension, reduce emissions. The proliferation of this type of unilateral taxes has put on alert the large airlines of the Old Continent, which see these initiatives as a detriment to passengers and not a way to reduce the consumption of fossil fuels.

“I have lost count of the number of taxes that have been passed with the excuse of sustainability and there are none that are serving to decarbonize the industry or to make it more efficient. We are not afraid of taxes or fees, we pay a lot, but we want them to serve to decarbonize the sector, not to make it fly less. Not to make flying more expensive,” said Johan Lundgren, CEO of easyJet, during the press conference organized by Airlines For Europe (A4E) in Brussels to demand the implementation of the Single European Sky and that ended up revolving around the proliferation of the coronavirus and its impact on the sector.

“Rates are the wrong way forward. It is better to invest in new technologies and the development of sustainable fuels. Fees have done nothing for European passengers in the last 20 years,” said Michael O’Leary, CEO of Ryanair. “There is a lot to do and the fees do not help reduce CO2,” said Lufthansa’s first sword, Carsten Spohr.

Thus, the first swords of the big European airlines attacked the so-called green taxes because they are not being used to help the industry invest in new technologies, such as the electric plane, or to promote the development of sustainable fuels that allow reducing emissions by up to 85%. “In 2019 IAG paid 967 million euros in taxes and not a penny went to reduce CO2 emissions. We have to invest in these projects,” said the still CEO of the airline holding company.

Among the alternatives that firms such as Lufthansa, Air France or IAG propose to curb emissions, the Single European Sky is the first on the list just with the establishment of a true single market in aviation, which includes ending unilateral taxes and rethinking the entire tax system. “We have a very fragmented and very inefficient airspace. It’s the same air traffic control system as it was 40 years ago and the planes have improved a lot. We have invested billions in new technologies and we are forced to fly around Europe like 40 years ago, when we had very rudimentary technology. We need action. Real progress must be made to implement the single European airspace,” Walsh said.

And, according to the latest calculations of the air sector, flying in a straight line in Europe would help reduce emissions by 10% per year, which implies about 25 million tons of CO2. In turn, it would eliminate inefficiencies, delays, flight cancellations and unnecessary fuel consumption, which would allow companies to have more funds to invest alternatives and advance in the renewal of fleets, which already allow fuel savings of 25%.

Save 37,000 million

At this point, the big airlines argue that the full implementation of the European single aviation market will save the economy 37,000 million euros a year, almost half (17,000 million) only with the implementation of the Single European Sky. The rest of the points that, they say, weigh down the system are unilateral taxes, which “distort the internal market of the EU creating disadvantages”, the “ineffective regulation and application” of airport taxes and border controls. The elimination of all these points would generate savings of about 19,700 million euros.

The other leg that airlines for Europe’s partner companies are betting on is the approval of legislation to promote the development and consumption of sustainable aviation fuels and the implementation of investment and incentives for technologies and innovations for decarbonization.

“By 2050 we will have new C02 emission-free technologies available for the aviation sector within the EU. We must focus on the electrification of aircraft. Two years ago it was said that it was not possible to have electric aircraft and now there are more than 200 projects in development. This technology is called to change the conditions of play in the sector and we need the EU to promote policies that support its development. We pay more and more taxes even though our emissions are falling and we are more efficient. We need a new regulation for taxes that allows us to invest in new technologies,” said easyJet’s CEO.

Lufthansa’s Spohr pointed to alternative fuels as the shortest-term solution. “We must bet on the development of sustainable fuels. They are a great opportunity to decarbonize our sector. Governments must bet on policies focused on the development of biofuels. These are real measures that will impact the environment more than aviation taxes or airline money,” said the senior executive.

Source: The Economist