Bailout airlines but only if they start paying tax and using cleaner fuels

March 19, 2020

EU governments considering airline bailouts have been told they must make financial aid conditional on carriers starting to pay tax once conditions improve and taking up green technology.

This week transport ministers held an emergency meeting by video conference to discuss measures to protect the aviation sector hit by a near total shutdown of flights in Europe. To slow the spread of the Covid virus, the EU has banned all non-EU nationals from visiting the Schengen area for at least 30 days, while many governments have stopped non-essential travel to other EU countries.

T&E said financial support must be prioritised for the paychecks of the thousands of workers in the aviation sector whose jobs are endangered. But taxpayers’ money to airlines should only be approved if countries ensure they will later start to pay tax and contribute to severely strained public coffers.

Carriers have long been exempt from fuel taxation and VAT on international flights in Europe. Their jet fuel tax exemption is valued at €27 billion a year. They have also been slow to use cleaner fuels such as synthetic kerosene and waste-based biofuels.

T&E’s aviation director, Andrew Murphy, said: ‘Airlines calling for taxpayers’ money in bad times should accept they need to start paying taxes in good times. EU governments should make airline bailouts conditional on carriers paying fuel, ticket and other taxes once the crisis has passed.

‘They should also require airlines to start using low-carbon fuels once conditions improve. Public money should support the technologies of the future to help combat the next looming global crisis, climate change, and not reinforce the mistakes of the past.’