European countries could agree bilaterally to tax airlines after EU uncertainty

An EU-wide tax on aviation remains uncertain following December’s meeting of EU finance ministers in Brussels. The new European Commission wants to tackle emissions from aviation as part of its ‘European Green Deal’ by ending the fuel tax exemption enjoyed by airlines. But while several member states expressed support for ending this exemption, Greece, Cyprus and Malta sounded notes of caution. T&E says a series of bilateral agreements among member states to tax kerosene should be the next step.

While aviation fuel has been exempt from tax since before the Chicago Convention on international air travel was agreed in 1944, the convention does not ban countries from taxing aviation fuel. Many states, including the US and Japan, tax domestic jet fuel. In Europe, measures to charge for aviation’s environmental impact have been of limited scale; some national governments have levied ticket taxes, and the EU operates emissions trading for intra-EU flights.

EU finance ministers meeting on 5 December discussed addressing fuel tax exemptions included in the Energy Taxation Directive from 2003. However, despite several member states already expressing support for ending this EU-wide exemption for airlines, Greece, Cyprus and Malta continued to voice their reservations on ending jet fuel’s favourable treatment. As EU tax laws require unanimous agreement, an end to airlines’ EU-wide fuel tax exemption is uncertain, and even if it is proposed by the European Commission, it could take several years of negotiations before being adopted.

T&E aviation manager Jo Dardenne said: ‘The countries already willing to end aviation’s tax holiday mustn’t be held back by a few member states. The urgency of climate change means such delays would be unacceptable. The progressive countries should now agree among themselves to tax aviation bilaterally, which could bring in over €2 billion and save 2 million tonnes of CO2. The work towards an EU-wide tax can continue in parallel.’

T&E recently called for the non-CO2 climate impacts of aviation to play a more prominent part in discussions about the role of air transport in the European Green Deal, in order to reflect aviation’s full effect. The IPCC Fourth Assessment estimated aviation’s total climate impact at two to four times that of its past CO2 emissions alone, a result of aircraft at altitude generating significant additional climate warming. Yet the willingness of the European Parliament to approve taxation covering aviation’s full environmental impact has not led to any legislation at EU level.

[bullet] T&E has criticised EasyJet’s decision to offset all emissions from its flights. T&E aviation manager Jo Dardenne said the low-fares airline’s move was an admission that the aviation sector has a serious climate problem, and will do nothing to make the air transport industry face up to its environmental impact. ‘Airlines paying others so that they can go on polluting is not a solution to aviation’s climate problem,’ she said. ‘Governments need to step up and regulate aviation’s climate impact by ending the sector’s tax privileges.’