IATA: Additional Taxes Will be Counterproductive to Airline Sustainability

The International Air Transport Association (IATA) has released a report and statement detailing how the EU’s taxes on jet fuel will destroy jobs and not push the industry towards carbon neutrality.

According to the report, new taxes will reduce investment into the airline industry, ultimately making them counterproductive to Europe’s Fit for 55 initiatives.

“Aviation is committed to decarbonization as a global industry. We don’t need persuading, or punitive measures like taxes to motivate change. In fact, taxes siphon money from the industry that could support emissions’ reducing investments in fleet renewal and clean technologies. To reduce emissions, we need governments to implement a constructive policy framework that, most immediately, focuses on production incentives for SAF and delivering the Single European Sky,” said IATA’s Director General, Willie Walsh.

Instead, the IATA is proposing a more comprehensive and constructive approach to encourage research and development, rather than punish the industry, its workers, and paying passengers. The approach detailed in the report includes the following:

  • Sustainable Aviation Fuels (SAF): these fuels can reduce emissions by up to 80% compared to traditional jet fuel. Insufficient supply and high prices of SAF, however, have limited airlines’ consumption of these fuels in place of traditional jet fuel, and new taxes will limit consumption further.
  • Market-Base Measures:  the airline industry in Europe supports initiatives to reduce emissions. However, measures taken like the EU Emissions Trading Scheme will likely undermine international cooperation. Further, overlapping schemes can often cause emission credits being paid for more than once, further pushing the financial burden on industry operators and consumers alike.
  • Single European Sky (SES): implementing a comprehensive and coordinated air traffic management (ATM) system in Europe would reduce emissions by 6-10% if all other things are left equal. However, there is heavy resistance from individual Member States and little coordination on the EU-level to implement such a policy.
  • Radical new clean technologies: the development of new, green technologies needs to be supported rather than hindered by additional taxes. While hydrogen and electric tech will likely not meet the EU’s goals for 2030, further taxation will slow development even further.

IATA’s main idea is to promote sustainable aviation fuels, as they believe that this is the most practical short-term solution to emissions problems. The EU’s actions have not made SAF cheaper for airlines to purchase. However, the mandates in place do require that airlines increase SAF use to 2% compared to jet fuel by 2025, and 5% SAF use compared to jet fuel by 2030.

By making SAF mandatory to use but not taking actions to decrease its price and adding additional taxes, the EU’s measures will likely not be met with the results they are looking for.

“Making SAF cheaper will accelerate aviation’s energy transition and improve Europe’s competitiveness as a green economy. But making jet fuel more expensive through taxation scores an ‘own goal’ on competitiveness that does little to accelerate the commercialization of SAF,” said Walsh.

To read IATA’s report, click this link.

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