The cost of flying in Europe – continent’s largest airlines will be hit with a EUR5 billion bill from environmental taxes and other payments

15 July, 2019

Europe’s largest airlines will pay more than EUR5 billion in national environmental taxes and other payments this year, according to lobbying group A4E. This includes around EUR590 million in expected payments to the EU’s ETS, (+59% vs 2018) which airlines have been a part of since 2013, but in which aviation is still currently the only transport sector which participates.

A4E says its airline membership remains focused on positive solutions with a high potential to lower emissions levels, and says these taxes, which do not necessarily get reinvested back into environmental programmes, could have otherwise been dedicated to support the industry’s decarbonisation efforts.

The group, which includes the likes of Air France-KLM, easyJet, IAG, Lufthansa Group and Ryanair among its membership, is already investing more than EUR169 billion in environmentally-friendly technologies until 2030, including the purchase of around 800 more fuel-efficient aircraft, which have already reduced emissions by 24% between 2005 and 2017. A further EUR1 billion is being invested in the set up of partnerships designed to fast-track the production of sustainable aviation fuels in Europe.

The Blue Swan Daily reported last week on how the French ecological transition and transport minister Elisabeth Borne is introducing a new eco-tax on flights departing French airports from 2020. The tax will range from EUR1.50 per EU economy class ticket up to EUR18 per business class ticket for travel outside of the EU, and will help finance initiatives in other transport sectors, most likely including the expansion of France’s regional and high-speed rail network.

“The claim that airlines are not paying environmental taxes is completely false. This environmental debate has been badly misinformed,” says Michael O’Leary, Chairman of A4E and Ryanair CEO. “More aviation taxes are a knee-jerk reaction that will undermine European competitiveness and particularly hurt the integration and free movement of EU citizens, especially for peripheral and island Member States such as Ireland, Spain, Portugal and the Baltic States, for example.”

Mr O’Leary describes the proposed plans in France, where Ryanair is the *** largest carrier by weekly seats, as a “knee-jerk reaction that will undermine European competitiveness.” He highlights that the LCC paid almost EUR550 million in aviation and environmental taxes in 2018, with passenger duties making up a large part of that – around 10% of passenger fares are environmental taxes.

A4E says EU policy-makers have “missed an opportunity to reduce aviation emissions” by failing to reform the European sky or by making sustainable fuels sufficiently available for aviation, choosing instead to introduce new taxes “which do nothing to make flying more sustainable”.

The lobbying group is calling on EU governments to “recognise and support” airlines’ sustainability initiatives with better research and development opportunities, highlighting the following examples

  • In 2019, airBaltic fully implemented its E-GEN project, which has enabled over 500 high precision approaches across Europe on its Bombardier Q400 NextGen fleet, significantly improving fuel efficiency levels and reducing CO2 emissions.
  • KLM Royal Dutch Airlines has committed itself to the development and purchase of 75,000 tonnes of sustainable aviation fuel per year for the next 10 years, starting in 2022. It will reduce KLM’s CO2 emissions by 200,000 tonnes per year (the equivalent emissions of 1,000 KLM flights between Amsterdam and Rio de Janeiro).
  • British Airways is building a plant with renewable fuels company, Velocys, to convert organic household waste into renewable jet fuel to power its fleet. It will start operations in 2024.
  • Ryanair is purchasing 200 x B737 in next 5 years (value more than EUR20 billion), reducing emissions by 16% per seat.
  • The Lufthansa Group has pledged to become 100% carbon-neutral for all ground operations in Germany, Austria, and Switzerland by 2030.
  • easyJet has a partnership with Wright Electric who are working to develop an electric aircraft with the intention that it will be viable for short-haul routes in Europe by 2030.

In addition to airlines’ own emission-reduction efforts, A4E says that from 2020 the United Nations’ global aviation carbon emissions reduction scheme, CORSIA, will result in the mitigation of around 2.5 billion tons of CO2 between 2021 and 2035, with airlines paying to offset their emissions by investing in climate-friendly projects. Currently, 80 states representing 77% of international aviation activity have voluntarily signed up to CORSIA – and more than half of these are European.