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A guide to France’s aviation eco tax

In 2019 it was announced that France would introduce a new eco tax on flights from French airports, which was thought to raise around EUR 180 million annually. France’s former Minister of Transport, Elisabeth Borne, stated that the monies raised would be used to fund less polluting transport. It was also predicted that the changes would have little effect on passenger demand.

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However, during September 2020, the French government proposed to tighten eco measures even further during a Citizens Convention for Climate (CCC) meeting, which has been met with mixed responses.

Green taxes

It was initially proposed in 2019 that flights from French metropolitan airports would be taxed at EUR 1.50- EUR 18 depending on the ticket price and class.

Other European countries are expected to introduce similar green taxes, with the UK, Germany and the Netherlands leading the way. In addition, a policy could be agreed across the European Union in future in a bid to cut carbon emissions, which are a major cause of greenhouse gases. The EU aims to be carbon-neutral by 2050 and says aviation is one of “the fastest-growing sources of greenhouse gas emissions.”

However, the CCC has since proposed for aviation eco tax to be raised between EUR 30 – EUR 400 depending on the length of the flight and ticket class. Whilst the proposal has been heavily criticised, it’s thought that this higher rate of eco tax could raise around EUR 4.2 billion per year.

Little impact on demand?

During the 2019 eco tax announcement, travel experts predicted there would be little impact on travel demand in France and pointed out that UK passenger taxes were already higher.

However, 2020’s eco tax proposals were met with great frustration by the aviation industry, particularly as travel and tourism has already suffered immensely as a result of COVID-19, with significant reductions in passenger demand.

The Directorate General for Civil Aviation predicted that higher eco tax rates could cut passenger demand by 14-19%. France’s current Transport Minister, Jean-Baptise Djebbari, also stated that the tax increase would have disastrous consequences for France’s aviation industry and that the aim should not be to travel less but make travel less polluting.

Fare increases

In 2019, it was stated that charges for economy domestic flights and those within Europe to start at EUR 1.50 with EUR 9 charged for business class. Passengers travelling outside Europe were to pay EUR 3 more for economy tickets and EUR 18 for business class.

The CCC proposed in 2020 that EUR 30 should be charged for economy flights under 2,000 km and EUR 60 for economy flights over 2,000 km. It was also proposed that EUR 180 should be taxed for business flights under 2,000 km and EUR 400 for business flights over 2,000 km.

A response to ecological urgency

Elisabeth Borne stated during the 2019 eco tax proposal that, “with the eco-contribution, air transport will play its part in financing the daily transport of all our citizens.” The measure “is a response to the ecological urgency and sense of injustice expressed by the French.”

Eco tax is incomprehensible, says Air France

However, Air France had a similar response to Jean-Baptise Djebbari and said the eco tax is “incomprehensible”, “extremely damaging” and will hit its international competitiveness.

“This tax represents extra costs of more than €60 million per year for the group. France is already one of the countries that taxes airline transport the most in Europe.”

8.5m Britons visit France each year

It is estimated that around 153,000 Britons live in France, according to the latest figures from the UK government and around 8.5 million UK citizens visited France in 2018.

Holland plans its own eco tax

The Netherlands is also making moves to introduce a similar tax on flights from Dutch airports in 2021. It plans to charge each adult passenger EUR 7.45 extra.  In June, it hosted a conference on carbon pricing and aviation taxes. Delegates were told that taxing airline fuel in Europe would cut emissions by 11% and would have no net impact on jobs or the overall economy, according to one study.

Germany may increase aviation tax

Germany already has a green aviation tax, which charges from EUR 7.50 for domestic and other short flights to EUR 42.18 per passenger for long flights, but Environment Minister, Svenja Schulze, has called for an increase in fees to help cut CO2 levels.

‘Fair CO2 price for air traffic’ needed

“I believe that air traffic must also bear the costs of greenhouse gas emissions and that this must be reflected in airfares. This is why we also need a fair CO2 price for air traffic.”

Flying is often ‘too cheap’

Ideally, a Europe-wide solution should be found, but, meanwhile, Germany should take measures itself. She explains, “Flying is cheap, often too cheap. It cannot be that a train journey within Germany is more expensive than a flight. Air traffic must be priced more reasonably. This would require an appropriate Europe-wide price for kerosene or a Europe-wide ticket tax.”

Airplane-at-Airport-London-Heathrow-Halo-Financial

UK considers voluntary green tax

At the same time, the UK is looking at a plan for a voluntary tax on plane tickets to cut greenhouse gas emissions. However, passengers would have to opt out to not pay the carbon offset charge. In Britain, however, a similar tax might also be added to trains, buses and ferry flares.

Air Passenger Duty to rise again

UK Air Passenger Duty currently starts at GBP 13 for Band A passengers and rises to GBP 538 for Band B, but it is scheduled to rise again from April 2021.  Long-haul rates are set to rise by GBP 2 for Band B reduced rate passengers and GBP 4 for Band B standard rate and GBP 13 for Band B higher rate passengers.

Funding tree planting

The UK government is committed to cutting greenhouse gas emissions to almost zero by 2050. The UK’s former Transport Secretary, Chris Grayling, said, “an offsetting scheme could help inform travellers about how much carbon their journey produces and provide the opportunity to fund schemes, like tree planting, to compensate for those emissions.
“However, our focus remains to target the development, production and uptake of zero-emission technology across all modes of transport.”

Call for UK to cut Air Passenger Duty

However, the International Air Transport Association (IATA) has called on the UK to cut Air Passenger Duty to ensure the aviation industry remains competitive and jobs are protected.

UK has highest duty in the world

The UK has the highest Air Passenger Duty in the world and charges the most out of 148 nations for the level of passenger and airport charges and taxes, says the IATA. Up to 120,000 jobs are at risk if the industry is disregarded, it claims.

Air industry ‘must be nurtured’

Rafael Schvartzman, IATA’s Regional Vice President for Europe, says, “as an island, the UK is uniquely dependent on air transport in order to connect itself to the world. It is no coincidence that the UK ranks very highly for the strength of its route network. This network—and the 1.6 million jobs that depend on aviation—cannot be taken for granted.

“If the industry is not nurtured, as many as 120,000 jobs could be lost. On the other hand, the tremendous economic and social benefits of aviation could be enhanced if the government adopts policies to strengthen the industry’s competitiveness.
“The chief priorities must be to increase airport capacity, cut APD, the world’s highest air passenger tax, and improve the visa and border process.”

New AITA report

The IATA has launched a new report, United Kingdom Air Transport Regulatory Competitiveness Indicators, which recommends the reduction or abolition of APD to increase the viability of new connections and industry growth.

Airline clients ‘unfairly targeted’

Ryanair chief executive, Michael O’Leary, who chairs the A4E (Airlines for Europe) campaign group, says airlines were being unfairly targeted, as shipping created double the carbon emissions of planes. “We are paying, on behalf of our customers, a penal level on aviation taxes.”

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