Airline groups have reacted angrily to proposals from several European states to tax aviation fuel in order to raise money to aid developing nations in Africa
The idea, first floated earlier this year by French president Jacques Chirac, was taken up by Germany at the G7 meeting of finance ministers from the world's major powers in February. European Union (EU) finance ministers are preparing to take the issue further with a study into the taxation suggestion.
IATA says it is "deeply concerned" by the proposals, and argues that penalising an industry that plays a critical role in economic development in many countries is not the way forward. "These are serious problems requiring serious, considered and well-coordinated international action," IATA says of the need to assist poorer countries. "Whimsical proposals that hurt one of the largest contributors to growth are simply not the answer."
"Of course we applaud humanitarian initiatives, but why target the airlines?" asks Ulrich Schulte-Strathaus, secretary general of the Association of European Airlines (AEA). "If the ministers were sincere about helping developing countries they would be asking themselves how they could encourage, and not discourage, travel and tourism into these regions." Sylviane Lust, director general of the International Air Carrier Association that represents leisure carriers, says: "The airline industry is not taxed, but is the only mode of transport that fully finances the infrastructure used on the ground and in the air. This taxation initiative would further jeopardise the competitiveness of EU carriers and hinder the role of airlines as catalysts of economic growth."
According to the European Commission: "If a solution like the taxation of fuel is adopted, it is important to make sure that it will not be a hindrance to the competitiveness of airlines."
The new proposals are separate to ideas at European and ICAO levels around fuel taxation relating to the issue of how to reduce the air transport industry's contribution to greenhouse gas emissions. Some are baffled about the motives for the new proposals. "If the aim is truly to levy new forms of aid to poor countries, then surely a more profitable source of revenue should be the target of an EU-wide tax," says Ray Webster, chief executive of easyJet. "If the agenda is an environmental one, then emissions trading or real environmental charges along the line of the polluter pays principle are far more effective than a tax on airline fuel."
As an alternative to fuel taxes, there is growing industry backing in Europe to include air transport in an emissions trading scheme. This comes into effect from the start of next year and sets emission levels for "energy intensive" industries, allowing those reaching below the set levels to trade their excess capacity to other states which are not hitting the targets. Such schemes are already supported by British Airways, and may be supported by the AEA too.
MARK PILLING LONDON
Source: Airline Business
