BusinessHow Emission Tax is Killing Global Aviation Industry

How Emission Tax is Killing Global Aviation Industry




July 25, (THEWILL) – The International Air Transport Association (IATA) has warned that the reliance on taxation as the solution for cutting aviation emissions in the European Union’s ‘Fit for 55’ proposal is counter-productive to the goal of sustainable aviation.

IATA is of the view that EU policy needs to support practical emission reduction measures, such as incentives for Sustainable Aviation Fuels (SAF) and modernisation of air traffic management.

Commenting, IATA’s Director-General, Willie Walsh, said that aviation is committed to decarbonisation as a global industry.


According to Walsh, IATA does not need persuasion or punitive measures in the form of taxes to motivate change, stressing that taxes siphon money from the industry that could support emissions’ reducing investments in fleet renewal and clean technologies.

To reduce emissions, Walsh hinted that IATA needs governments to implement a constructive policy framework that, most immediately, focuses on production incentives for SAF and delivering the Single European Sky.

Walsh opined that a comprehensive approach achieving aviation decarbonisation requires a combination of measures which include sustainable Aviation Fuels which reduce emissions by up to 80 per cent, compared to traditional jet fuel.

Walsh also added that insufficient supply and high prices have limited airline uptake to 120 million litres in 2021, a small fraction of the 350 billion litres that airlines would consume in a ‘normal’ year.

Noting that there should be market-based measures to manage emissions until technology solutions are fully developed, Walsh said that the industry supports the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as a global measure for all international aviation.

“It avoids creating a patchwork of uncoordinated national or regional measures such as the EU Emissions Trading Scheme that can undermine international cooperation. Overlapping schemes can lead to the same emissions being paid for more than once. IATA is extremely concerned by the Commission’s proposal that European States would no longer implement CORSIA on all international flights”.

The DG also pointed out that Modernizing European ATM through the SES initiative would cut Europe’s aviation emissions between six and 10 per cent, but national governments continue to delay implementation.

While it is unlikely that electric or hydrogen propulsion could have a significant impact on aviation emissions within the EU ‘Fit for 55’ timeframe of 2030, Walsh stated that the development of these technologies is ongoing and needs to be supported.

“Aviation’s near-term vision is to provide sustainable, affordable air transport for all European citizens with SAF-powered fleets, operating with efficient air traffic management. We should all be worried that the EU’s big idea to decarbonise aviation is making jet fuel more expensive through tax. That will not get us to where we need to be. Taxation will destroy jobs. Incentivising SAF will improve energy independence and create sustainable jobs. The focus must be on encouraging the production of SAF, and delivering the Single European Sky,” Walsh added.

Canvassing that the most practical near-term solution to reducing emissions is SAF, Walsh added that energy transitions are successful when production incentives drive down the price of alternative fuels while driving supplies up.

“The EU ‘Fit for 55’ proposal does not include direct measures that will achieve this. Without specific measures to reduce SAF costs, it does, however, propose a mandate to increase SAF utilisation to two per cent of jet fuel use by 2025 and at least 5% by 2030.

“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,” Walsh said.

Meanwhile, IATA has equally called on governments to take action to address the high cost of COVID-19 tests in many jurisdictions and urged flexibility in permitting the use of cost-effective antigen tests as an alternative to more expensive PCR tests.

IATA also recommended governments adopt recent World Health Organisation (WHO) guidance to consider exempting vaccinated travelers from testing requirements.

According to IATA’s most recent traveler survey, 86 per cent of respondents are willing to get tested. But 70 per cent also believe that the cost of testing is a significant barrier to travel, while 78 per cent believe governments should bear the cost of mandatory testing.

“IATA supports COVID-19 testing as a pathway to reopen borders to international travel. But our support is not unconditional. In addition to being reliable, testing needs to be easily accessible, affordable and appropriate to the risk level. Too many governments, however, are falling short on some or all of these.

“The cost of testing varies widely between jurisdictions, with little relation to the actual cost of conducting the test. The UK is the poster child for governments failing to adequately manage testing. At best it is expensive, at worst extortionate. And in either case, it is a scandal that the government is charging VAT,” said Walsh.

The new generation of rapid tests cost less than $10 per test. Provided a confirmatory Rrt-PCR test is administered for positive test results, WHO guidance sees Ag-RDT antigen testing as an acceptable alternative to PCR. And, where testing is a mandatory requirement, the WHO’s International Health Regulations (IHRs) state that neither passengers nor carriers should bear the cost of testing.

Testing also needs to be appropriate to the threat level. For example, in the UK, the latest National Health Service data on testing arriving travelers show that more than 1.37 million tests were conducted on arrivals from so-called Amber countries. Just one per cent tested positive over four months. Meanwhile, nearly three times that number of positive cases are being detected in the general population daily.

“Data from the UK government confirms that international travelers pose little to no risk of importing COVID-19, compared to existing levels of infection in the country. At the very least therefore, the UK government should follow WHO guidance and accept antigen tests which are fast, affordable and effective, with a confirmatory PCR test for those who test positive. This could be a pathway for enabling even unvaccinated people access to travel,” Walsh said.

Restarting international travel is vital to supporting the 46 million travel and tourism jobs around the world that rely on aviation. “Our latest survey confirms that the high cost of testing will bear heavily on the shape of the travel recovery. It makes little sense for governments to take steps to reopen borders, if those steps make the cost of travel prohibitive to most people. We need a restart that is affordable for all,” said Walsh.

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