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Taxation counter-productive to aviation industry -IATA

Joseph Oyekanmi

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Taxation counter-productive to aviation industry -IATA

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 (EU) ‘Fit for 55′ proposal is counter-productive to the goal of sustainable aviation.

The EU policy seeks to support practical emission reduction measures such as incentives for Sustainable Aviation Fuels (SAF) and the modernisation of air traffic management.
In an interview, IATA’s Director-General and Chief Executive Officer, Willie Walsh said though the aviation sector is committed to decarbonisation as a global industry, operators and countries need persuading, or punitive measures to motivate change.

He said the industry needs to rethink its position on taxation.

“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.
Achieving aviation decarbonisation, he said, requires a combination of measures.
: “These include Sustainable Aviation Fuels, which reduce emissions by up to 80 per cent compared to traditional jet fuel. Insufficient supply and high prices have limited airline uptake to 120 million litres in 2021-a a small fraction of the 350 billion litres that airlines would consume in a ‘normal’ year.

He added that Market-based measures to manage emissions until technology solutions are fully developed were also relevant.

Walsh argued that The industry supports the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as a global measure for all international aviation and that further schemes may lead to multiple taxations.

“It also 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.”

He recommended Mandating a gradual transition to SAF is a less efficient policy compared to comprehensive production incentives, but it may contribute to making SAF more affordable and widely available in Europe, but only under the following key conditions.

“It is accompanied by policy measures to ensure a competitive market and appropriate production incentives. The mandated use of SAF must not allow energy companies to engage in uncompetitive practices with the resulting high costs being borne by airlines and passengers.”

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