Trust innovation to improve the airline industry.
Through the European Green Deal, the European Union wants to create a carbon-neutral Europe in the near future. To achieve this goal, the European Commission reverts to many punitive measures, including taxation — used to find subsidisation in other areas. This old-school redistributive thinking is unlikely to yield the results that Berlaymont would like to see. However, this does not mean that we should do nothing about environmental challenges.
In the transport sector, we witness that traditional modes of travel are under increasing scrutiny. Through mechanisms such as the Emissions Trading System (ETS), or the more recent discussion over carbon border adjustments, the European Union seeks to institutionalise the principle of the paying polluter. In this context, we would like to express our concern that these mechanisms are effectively taxes on consumption, known to be regressive.
Low-income households spend a larger part of their total income on these services. The adage of “if you tax something, you get less of it” is correct, yet does it serve the purpose of making the travel sector sustainable? COVID-19 has significantly reduced global air travel for a couple of weeks, and as a result, governments feel that they need to bail out the airline industry. In this sense, it seems understandable that a reduction in any mode of transport cannot be radical, and that there needs to be a gradual shift to sustainable transport.
Reducing fuel consumption is as important to airlines as it is to each and every one of us. The aviation industry has been making consistent efforts to use less fuel. Giving innovative technologies such as new materials and fuel-saving engines a chance doesn’t usually come to mind as a possible solution, while its potential to help us cut the emissions would actually have a significant impact.
For example, Airbus’ new A321XLR has 30% less kerosene consumption per passenger, while adding 30% more range than the currently used A321neo. These innovations are possible due to the current rate of use of airline services. Private industry needs capital flow in order to invest in future technological innovation. Cutting low-income households out of the equation with regressive taxation would paralyse the goals of sustainable agendas.
We should not underestimate human ingenuity when it comes to overcoming the challenges of the future, and that includes the field of aviation. The COVID-19 pandemic has shown some staggering inconsistencies in the way in which we treat airlines.
On one hand, European taxpayers are subsidising big players on the airline market due to travel bans, while simultaneously taxing airlines through existing environmental measures. Needless to say, airlines have received financial support not just during the terrible business year of 2020, but also during previous years, mostly following considerable mismanagement. The Italian company Alitalia comes to mind, which instead of a simple bankruptcy procedure gets dragged out into a market it cannot sustain, through expensive government loans. Instead, EU member states should allow new airlines to prosper through eased administrative and tax burdens.
Why not endorse new and small airlines that are willing to invest, as opposed to supporting old airlines that cannot focus on using new technology because they are too focused to make the next repayment, or sustaining cash-flow?
Europe has the technology and the ingenuity to make air travel even more sustainable. Through the existing ETS system. Sustainable fuels and new aircraft are the way forward to a Europe that allows for continued mobility, while aiding those who have made grandiose promises to reach the carbon-neutrality goal. Europe should not be about “either/or” policies, but pave the way for an innovative future.
Originally published here.