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Taxing Short, Cheap Flights Makes a Lot of Sense

Leonid Bershidsky

(Bloomberg Opinion) -- Germany’s former transport minister (and current senior legislator) Alexander Dobrindt has proposed setting a price floor on air tickets, to eliminate the cheapest offerings from Europe’s ubiquitous discount airlines. The idea probably will be rejected for political reasons, but it’s actually one to consider when it comes to reducing air travel’s climate impact.

It’s difficult to tax airline tickets: Taxation is regulated by the 1944 Chicago Convention and a spate of bilateral agreements, and in the European Union, taxes shouldn’t interfere with the workings of a free common market. According to a 2018 report by the Dutch consultancy CE Delft, it’s legally problematic, if not impossible, to tax flights based on fuel consumption, although it might be possible to set up tax brackets based on various emissions. In any case, almost every new ticket tax is challenged in the courts. The rulings have shaped the levies as they exist today.

Airline ticket taxes are often flat or differentiated based on baffling criteria. In a number of European countries, the levies on domestic and intra-EU flights and lower than on those outside the EU. In Germany and Austria, the longer the flight, the higher the tax. The so-called eco-tax France plans to impose next year (over the strong  objections of Air France) will be higher on business-class tickets than on economy-class ones, and it’ll also make the EU-non-EU distinction.

From an environmental point of view, none of this makes a lot of sense. Emissions per passenger don’t depend on whether the flight is domestic or international, intra-EU or extra-EU. A business class passenger, of course, occupies more space on a flight and thus theoretically accounts for a higher share of emissions, but at the maximum rate of 18 euros ($20) per ticket, which France plans, airlines will hardly be encouraged to remove business class sections from flights.

A tax scale that goes up with the distance traveled is plainly a mistake, too. Of course, the longer the flight, the higher the absolute amount of carbon emitted per passenger. But the idea of a smart environmental levy on airfares shouldn’t be to discourage long-distance travel, because it’s rather pointless. For people planning an intercontinental trip, or even one across Europe, there’s no reasonable alternative to flying. Climate activist Greta Thunberg traveled from the U.K. to the U.S. by sailing yacht earlier this month, but two crew members had to fly there to bring the boat back.

It’s the shortest flights that a smart tax should discourage. The curve that describes the relationship between distance traveled and carbon emissions per passenger per mile is L-shaped: The highest emissions occur during takeoff and landing. 

The straightforward approach would be to impose a restrictive tax on flights up to a certain distance, making more climate-efficient trains, buses and, yes, fully loaded cars more competitive. But Dobrindt’s proposal to tax all air tickets priced below 50 euros would largely serve the same purpose: These cheap flights are overwhelmingly short-haul. According to an analysis performed in 2011 by Brighter Planet, California-based organization that calculates emissions and looks for ways to reduce them, European and U.S. low-budget airlines are driven down the carbon efficiency scale by the relatively short distances they typically fly.

There’s no justification for flying, say, from Brussels to London, from Barcelona to Madrid or from Rome to Milan – it’s faster by train when airport waiting times are taken into consideration. But these are often the flights with the cheap tickets that compete with train and bus fares.

“I want climate protection instead of predatory pricing,” Dobrindt told the German tabloid Bild. “There should be a price floor on flying and railroads need a value-added tax reduction.”

His plan likely won’t fly. The coalition agreement on which the current German government is based rules out raising taxes, and even within Dobrindt’s party, Bavaria’s Christian Social Union, there’s a strong aversion to any tax increases. Besides, the German government, unlike the French one, doesn’t really need additional revenue: It’s consistently running a budget surplus. What it needs is ways to stimulate business activity in the face of a recession – and if  it tries to impose an additional tax on air tickets, it will be attacked for doing the opposite.

And of course, whoever dares attack cheap flights will also get pilloried for reducing the mobility of the poor and making life worse for the middle class. Arguments that anyone, rich or poor, should take the train, the bus or the family car for relatively short-haul trips will drown in the chorus of socially motivated disapproval.

But something needs to be done about the short flights, and sooner or later governments will need to clamp down on them, boosting the competitiveness of more carbon-efficient modes of transportation. Dobrindt’s idea shouldn’t be discarded out of hand.

To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story: Tobin Harshaw at tharshaw@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

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