In 2012, subsidies for the transport sector contributed €28.6 billion to harmful impacts on the environment. A large portion of the existing subsidies, around €12 billion, is attributable to air transport. The subsidies consist of missing value added and kerosene taxes as well as ticket taxes that are too low. This distorts competition to the detriment of rail and other more environmentally-friendly modes of transport.
What about competition and infrastructure?
The airline industry’s argument against higher taxation is that companies have high costs elsewhere, e.g. airport charges and air traffic control. In addition, higher taxes would lead to competition distortions in international aviation; in addition, other modes of transport are subsidized. The aviation industry also claims to be the only mode of transport to entirely finance its own infrastructure costs. Rail travel is also cheaper than air travel in most cases.
An analysis conducted by Deutsche Welle (DW) comes to different conclusions. Especially on routes covered by low-cost airlines, a flight is cheaper than a train ride. However, the reduction in VAT for rail travel to the rate of 7% in 2019 should make domestic rail travel in Germany more financially attractive compared with air travel.
Moreover, the cost of airline tickets is in no way commensurate with the environmental impact of air travel. The complete financing of infrastructure by aviation also does not stand up to closer scrutiny: subsidies for regional airports and the financial disaster surrounding the construction of the new BER airport in Berlin are definitely a burden on the public purse. Taxes are also levied for other reasons, e.g. to finance education or social services and to put together rescue packages in times of crisis. Aviation also benefits from all this. Ultimately, taxes can also develop a steering role: the energy tax, for example, leads to a higher incentive for energy efficiency.
Closer to the desired effect
There is even the political will in the EU for higher taxation of air travel: in November 2019, the finance ministers of Belgium, Bulgaria, Denmark, France, Germany, Italy, Luxembourg, Sweden and the Netherlands expressed their support for an EU initiative to tax air travel. 72% of EU citizens also support a carbon tax on air travel. Nevertheless, from a climate protection perspective, current regulation is unfortunately far from what would be desirable.