France’s eco-tax on flights criticised by airlines and activists

Air France says new tax will reduce competitiveness. Climate activists say it’s too low to battle global warming.

Air France
Climate activists say France's new tax on airlines that fly out of its airports is unlikely to change consumer behaviour [File/Philippe Wojazer/Reuters]

To help support the environment, France will introduce a tax on airlines flying out of its airports, the transport minister said on Tuesday, in a move expected to raise around 180 million euros ($202 million) annually starting in 2020.

Shares in airlines across Europe fell on the news, with Air France down 5.2 percent, Ryanair down 4.8 percent, easyJet down four percent and Lufthansa down nearly three percent at 12:55 GMT.

However, activists said the new tax was unlikely to change consumer behaviour at the proposed levels and was low compared to similar taxes in other countries. Brussels-based nonprofit organisation Transport and Environment (T&E) estimates airline taxes raise about 1 billion euros ($1.1bn) per year in Germany and more than 3 billion euros ($3.4bn) annually in Britain.

The new French tax will be 1.5 euros ($1.7) for flights within France or the European Union, three euros ($3.4) for economy flights out of the EU, nine euros ($10.1) for intra-EU business class and up to 18 euros ($20.2) for business class tickets out of the EU. Transit flights will not be taxed.

“We have decided to put in place an eco-tax on all flights from France,” Transport Minister Elisabeth Borne told a news conference, adding that proceeds would be used to finance daily transport in France, notably local trains.

The French government also said that from 2020 onward, it expected to raise an annual 140 million euros ($157m) from reducing tax benefits on diesel for trucks.

“The government is finally targeting tax breaks for the most polluting industries such as trucking and airlines, but these modest measures will not significantly reduce greenhouse gas emissions,” said Climate Action Network’s Lorelei Limousin.

Limousin said tax exemptions for kerosene fuel for jet planes cost French taxpayers more than 3.7 billion euros ($4.2bn) per year.

But she welcomed the fact that France was taking action at home, rather than waiting for an EU-wide initiative on airline taxes.

France said last month that it wanted the new European Commission to reduce CO2 emissions by pushing for an end to global tax exemptions for jet fuel. It has also linked up with the Netherlands to try to convince fellow European nations to tax airline travel more.

Air France said the new tax would significantly hurt its competitiveness and represent an additional cost of over 60 million euros ($67m) per year.

It said 50 percent of its flights were operated out of France, notably for its domestic network, where losses amounted to more than 180 million euros ($202m) in 2018.

French President Emmanuel Macron‘s government has said it wants to put the environment at the centre of its policies. But late last year, it abandoned an attempt to increase taxes on diesel fuel following the “yellow vest” protest movement.

Andrew Murphy, an air travel specialist at T&E, said the new policy was “a more equitable tax”.

“Driving a car is often unavoidable,” he said. “But frequent flyers tend to be wealthy urbanites.”

Source: Reuters