Sant warns green kerosene tax punishes small European airlines

The green kerosene taxes being imposed on aviation fuel discriminate against short and medium haul carriers to the benefit of the giants

Small European airlines risk being placed at a disadvantage against their larger competitors, over revised proposals that will exempt long-haul flights from tax emissions... despite producing the bulk of aviation emissions.

Labour MEP Alfred Sant (S&D) questioned the proposals for a green kerosene tax that would punish short and medium-haul carriers to the benefit of giants.

In an intervention at the European Parliament’s subcommittee on tax matters (FISC) that debated the upcoming Energy Treaty Directive, Sant queried whether sufficient account was given to peripheral countries, islands and remote regions where tourism is the primary vehicle for economic development.

Energy taxation is used by European governments to generate money and support climate objectives. The Energy Taxation Directive lays down minimum tax levels. In July 2021, as part of the ‘Fit for 55’ legislative package, the European Commission called for a revision of the Directive and proposed a new legislation that would tax processes which create greater climate warming.

“Taxing kerosene fuel in medium-haul flights while exempting long-haul flights amounts to a cross subsidisation in fuel emission taxation. This will benefit large carriers at the expense of smaller airlines,” Sant protested.

“The proposed changes in the emissions taxation will not strike the right balance because these could likely serve to cut off remote or peripheral communities.”

In his intervention at the FISC, Sant said intra-EU flights by smaller regional and legacy airlines, already battered by COVID-19, would be discriminated against such carriers like Lufthansa, Air France and KLM. “Would this make sense in economic terms and from the perspective of competitive coherence within the EU?” he asked.

Sant also said that for islands like Malta, flying was not just another mode of transport or a “less green” alternative to a train journey. “Boarding a plane is the only way to travel and to be connected to the rest of the EU. In many instances, tourism has been a major pillar of economic development for communities living in these areas, for which connectivity is a major concern. There is a real danger that as proposed, emissions taxation could help to cut off remote or peripheral communities.”

Emmanuel Rauch, head of unit at the European Court of Auditors, pointed out that kerosene for international flights was already tax free because of global trade negotiations. But he conceded that there was no alternative for remote regions and islands. “It is up to policymakers to see what to do – we can only repeat that attention should be paid to these people, however it is not the job of the ECA.”

Vicente Hurtado Roa, head of unit at the European Commission’s directorate-general of taxation, confirmed that international agreements on flights outside the EU prohibited the introduction of a tax.

“The connectivity issue is crucial; we do not want to penalise people and we want to promote exchange of people in the EU. We understand that mobility is a cornerstone,” Hurtado Roa said, also conceding that there was no alternative for Maltese travellers, except to encourage train journeys where that is possible.

“We want to promote and encourage airline companies to move from kerosene to electricity or hydrogen. Some companies already have plans to opt for less polluting fuels,” he said, saying taxation can be a corrective tool to move towards sustainable aviation fuels.

“An exemption for aviation would be a missed opportunity. However, I understand the connectivity issues for Malta or the Canary islands... State aid is here to ensure connectivity for small airports. State aid is allowed in these cases.”