Sunday, June 20, 2010

Flying Blind in Berlin

Earlier this month, German Chancellor Angela Merkel announced that her government intends to impose a new tax on air travelers departing from German airports. The amount of the tax - expected to add from 8 to 16 euros per ticket to air fares - will be calibrated "depending on factors such as the flight's noise level and fuel consumption,'' according to the Berlin government. In other words, the levy is being positioned as an environmental mitigation tax.

Predictably, top executives for the world's airlines - gathered in Berlin to attend the annual general meeting of the International Air Transport Association and the Berlin Air Show - were appalled.

Airlines, like other businesses, have probably never met a tax they like. But while the airlines' immediate negative reaction is predictable, it is not wrong. Although the tax - expected to raise 1 billion euros ($1.2 billion USD) for Germany's general fund - was introduced as a green measure, Berlin hasn't revealed any details of how it will use the additional billion to help our ever-imperiled environment. In short, this is a deficit-reduction measure, not a green measure. The environment provides political cover for the tax.

The United Kingdom, Ireland and the Netherlands have imposed aviation taxes of their own, citing environmental protection as the rationale. But the UK's monies haven't been funneled specifically to environmental protection as far as I have been able to discover. The Netherlands actually repealed its tax after just a year; it collected 300 million euros, but found that travelers were booking flights out of neighboring countries instead of paying rising fares at Dutch airports.

IATA's director general, Giovanni Bisignani, rightly characterizes Merkel's move as "a cash-grab by a cash-starved government.'' Efforts to go green should be global, not national or regional, he says, and a new tax will damage struggling European airlines. In 2009, the world's airlines lost more than $9 billion USD; it was the worst year in aviation history. In 2010, IATA expects airlines to earn $2.5 billion globally, but German and other European carriers - hammered by weak economies and the Iceland volcanic ash cloud - will lose $2.8 billion USD.

The new tax will make their recovery even harder than it already is, Bisignani argues. German carriers fear they'll be at a competitive disadvantage and won't be able to pass the full cost of the tax along to their customers. If that proves true, the carriers will have to eat the cost.

"This tax is a body blow to the weak economy and a fragile industry,'' Bisignani says. "And it is a kick in the teeth to travelers at a time when they can least afford it.''

The bottom-line is this: Everyone wants to protect, and if possible heal, the environment. Civil aviation contributes 2 percent of global greenhouse gas emissions - less than cars and trucks and much less than heavy industry - but that percentage is expected to grow to 3 percent as air travel itself continues to grow. Travel and aviation must do their share to bring things under control. The question is: What is the best way to go about doing it?

Not this.

Bisignani was sardonic about the German new tax, fuming "What will this do for the environment? Absolutely nothing.'' However, his criticism has a constructive side, as well. "If the chancellor is serious about aviation and climate change,'' he has said of Merkel, "the focus should be on finding a globally coordinated solution at the International Civil Aviation Organization in advance of the climate talks in Cancun.''

He has a point. The airlines have their own interests at heart, to be sure - as they must - but there have got to be more comprehensive and imaginative ways to deal with climate change than slapping on a vague new tax. And, I may add, more honest and straightforward ways.

For now, at least, it looks as though Berlin is flying blind.

1 comment: