Seeing red on green taxes

Government needs to back emission-reducing technology not pile taxes with a green label on aviation, says Giovanni Bisignani


Airlines are in crisis. In five years fuel has gone from 14 per cent of operating costs to more than 34 per cent. If oil prices average $135 for the rest of the year, the industry bill will be $190bn (£99m). And next year it could be more than $250bn. There is no alternative to kerosene. Saving fuel not only reduces CO2 emissions — it is a matter of survival.

IATA’s environment leadership is delivering results after working with our members to implement best practice in fuel management. In 2007 this saved 6.7 million tonnes of CO2 and $1.3bn. Our work with governments and air navigation service providers meant optimising 395 routes and procedures in 81 airports, saving 3.8 million tonnes of CO2 and $831m in costs. With better air traffic management, up to 73 million tonnes of CO2 could be saved but while painting themselves green to win votes governments are slow to deliver results.

After decades of discussion, instead of a Single European Sky, we have a mess of 35 air navigation services providers. Last year there were 21 million minutes of delays in Europe and 12 million of those were in the air. Each minute cost the environment 159kg of carbon and, at today’s fuel prices, wasted $55. The European Commission estimates the total cost of fragmentation at 16 million tonnes of CO2 a year. This must change.

But there is some good news. EC vice-president Antonio Tajani won Commission approval for the Single European Sky Second Package. Now Europe’s governments must look beyond national self-interest to do what is best for Europe and the environment.

Political leadership and vision are needed. I challenge the French Presidency of Europe to turn Europe’s biggest environmental embarrassment into a success story.

A Single European Sky is only the beginning. There are at least two other big messes to clean up. The crumbling US air traffic management system needs replacing with NextGen technology, saving up to 17 million tonnes of CO2. Inefficient procedures in China’s Pearl River Delta add 20 minutes to flights arriving or departing north from Hong Kong. Redesigning air space could save up to 340,000 tonnes of CO2 in Hong Kong alone.

Impressive results can be achieved by working together. Look at RVSM (reduced vertical separation minimum). Flying aircraft safely and closer together avoids congestion and costly delays. Implementing RVSM in China last year saved 1.1 million tonnes of CO2 and $250m. Soon Africa and Russia will implement RVSM saving a further 800,000 tonnes of CO2 and $350m.

Technology can do much more if we use it. Every Continuous Descent Approach (CDA) we make saves between 150kg-600kg of CO2. Each Clean Airspeed Departure (CAD) saves between 600kg-5000kg of CO2. But progress is slow. The dual challenges of climate change and high fuel prices demand faster action.

The only time governments act quickly is to line their pockets with taxes. Governments think green and see cash. Taxes don’t cut emissions, better operations and technology do. Europe led the way in raising awareness on the environment, but it is fixated on one small part of the solution — economic measures — focusing on punitive measures.

We don’t want handouts, but more investment in research on alternative energy and radical aircraft designs. Why not offer tax credits for buying fuel-efficient aircraft? All I see is a rush to implement economic penalties on the industry with taxes, taxes and more taxes. They have an environment label but do nothing to reduce emissions.

Take the UK’s Air Passenger Duty. If the government has its way, by 2010 it will be a £3.5bn pot of honey for the Treasury. That is enough to offset four years of the UK’s civil aviation emissions. Who’s benefiting? The Treasury. It is incredible to see that without planting a single tree UK politicians are lost in the woods on aviation and the environment.

It is time to re-focus. Our common objective with governments should be to reduce emissions not charge for them. Industry’s four-pillar strategy is delivering results. Governments must play their role responsibly by taking the reality of $140 oil into account, stopping their green grand-standing and joining the industry’s global and comprehensive approach.

Positive economic measures are part of the strategy. Punitive taxes disguised as environmental measures are not. Technology, operations and infrastructure will be the real drivers of innovation. No matter what the incentive, governments need to act to fix air traffic management, invest in research and work towards an effective global solution on emissions trading. It’s our responsibility to work together so that airlines can continue to deliver massive economic benefits while limiting, and eventually reducing, their carbon footprint.



Edited extracts of a speech given at the Farnborough Air Show by Giovanni Bisignani, director-general and chief executive of the International Air Transport Association