T&E: After Boeing ruling, aviation needs to go cold-turkey from subsidy addiction

Today’s ruling by the WTO against Washington State on subsidies to Boeing, and an earlier similar ruling on Airbus, officially adds another €5.4 billion ($5.7 billion) to the already very long list of subsidies granted to the aviation sector.  One reason CO2 emissions are out of control is that flying is artificially cheap because of such subsidies. The list of direct and indirect subsidies includes:  Airlines enjoy universal exemption from fuel taxation, estimated at €20 billion a year in Europe and over €60 billion globally; Airlines receive an effective subsidy worth another €7 billion in Europe alone because ticket prices are artificially suppressed by about 20% due to the VAT exemption on ticket sales; Airlines are bailed out on a regular basis especially since the 2009 crisis; Already lenient state aid rules for airports have been regularly flouted; worth another estimated €3 billion a year in Europe alone; Manufacturers receive a €1.8 billion subsidy under the ‘Clean Sky 2’ joint technology initiative; Air traffic control receives a €3 billion subsidy under the SESAR ‘joint undertaking’. Meaningful action to cut aviation CO2 is urgently needed at global level but the very modest and inadequate plans agreed at ICAO will mean nothing so long as the sector binges on government handouts. The subsidies above fall outside of WTO rules and will only be removed with action by governments.
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T&E: After Boeing ruling, aviation needs to go cold-turkey from subsidy addiction

November 28, 2016 (Transport & Environment)

Today’s ruling by the WTO against Washington State on subsidies to Boeing, and an earlier similar ruling on Airbus, officially adds another €5.4 billion ($5.7 billion) to the already very long list of subsidies granted to the aviation sector, sustainable transport group Transport & Environment (T&E) has said.

That list of direct and indirect subsidies includes:

  • Airlines enjoy universal exemption from fuel taxation, estimated at €20 billion a year in Europe and over €60 billion globally;
  • Airlines receive an effective subsidy worth another €7 billion in Europe alone because ticket prices are artificially suppressed by about 20% due to the VAT exemption on ticket sales;
  • Airlines are bailed out on a regular basis especially since the 2009 crisis;
  • Already lenient state aid rules for airports have been regularly flouted; worth another estimated €3 billion a year in Europe alone;
  • Manufacturers receive a €1.8 billion subsidy under the ‘Clean Sky 2’ joint technology initiative;
  • Air traffic control receives a €3 billion subsidy under the SESAR ‘joint undertaking’.

Earlier this year the International Civil Aviation Organisation agreed a so-called ‘global market-based measure’ in a bid to address the runaway CO2 emissions of aviation, the most climate-intensive of transport modes. One reason CO2 emissions are out of control is that flying is artificially cheap because of such subsidies.

Meaningful action is urgently needed at global level but the very modest and inadequate plans agreed at ICAO will mean nothing so long as the sector binges on government handouts. The subsidies above fall outside of WTO rules and will only be removed with action by governments.

Bill Hemmings, director of aviation at T&E, said: “Today’s ruling is a wakeup call to anyone who believes that the global market-based measure will solve aviation’s climate problem. Flying is the cheapest and quickest way to fry the planet because not only manufacturers, but also airlines and airports, are subsidised to the hilt.” 

https://www.transportenvironment.org/press/after-boeing-ruling-aviation-needs-go-cold-turkey-subsidy-addiction-says-ngo

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And surface access:

And this excludes the help the industry gets from the countries in which airlines and airports operate paying for surface access (road and rail) infrastructure, so air passengers can get easily to and from airports. Airports rarely pay more than a tiny proportion (if anything) for this huge benefit.  Heathrow is hoping it will not have to pay any of the immense sums of money it would take to improve surface transport sufficiently, so it can deal with an extra 35 million annual passengers.  (AirportWatch note) 


See earlier:

WTO rules Boeing’s state subsidies (that don’t need to be repaid) are illegal

The WTO has ordered the US to withdraw illegal state tax breaks for American company Boeing within 3 months, giving rival Airbus the latest victory in a 12 year battle over government support for the world’s two biggest plane makers. The World Trade Organisation says a tax break granted by the state of Washington to Boeing in 2013, to ensure it produced its newest long-range jet there, was a prohibited subsidy. The WTO rarely defines a subsidy as “prohibited” as this is a very clear breach of its rules. In mid September, the WTO found that the EU had was also illegally subsidising Airbus in Europe. Both companies have benefited by billions of $s or €s over the past years, to battle against each other to sell more planes. In 2011 the WTO said both had received huge amounts of unlawful assistance – from taxpayers. Now the EU trade commissioner says Boeing is in line to receive another $5.7bn, provided by Washington state, between 2024 and 2040. Airbus says this would have covered most of the cost of developing Boeing’s 777X twin aisle aircraft, due to enter service in 2020. The EU wants the subsidy ended immediately. The situation is complicated, and the battles are likely to continue. Airbus says: “Unlike the loans to Airbus – the interest rates of which were considered in the WTO dispute against the European Union – Boeing plans no repayment of any kind.”

Click here to view full story…

 

and earlier

WTO rules that EU unfairly subsidises Airbus ($10 bn per year) – but US subsidises Boeing too

The long-running battle over immense state subsidies to aircraft makers Airbus and Boeing has intensified – the World Trade Organization ruled that European governments had failed to comply with rulings that it should cut subsidies to Airbus. Both plane makers have taken complaints to the WTO about subsidies supplied by the other.  The WTO is yet to rule on a similar EU complaint that Boeing benefits from billions of dollars in tax breaks in the US. The complaints are because the industries get unfair assistance, are always bailed out, and the success of either one could lead to lower sales (and fewer jobs) for the other.  The state subsidies for these two vast companies mean planes are a bit cheaper than they might otherwise be.  Airbus said it would appeal the judgment and the EU said it found some of the findings “unsatisfactory”.  There may be issues of state subsidies by other plane makers, in countries such as Russia and China, in future. Bombardier has had subsidies from the Canadian government.  In June 2011, the WTO found that the EU and four of its member countries provided billions of dollars in subsidised financing to Airbus, and the recent ruling is the final part of that. The EU had argued that the most recent Airbus jet, the A350, fell outside the case, but that was rejected by the WTO which said funding for the jet had been subsidised. The subsidies to plane makers are just one of the many ways in which the aviation sector is helped, making the cost of flying artificially low.

http://www.airportwatch.org.uk/2016/09/wto-rules-that-eu-unfairly-subsidises-airbus-10-bn-per-year-but-us-subsidises-boeing-too/