Air France’s bailout ‘climate conditions’ and possible future aviation taxes
The state bail out of Air France by the French government earlier in the year got a lot of publicity. Some of the conditions looked as if they could be effective in cutting emissions. Now the restrictions on air travel look set to continue for many more months, airline finances and state help need to be reassessed. The pandemic has been a unique opportunity to shrink the sector, and insist that it takes effective action in future to significantly cut its carbon emissions. The NGO Transport & Environment (T&E) have assessed the potential effectiveness of the conditions, and are not impressed. They say the Air France conditions included improving fuel efficiency (which it will do anyway, to save money); also removing the shortest flights (which will have minimal impact on the airline’s overall emissions). And use of low carbon novel fuels, but if first generation biofuels were used, this would increase – not cut – CO2 emissions. Last T&E says the climate conditions attached to the bailout are not legally binding, leaving it to the good will of Air France. Each condition should be made mandatory, with clear financial penalties for failure to comply. The French government has now proposed reasonably high taxes on flights, of €30 for economy short haul, and €60 economy long haul (>2,000km) but this has to be approved by the political process.
Air France leads tax pushback in climate vs recovery fight
By Laurence Frost, Kate Abnett (Reuters)
PARIS/BRUSSELS (Reuters) – Air France-KLM AIRF.PA is battling new green taxes on top of the coronavirus crisis – in a test of growing policy tensions between righting Europe’s crippled airlines and delivering on climate goals.
The Franco-Dutch group, sustained by €10.4 billion ($12.2 billion) in state-backed loans, faces higher duties in both home markets as well as EU plans to hike airlines’ carbon costs.
The struggle unfolding around Air France-KLM is part of a larger reckoning for carbon-intensive industries as efforts to tackle global warming spawn more taxes and regulation.
While campaigners say those are long overdue, crisis-hit airlines warn their timing and severity will cost thousands more jobs and hurt development of lower-carbon technologies.
New taxes “do not support emissions reductions”, said Air France-KLM Chief Executive Ben Smith in response to proposed increases to French passenger duties.
“In fact it’s counterproductive and would deprive us of finances that could otherwise be invested in environmental projects,” he told an online industry forum this month.
Tensions can only rise as emissions goals are toughened to slow dangerous climate change. The European Union’s executive now wants to cut greenhouse gas output by 55% in the next decade rather than the previous 40%, from a 1990 baseline.
While the pandemic has dampened climate protests led by Extinction Rebellion and Swedish activist Greta Thunberg, their political legacy must be squared with the economic emergency.
French municipal elections saw the ecologist EELV party take Lyon, Bordeaux and Strasbourg in a June 28 “Green Wave”. The next day, President Emmanuel Macron promised to advance 146 proposals from a “citizens’ climate convention”.
Those include an airline duty increase to €30 per short-haul economy passenger and €400 for long-haul business, from their current €1.50-18 range. At 2019 traffic, officials say the sector would pay €4.2 billion.
Key members of the government, which underwrote €7 billion for Air France, are backing away from the pledge as officials draft legislation in response to the convention.
“It would be grotesque to take back with one hand what we’d given the sector with the other,” Finance Minister Bruno Le Maire told daily Les Echos.
Le Maire and his Dutch counterpart were among nine EU finance ministers who had called for “taxation or similar policies” to curb emissions by raising air fares.
From Jan. 1, the Netherlands is introducing passenger duties worth €220 million at pre-crisis traffic. A Greenpeace legal challenge is also demanding steeper emissions cuts in return for KLM’s €3.4 billion aid package.
Airline emissions account for 2.5% of the global total but are set to triple by 2050. [Much more – 5 or 6% – when the non-CO2 climate impacts are taken into account]. Under a U.N.-brokered programme, CORSIA, the industry aims to counter emissions growth from international flights with carbon offsets, whose effects are contested.
Airbus has given itself until 2035 to put a “zero-emission” plane into service, but many are sceptical about that deadline. Synthetic fuels are also too scarce and expensive to offer a near-term solution.
For intra-European flights, airlines would face a higher bill for European carbon credits under plans outlined this month to reduce free permits for the sector.
EU officials have also signalled likely moves to end a tax exemption for jet fuel enshrined in international treaties, a process that could take several years.
Germany, which has pushed ahead with an airline tax increase to fund cheaper rail travel, plans binding minimum quotas for carbon-neutral alternative jet fuel.
Far from giving struggling airlines a break, campaign groups are urging governments to use bailouts to force faster progress.
“Airlines’ reliance on governments strengthens the case for acting to cut their emissions,” said Andrew Murphy of Brussels-based Transport & Environment.
Assuming a slow recovery, research commissioned by the group suggests CORSIA’s market mechanism would price emissions as low as 17 cents per long-haul flight, leaving little incentive to curb greenhouse gases.
ICAO, the U.N. aviation agency that developed the programme, said it “cannot comment on advocacy studies that have not been peer-reviewed.” CORSIA complements a “carbon-neutral growth strategy” agreed among member governments that also draws on technology, operational gains and alternative fuels, it added.
Other emissions-cutting proposals may divide the industry.
Air France-KLM’s Smith called on French ministers to consider a minimum fare instead of taxes, citing the 40-euro minimum recently introduced in Austria. “Let’s discuss that,” he said in a newspaper interview.
While minimum fares can curb overall traffic and emissions without hurting traditional airlines’ profits or jobs, they punish budget carriers and their customers.
“This is another mad idea from a high-fare airline that can only survive with over €10 billion of illegal state subsidies,” Ryanair RYA.I said. The low-cost giant is challenging rivals’ EU-approved bailouts in court.
“Ordinary consumers all over Europe have benefited from and will continue to demand low fares, choice and competition,” it said.
However these tensions play out, airlines face a rising tide of carbon costs on top of their current woes.
Maintaining fuel tax exemptions would present a “flagrant inconsistency” with EU climate goals, said Christian Egenhofer of Brussels-based think tank CEPS.
Taxing fuel would be an important step even if rates started low, Egenhofer said. “You know what happens with taxes – they always go up.”
The possible new taxes on airline tickets, proposed on flights from French airports:
What would this new environmental tax look like for airline tickets?
- For economy flights of under 2,000km, the tax would be 30 EUR one-way
- For economy flights of over 2,000km, the tax would be 60 EUR one-way
- For business class flights of under 2,000km, the tax would be 180 EUR one-way
- For business class flights of over 2,000km, the tax would be 400 EUR one-way
- For private jet flights, the tax would be 2,400 EUR one-way
See more at
Air France’s bailout ‘climate conditions’ explained
3rd June 2020 (Transport & Environment)
By Eoin Bannon
See the infographic:
Airline polluters are now seeking tens of billions in taxpayers’ money, according to the European airline bailout tracker. Air France recieved €7 billion, with the French government announcing “climate conditions” attached to this state-aid. While these are a first for airline bailouts, much improvement is needed for them to be effective and to achieve the stated objective of making Air France “the most environmentally friendly airline” on the planet. Our analysis below explains the conditions in detail and how to improve them.
See full infographic at