Airlines oppose Dutch plan to phase out EU fossil fuel subsidies

Airline bosses are, unsurprisingly, opposed to a Dutch plan for an EU-wide phase-out of fossil fuel subsidies. They say it should not be introduced, while rail travel is so expensive, and the airline sector does not yet have low carbon fuels. The Dutch government announced last month that it spent up to €46.4bn in 2023 supporting the use of fossil fuels, either through direct subsidies or tax schemes that indirectly led to more polluting energies being used. More than €3.6bn went to airlines, as fuel supplied for use in aviation is currently fully exempt from taxation in the EU.  The Dutch government is keen to reform the tax system and cutting subsidies was “crucial” to achieving a transition to lower carbon industries, and net zero by 2050.  An EU proposal to update energy rules in 2019, which aimed to remove many fossil fuel subsidies, stalled as it requires unanimous approval from all 27 member states, which it is unlikely to get. The Dutch government introduced a cap on flights at Schiphol earlier in the year.


Airlines hit out over Dutch plan to phase out EU fossil fuel subsidies

Ryanair boss labels proposals ‘pie in the sky’ until cheaper green travel alternatives are available

By Alice Hancock in Brussels and Philip Georgiadis in London (FT)

OCTOBER 16 2023

Airline bosses have criticised a Dutch plan for an EU-wide phaseout of fossil fuel subsidies, saying such a move will be fanciful until there are affordable greener travel alternatives.

Ryanair boss Michael O’Leary and Lufthansa chief executive Carsten Spohr were among European airline executives who said at a briefing last week that train fares remained too expensive to replace air travel, and policymakers’ plans to make aviation more sustainable by cutting support would backfire.

The Dutch government announced last month that it spent up to €46.4bn in 2023 supporting the use of fossil fuels, either through direct subsidies or tax schemes that indirectly led to more polluting energies being used. More than €3.6bn went to airlines, as fuel supplied for use in aviation is currently fully exempt from taxation in the EU.

Rob Jetten, the Dutch climate minister, told the Financial Times that reforming the tax system and cutting subsidies was “crucial” to delivering the clean transition, and that governments should “redesign the rules of the market”.

He added, however, that fossil fuel subsidies, particularly ones that resulted from international agreements such as for airlines and shipping, “need to be tackled from the EU level”.

But O’Leary, the Ryanair boss, said: “Until you have some affordable alternative that you can offer to voters and to consumers across Europe, it’s all just pie in the sky.”  [This, of course, ignores the need to reduce the demand for flying. People could choose not to travel so much. That is not an option the airlines want anyone to even consider. AW comment.]

Ourania Georgoutsakou, managing director of the industry body Airlines for Europe, added that increasing fuel taxes for airlines would increase costs which “at some point will impact the passenger”. [Yes, exactly. That is the point. The aim is to make flying more expensive, so less appealing, and so reduce demand.  Lower demand is the only effective way to cut aviation sector CO2 emissions.  AW comment]

Fuel is one of the single biggest expenses for airlines, and accounts for about 25 per cent of their operating costs. Aviation is also among the toughest sectors to decarbonise, with alternatives to jet fuels still at an embryonic stage.

The airline industry last week reiterated calls for more support to increase production and lower the cost of so-called sustainable fuels, which are significantly less polluting than kerosene.  [ie. they want public money, in order to make SAF cheaper, so they can keep the level of aviation demand high, and increase it.  AW comment] 

European airlines have historically struggled with profitability amid thin margins, leaving them limited capital to invest on decarbonisation, Spohr said.  [The financial model of “pile it high and sell it cheap”, ie huge number of passengers, low profit margin on each, is totally unsuitable for an industry that causes the emission of so much CO2.  AW comment]. 

Still, the industry is enjoying a strong run amid high ticket prices, and European airlines are forecast by trade body Iata to post a combined $5.1bn net profit this year, having lost more than $45bn during the pandemic.   [In the para above, they say they now have limited capital.  Which is it?  AW comment]. 

Wopke Hoekstra, the EU’s new climate commissioner, has also backed plans to phase out fossil fuel support schemes although there is “no guarantee on the outcome”, one EU official said.

But O’Leary dismissed the Dutch push to phase out fossil fuel subsidies, which for airlines include exemptions on kerosene tax and VAT for passenger transport, as a “wish list”.

An EU proposal to update energy rules in 2019, which aimed to remove many fossil fuel subsidies, has stalled as it requires unanimous approval from all 27 member states, which it is unlikely to get.

EU ministers are due to discuss support for fossil fuels on Monday as part of negotiations ahead of the UN COP28 climate summit in December.

The Dutch government has been among the toughest in Europe on airlines as it tries to cut carbon emissions to meet its target of achieving net zero by 2050.

In January, The Hague increased air passenger duty and in February introduced a cap on the number of flights permitted at Amsterdam Schiphol airport, the Netherlands’ largest.

Other European countries, including Ireland, Austria and Denmark, have all indicated support for the subsidy phaseout plan, according to an official close to the talks.

Jetten acknowledged that some sectors would have “to pay extra in energy taxes in the upcoming years — and it makes total sense because they’ve been using [fossil fuels] for extremely low prices for a very long time and we need to change that”.

Additional reporting by Andy Bounds in Brussels



See earlier:


Dutch to introduce limits on the carbon emissions of international flights from its airports

The Dutch cabinet has announced that flights from Dutch airports will have their CO2 emissions capped from 2025 depending on the airport.  It has not yet specified the different thresholds for each.  This follows the “Aviation Memorandum 2020-2050”, a 2020 memorandum which laid down the blueprint for measures to achieve increased “sustainability” in the Dutch aviation sector.  The Minister responsible for aviation said there is not yet any “global, European or national instrument that legally anchors aviation CO2 emissions in absolute terms. The CO2 cap provides this anchorage … and secures the climate goals for aviation by setting clear and enforceable limits on permitted CO2 emissions, thus creating a guarantee for meeting the climate targets …  The targets are currently unenforceable; without introducing a legal cap, there is a risk that CO2 emissions from aviation will in practice turn out higher than agreed, as a result of which the goals of the Aviation Memorandum will not be met.” The cap is planned to be implemented in 2025.


Dutch air passenger tax to triple in 2023


Departures from Dutch airports will become a lot more expensive next year with the news that the existing Dutch Air Passengers Tax will more than triple to EUR28.58 euros (USD29) on January 1, 2023, according to a report by De Telegraaf.

Citing insider information, De Telegraaf, the largest Dutch daily newspaper, reports the hike results from environmental commitments the Dutch governing parties made in their coalition agreement.

No official announcement has been made. The official departure tax for 2022 is EUR7.947 (USD8.04) per passenger per flight, according to the Dutch Tax and Customs Administration website.

The tax applies to departures from the following airports: Amsterdam Schiphol; Eindhoven; Groningen; Lelystad; Maastricht; Rotterdam; and Enschede. Transfer passengers are exempt from the levy, first introduced on January 1, 2021.

Other passenger charges in The Netherlands include the Passenger Service Charge, which also increases from EUR17.37 (USD17.68) to EUR20.62 (USD20.99) per departing passenger from April 1, 2023. The Passenger Security Service Charge increases from EUR13.23 (USD13.46) to EUR15.12 (USD15.39) from April 1, 2023, according to Schiphol Airport. Together that makes an additional EUR64.32 (USD65.58) per ticket, compared to EUR38.78 (USD39.47) at present, a EUR25.54 (USD26) increase.

The 2021-2025 coalition agreement between the People’s Party for Freedom and Democracy (VVD), Christian Democratic Alliance (CDA), Democrats ’66 (D66), and Christian Union (CU) prioritises combating climate change. In civil aviation, it promises to increase flight taxes and use part of the revenue to make aviation more sustainable and reduce its environmental impact.

Asked to comment, KLM Royal Dutch Airlines (KL, Amsterdam Schiphol) told ch-aviation the airline shared The Netherlands’ ambition to be a leader in the sustainable aviation sector and supported measures that effectively helped to make the aviation sector more sustainable.

“KLM, along with the partners of the sustainable aviation table, believe it is very important that a substantial part of the money raised by the increase in the flight tax goes to more sustainable aviation. Otherwise, an air passenger tax will not help the environment,” an airline spokesperson said.


Schiphol flights to be limited to 11% below 2019 levels to cut noise

After pressure from communities in the Netherlands, the Dutch Parliament has said Schiphol must reduce its flights from 500,000 a year to a maximum of 440,000 by 2023 in order to cut the noise experienced by impacted communities. That cut is 11% less than in 2019 (about 510,000).  It is understand from the Dutch aviation campaigners that the mix in the current Dutch Parliament helped. The Netherlands has proportional representation and enough small parties backed the proposals to get it agreed.  The decision follows a move by Schiphol itself, in which the Dutch state is the majority shareholder, to impose a cap on the number passengers it can carry this summer – although that was due to staffing shortages. Part of the reason is awareness fo the carbon emissions.  Airlines, predictably, are not happy.  Greenpeace, which had lobbied for traffic at Schiphol to be reduced, hailed the decision as a “historic breakthrough”.  This might be the first time a major airport has been asked to reduce flight numbers.