..says airline industry not cash cow
The International Air Transport Association (IATA) has expressed its deep disappointment at the recommendation of the Global Solidarity Levies Task Force (GSLTF) to target air transportation with its aim to “improve domestic revenue mobilisation of developing countries and support international solidarity (in particular with regards to climate change mitigation and adaptation, pandemics and other development challenges).”
A visibly upset DirectorGeneral of IATA, Willie Walsh, told New Telegraph over the weekend that the airline industry was an economic catalyst, not a cash cow, yet governments casually suggest a tax on flyers that is three times the airline industry’s annual profit without considering the real-world side-effects for an industry that is a lifeline for remote communities, invigorates tourism markets and links local products to global markets.
Moreover, he noted that while the modalities for the GSLTF proposal are not specified, history showed that these taxes simply go to the general exchequer, with little, if any, of the revenues generated going to climate change adaptation.
An initial assessment of the GSLTF’s proposals reveals severe deficiencies, including that the competitive airline industry does not generate excessive profits. The GSLTF announcement, while lacking any meaningful detail, quotes a CE Delft estimation that a premium flyer levy could generate N78 billion (over $90 billion) per year.
Moreover, he noted that while the modalities for the GSLTF proposal are not specified, history shows us that these taxes simply go to the general exchequer, with little, if any, of the revenues generated going to climate change adaptation.
That is approximately three times the airline industry’s global estimated profit of $32.4 billion in 2024. Airlines’ structurally thin net profit margin (estimated at an average of 3.4% industrywide for 2024 and approximately half the global average for all industries) must also be considered in any policy deliberation. Airlines have committed to achieving net zero carbon emissions by 2050—an effort that is expected to cost $4.7 trillion over the period 2024- 2050.
This will ensure that aviation can deliver its direct contribution of 3.9 per cent of global GDP and 86.5 million jobs globally while addressing its estimated 2.5% share of global carbon emissions. Increasing aviation taxes on airlines as proposed will limit the industry’s ability to invest in solutions that deliver long-term emissions reductions.
The GSLTF’s proposal disregards the role of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which was agreed through the International Civil Aviation Organisation and is the world’s first globally agreed mechanism to manage carbon emissions from an industrial sector—in this case, international aviation.
