World airlines have expressed disappointment at the recommendation of the Global Solidarity Levies Task Force (GSLTF) to target air transportation in its aim to “improve domestic revenue mobilisation of developing countries” and support climate change interventions.
The airlines, under the aegis of the International Air Transport Association (IATA), said the initial assessment of GSLTF’s proposals reveals severe deficiencies, including the state of airlines’ profitability, their commitment to sustainability, and financing mechanisms for climate change remedies.
GSLTF, an independent group of experts set up after COP28, has set out 16 specific ideas for consultation that could raise hundreds of billions of dollars a year to fight global heating, from taxes on cryptocurrencies to flying.
The group’s far-reaching proposals will be presented to the world’s governments at the COP30 summit in Brazil in November. Already, airline operators and IATA are countering some of the premises of the body.
Flying – an elite, heavily polluting activity – is growing. Just one per cent of the world’s population causes half of all aviation emissions. The taskforce puts forward a tax on tickets or on jet fuel for international flights, which is barely taxed at all today.
The ticket tax may raise $100 billion a year, the jet fuel levy $10 billion. A frequent flyer tax is also being considered, with the levy rising with each flight, but this may require each passenger to have an ID number. Several countries have already used an aeroplane ticket levy to fund the fight against Aids and other diseases.
According to IATA, the GSLTF announcement, while lacking any meaningful detail, quotes a CE Delft estimation that a premium flyer levy could generate €78 billion (over $90 billion) per year. 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 per cent industrywide for 2024 and approximately half the global average for all industries) must also be considered in any policy deliberation.
Contrary to the addition tax, the airlines have already 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 per cent 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.
IATA’s Director-General, Willie Walsh, said punishing premium travellers or burdening the sector with excessive taxes would upend route dynamics, which enable the connectivity that nearly five billion travellers will rely upon this year.
Walsh added that the impact of GSLTF’s proposal would make airlines less efficient and more financially strained. This would mean higher costs for all travellers and for items shipped by air. Such reduced affordability for a sector that is an indispensable economic catalyst ultimately brings the unintended consequence of weaker economic growth.
He said: “The airline industry is 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, 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,” Walsh said.
The DG said that contrary to the GSLTF’s claim that the solidarity levies won’t increase the cost of living for ordinary citizens or impact things like household bills, the truth is that GSLTF’s recommendations would increase the cost of air travel for all travellers and do more harm than good.
“Extracting tens of billions from aviation will cripple its ability to invest in achieving net zero by 2050, change route dynamics to the extent that connectivity will suffer, and short-change countries on the critical economic support that air transportation provides.
Walsh stressed that the industry is doing everything possible to achieve net-zero carbon emissions with Sustainable Aviation Fuels (SAF), more efficient operations, and better technology.
“The last thing these efforts need is a $90 billion gut punch of a tax. With respect to air transportation, the aims of the GSLTF could best be realised by supporting investments in SAF production so airlines can deliver prosperity by connecting people and businesses to global opportunities,” Walsh said.
