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Uproar over French eco-tax proposals on air travel

French transport minister Elisabeth Borne has unveiled plans to impose a so-called eco-tax on airlines flying out of French airports. The tax is expected to raise around EUR 180m ($203m) from 2020. The tax will vary between EUR 1.50 and EUR 18 per passenger depending upon flight duration, destination and class of travel. Borne said the tax would apply to all flights except those to Corsica, overseas departments and territories and connecting flights. The measure is to be included in the French government’s 2020 budget.

Reaction has been as one would expect; The International Air Transport Association (IATA), the trade association of the world’s airlines, issued a statement which said: This tax is misguided. Since 1990, airlines have reduced carbon emissions per passenger 50%, and from 2020 will be paying to offset all the growth in emissions. A tax will not help the industry to invest in cleaner fuels and technology. It will also damage EUR 100bn that aviation generates for the French economy, and 500,000 new jobs are at risk from the lack of competitiveness of French aviation. 81% of French people don’t trust their government to spend environmental taxes on environmental action. On their behalf, we will hold the French government to account to spend this tax on accelerating aviation sustainability, especially prioritizing more efficient air traffic control and promoting sustainable fuels.”

Air France has also come out against the eco-tax proposal. It said: “This new tax would significantly penalize Air France’s competitiveness, at a time where the company needs to strengthen its investment capacity to more rapidly reduce its environmental footprint, notably as part of its fleet renewal policy.

“France is one of the countries with the most heavily-taxed air transport industry in Europe. These taxes are in addition to the particularly high burden of employer payroll taxation on airlines, whereas Air France’s activity contributes 1.1% of French national GDP, generates more than 350,000 jobs and Air France is the leading private sector employer in the Paris region.

“This tax would represent an additional cost of over EUR 60m per year for the Air France group, i.e. the equivalent of the measures adopted during the French Air Transport Conference, aimed at strengthening the French flagship carrier’s competitiveness.

“This measure would be extremely penalizing for Air France, of which 50% of its flights are operated out of France, and notably for its domestic network, where losses amounted to above EUR 180m in 2018. In addition, last month, the government had ruled out taxation at national level due to the unfair competition that this would cause.

“The government’s decision is all the more incomprehensible as this new air transport tax would reportedly finance competitive modes of transport including road transportation and not the energy transition in the air transport sector. Such a transition could have been facilitated by supporting the implementation of sustainable biofuel industries or disruptive innovations.

“The Air France group is committed alongside all the industry players to reducing its CO2 emissions by 50% by 2050, in accordance with the Paris climate agreement objectives. Air France has been contributing to the European Union’s Emissions Trading Scheme (ETS) since 2012, and will contribute to the CORSIA scheme for international flights as from 2021, representing already EUR 200m per year for the Air France-KLM group by 2025.”

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