The International Air Transport Association (IATA) expressed deep disappointment over the recommendation of the Global Solidarity Levies Task Force (GSLTF) to target air transportation.
The GSLTF claims that it seeks to improve domestic revenue mobilization of developing countries and support international solidarity in particular with regards to climate change mitigation and adaptation, pandemics and other development challenges.”
In a statement released by IATA at 8:17pm (BKK) on Friday, 4th July, the association pointed out that the GSLTF proposals have a number of critical deficiencies.
These are as follows:
- A 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 EUR 78 billion (over USD 90 billion) per year. That is approximately three times the airline industry’s global estimated profit of USD 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.
- The Airline Industry Has a Multi-Trillion Dollar Commitment to Sustainability: Airlines have committed to achieving net zero carbon emissions by 2050—an effort that is expected to cost USD 4.7 trillion over the period 2024-2050. This will ensure that aviation can deliver its direct contribution of 3.9% 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.
- A Specialized Climate Financing Mechanism for Aviation Already Exists: 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 Organization and is the world’s first globally agreed mechanism to manage carbon emissions from an industrial sector—in this case international aviation. The GSLTF states were among those that created CORSIA under the principle that it would be the single harmonized market-based measure to manage international aviation’s carbon emissions. Overlapping measures, such as the Solidary Levy, would undermine CORSIA and lead towards a fragmented, inefficient and inconsistent global policy framework. It is essential that all states (those in the GSLTF included) focus on making CORSIA successful rather than advancing overlapping measures. Topping the agenda of critical support needed for CORSIA is states making available the carbon credits so that airlines can fulfil their CORSIA obligations and states can realize their climate financing value.
- Failure to Assess Rising Costs is an Inescapable Consequence of the Proposed Levy: In addition, the GSLTF has not released any assessment of the impact that such a levy would have on the economies of the very states to which it aims to funnel the funds, or the broader impact it will have on all travelers. It has also not detailed how such funds would be used. Although the GSLTF is positioning its proposal as targeting premium travel, it fails to recognize the critical importance of this segment to making route networks viable. Punishing premium travelers or burdening the sector with excessive taxes would upend route dynamics which enable the connectivity that nearly five billion travelers will rely upon this year. The impact of the GSLTF’s proposal would make airlines less efficient and more financially strained. This would mean higher costs for all travelers 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.
IATA: the aviation sector is an economic catalyst
IATA director-general Willie Walsh sternly pointed out that the global airline industry is an economic catalyst, not a cash cow.
Walsh said: “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.
At the same time, Walsh decried the GSLTF’s claim that their solidarity levies will not increase the cost of living for ordinary citizens or impact things like household bills.
He declared: “This is untrue. The bottom line is that, if followed, the GSLTF’s recommendations will increase the cost of air travel for all travelers 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.”
Furthermore, Walsh corrected the GSLTF’s assumption that airlines are shirking from doing their part to mitigate the impacts of climate change.
As he put it: “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 US$90 billion gut punch of a tax. With respect to air transportation, the aims of the GSLTF could best be realized by supporting investments in SAF production so airlines can deliver prosperity by connecting people and businesses to global opportunities.”
The public isn’t buying GSLTF’s explanations
Independent global research carried out by Savanta in 15 countries for IATA reveals deep public skepticism over air travel taxation:
- 73 percent said that green taxes are government greenwashing;
- 79 percent said there are too many taxes on flying;
- 78 percent said that taxation is not the way to make aviation sustainable;
- 74 percent do not trust governments to spend tax money wisely; and
- 88 percent believe that taxes collected from air travel should be invested to improve travel for passengers.
Likewise, the study showed that taxation was the least popular modality to compensate for carbon emissions associated with flying, supported by only nine percent of respondents.
More popular preferences are SAF purchases at 25 percent, carbon emissions reducing technology investments at 23 percent, emissions reduction research at 18 percent, and offsetting at 13 percent.
