Carbon tax on airlines would never fly

A head of steam, or perhaps a vapour trail, is building up in Strasbourg over the carbon cost of air transport. The European Parliament is to vote in July on a report from its Environment Committee which recommends that airlines be drafted into an emissions trading scheme, similar to the one that operates for European industry.

It’s logical but it probably won’t work for two reasons: demand for air travel is proving relatively insensitive to fuel surcharges, and the airline industry is so inefficient that it can probably absorb more fuel costs as it eliminates chronic waste and subsidies.
Aircraft fuel consumption per passenger mile is falling rapidly, having declined 70 per cent since the 1970s. IATA, the airline industry lobbyist, reckons aircraft are now just as fuel-efficient as your car. Even if you don’t believe that statistic, aircraft still account for just 2-3 per cent of global carbon emissions. Planes are not yet the big problem.

Meanwhile, growth in demand for air travel is proving strangely unaffected by the rubber band of price. Airlines pay no tax on energy consumption — jet kerosene is free of fuel duty and VAT so the surge in the raw cost of a barrel of oil has an immediate impact on overheads.

The Times