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A4E’s Position on Aviation-Specific Taxes

By  Brussels, — Last updated on 8 December 2023


Taxes levied specifically on aviation restrict the social and economic benefits the industry can provide and therefore impose significant costs on society. At the same time, such taxes are not an effective way to pursue environmental objectives and do not have a material impact on carbon reduction.

A4E members have an ambitious strategy in place to reduce their carbon footprint and are focusing on investments in new technologies and sustainable aviation fuels, which are key long-term, meaningful solutions. In contrast to taxes, market-based measures are by far a more cost-effective way to cap and reduce emissions while incentivising companies to improve their environmental performance and invest in new technologies.

At this critical juncture, the EU and its Member States must focus on supporting the industry’s substantial efforts to decarbonise and implement effective measures, such as increased production capacity of sustainable aviation fuels in Europe, without resorting to symbolic, penalising measures such as taxes that do not address the core issue.

It is also vital that governments take direct action today to address excess emissions caused by airspace inefficiencies by implementing the Single European Sky, which alone would reduce emissions in Europe by 10%.

A balanced approach is crucial to promote sustainability and encourage and enable the future decarbonisation of the industry while preserving economic competitiveness and social benefits to citizens and consumers all throughout.


Aviation creates economic and social value. It connects people, goods and ideas within Europe and connects Europe to the world. It facilitates the deep cross-border ties of the 21st century — families, relatives and friends spread across the EU and beyond to pursue employment opportunities, education, or a particular lifestyle — and allows businesses far apart to trade with and provide services to each other.

Aviation is an essential part of the connected modern world, boosting the EU’s Single Market and facilitating citizens’ freedom of movement. As recognised by the European Commission in its Aviation Strategy for Europe, the industry is strategically important and essential to the EU’s economic competitiveness and global leadership position.European Commission, An Aviation Strategy for Europe, 2015 The liberalisation of air transport in the EU since the 1990s has brought major benefits to ordinary travellers, peripheral regions and national economies.

A4E’s core objective is that aviation can grow sustainably while continuing to benefit the social and economic development of countries across Europe in the coming decades. This requires a coherent policy framework that promotes sustainability while supporting competitiveness.

In this context, taxes levied specifically on aviation restrict these economic and social benefits, while being a poor way to pursue environmental objectives. The positive impact of aviation should not be undermined through unreasonable or short-sighted tax policies.

European airlines recognise the need to tackle the global challenge of climate change and have a strong track record of limiting their environmental footprint. Further progress is needed, but the focus must be on the most effective solutions to reduce carbon emissions from aviation, not symbolic measures.

The EU institutions and Member States should find ways to support the industry’s substantial efforts to become more sustainable and its ambitious goals to cut CO2 emissions. This requires public incentives for R&D and investment in sustainable technologies and fuels, which offer a real prospect for the future decarbonisation of air travel. This should be complemented by robust market-based measures to curb CO2 emissions in the medium-term.

The Socio-Economic Benefits of Aviation

The democratisation of EU air transport over the past 25 years has been a major success. Competition among European airlines has created new business models, lowered fares and increased consumer choice, allowing European citizens from all walks of life to travel and see the world. Today, nearly every corner of Europe can be reached by a flight of less than four hours. These benefits should not be underestimated: there is value in the experiences, relationships, and knowledge that air travel makes possible.

There are also direct benefits that affect everyday lives. Competitive air cargo services play an essential role in the quick and efficient delivery of a range of goods, including parcels ordered online, medicines and vaccines, as well as automotive parts.

Equally important is the role of aviation as a source of economic welfare at the local, regional and national levels. The industry is an economic enabler, supporting investment, tourism, trade and job creation, including in peripheral regions that would otherwise have found it difficult to stimulate local economies. Aviation directly employs two million people in the EU and contributes an estimated €144 billion to GDP. One new job in the industry generates three jobs in other sectors, such as logistics and retail, and in the supply chain. €1 spent in the industry generates €3 for the wider economy.European Commission, EU Aviation: 25 years of reaching new heights. Available at: As a result, aviation helped to support an estimated 9.4 million jobs and contributed €624 billion (4%) to EU GDP in 2016.ATAG, Aviation Benefits Beyond Borders, 2018

The Socio-Economic Costs of Aviation Taxes

Some governments have nevertheless imposed taxes specifically on aviation to raise revenue. The value and benefits of aviation are not always fully considered, not least the benefits that are foregone through imposing such taxes. The long-term negative impact does not only apply to the travel and tourism sectors but severely affects the whole aviation value chain, as well as ordinary citizens and national economies.

As governments are not always in a position to realise the benefits that are lost, A4E commissioned a study from PwC in 2017 to illustrate the gains that could be obtained through a reduction or abolition of existing aviation taxes in Europe.

This would lead to a €215 billion cumulative GDP increase in the European Economic Area (EEA) over a 12-year period and the creation of 40,000 new jobs in Europe in the year immediately following implementation, rising each year to 110,000 jobs being created by the end of the 12-year period.

Whilst countries would no longer receive tax revenues from the air travel taxes, the cuts would stimulate wider improvements in macroeconomic performance (employment, productivity, wages, consumption), and 97% of tax cuts would be recouped, mainly from labour taxes, social security and product taxes.PwC, The economic impact of air taxes in Europe, 2017. The main report provides aggregate figures for the EEA. Individual country reports are also available.

It illustrates the significant socio-economic costs associated with aviation taxes, which ultimately drive up the cost of travel for consumers. Lower-income social groups that have gained from more affordable and well-connected air travel stand to lose out. Aviation taxes are regressive and disproportionately affect island or peripheral economies, which depend on the direct air connectivity essential for tourism, economic growth and employment. Neither rail nor maritime transport can provide viable alternatives to competitive direct air transport connections to, and between, geographically peripheral countries or regions.

Paying a Fair Share

PwC also estimated that A4E’s members paid a total of €6 billion in aviation-specific taxes in 2017.Prior to the introduction of the Swedish tax in 2018 and the 50% reduction of Austria’s tax in 2018. For a capital-intensive industry with low-profit margins,Profit margins among the European industry are projected to fall from 4.7% in 2018 to 3.7% on average in 2019, as a result of weak international trade and higher fuel prices. this constitutes a significant financial burden, as airlines would need to substantially boost revenue in order to absorb a new tax.IATA, Economic Performance of the Airline Industry, June 2019

In addition, aviation is the only transport mode to date to be included in the EU’s Emissions Trading System (ETS) from 2012. The annual purchase of CO2 emission allowances by the aviation industry has increased from 15 million tons in 2013 to 27 million tons in 2017. It is expected to result in a reduction of 193.4 million tons of CO2 from aviation by 2020.EASA, European Environment Agency and Eurocontrol, European Aviation Environmental Report, 2019 The price of emission allowances has more than tripled from early 2018 to mid-2019 and will likely increase further.The price closed at €7.78 on 1 January 2018 and peaked at €29 on 22 July 2019. Source: As a result, A4E estimates that members will pay €590 million to comply with the ETS in 2019, a 59% increase on the €370 million paid in 2018.

In this context, it is worth noting that aviation covers its infrastructure costs directly through charges for airports and air traffic management, unlike other transport sectors. These are significant sums. In some EU Member States, airlines also cover security costs at airports, which are funded by the public for other sectors. Lastly, the fact that air fares are lower in comparison to some other transport sectors is a direct result of the liberalisation of the EU air transport market, which has gone further than in other sectors and led to high efficiency to the benefit of customers. Direct subsidies in the rail and road sectors are considerably higher than in aviation.Infrastructure subsidies for railways in the EU are estimated to be €30–35 billion, for example. European Commission, 6th report on monitoring development of railway market, 2019. See also the Commission’s study on the prices and quality of rail passenger services, 2016. For more information on international standards for air transport taxation, the financial contribution of aviation, and differences with the road and rail sectors, see the ICAO working paper on taxation of international air transport.

A recent study for the European Commission found that aviation accounts for 5% of the total external costs of transport in the EU, compared with 1.8% for rail, 10% for maritime and 83% for road transport.European Commission, Sustainable Transport Infrastructure Charging and Internalisation of Transport Externalities: Main Findings, May 2019

Effective Measures to Address Environmental Challenges

The introduction of aviation taxes has often been ‘justified’ on environmental grounds. This has frequently been in the form of a ticket tax, which is a particularly blunt instrument from an environmental perspective, as it sets a fixed rate based on the distance flown and takes no account of the environmental performance of the aircraft or airline. Put differently, aviation taxes do not incentivise environmental efficiency for airlines or passengers and do not reward sustainability. Moreover, revenues collected through aviation taxes that go into general government budgets do not serve an environmental purpose and do not support the aviation industry in becoming more sustainable.

There is also no clear evidence that such taxes have any material effect on emissions. A study for the Dutch Finance Ministry in 2018 found that a tax would have a modest impact (in the range of 0.5 to 2.5% lower emissions depending on different scenarios).CE Delft, Economic and sustainability impacts of an aviation tax, 2018 (Dutch only) A Committee of Inquiry for the Swedish Government came to a similar conclusion in 2016.Committee of Inquiry of the Government of Sweden, A Swedish aviation tax, 2016 (mainly in Swedish, English summary on page 19)

A4E is committed to ensuring that the future growth of aviation is sustainable and does not come at the expense of our planet. While aviation only accounts for 2–3% of global CO2 emissions, and 3.6% of total EU CO2 emissions (of which intra-EU flights are only 0.5%Source: International Energy Agency 2018 based on data for 2015. See also the BDL’s climate protection report 2018.), each sector must do its part.European Aviation Environmental Report 2019. Aviation accounts for 13.4% of emissions in the EU transport sector in comparison with 70% for road transport. A similar proportion applies at the global level. See also the European Environment Agency’s overview of greenhouse gas emissions from transport, available here. However, we need to focus on solutions that are going to be effective, not quick fixes that do not address the core issue of cutting emissions. Taxes are not the answer.

The European airline industry has an ambitious strategy in place and has been taking action to become more sustainable for decades, first and foremost through more efficient aircraft and operational procedures. Average fuel consumption decreased by 24% between 2005 and 2017 alone, with an average of 3.4 liters of fuel used per passenger per 100 kilometers, a standard metric applied to different transport modes.European Aviation Environmental Report 2019. That is comparable to most compact cars on the road today. Looking further back, fuel consumption per passenger has been reduced by 50% since 1990.

In the meantime, we acknowledge that demand for air travel continues to grow globally, a trend which is set to continue in the coming decades. To limit the climate impact of air travel, it is essential that a range of meaningful measures be applied simultaneously to ensure carbon-neutral growth while long-term solutions are implemented to reduce emissions. The “basket of measures” approach that has been endorsed by the UN Agency for Aviation, ICAO, and is fully supported by A4E, remains the most viable and effective way to meet this challenge.

That approach is founded on four pillars:

  • Greener aircraft technologies: New aircraft designs that increase fuel efficiency and reduce noise, including pilot projects to develop electric aircraft for commercial aviation.
  • More efficient operations and infrastructure: According to a study released in 2019, EU airlines’ have saved 20 million tons of emissions through their own operational and technical measures since 2014.SEO and To70, Environmental impact of disruptions and airspace inefficiencies in Europe, 2019 Implementing the much-delayed Single European Sky would complement those developments and alone reduce emissions by 10%.
  • Development of sustainable aviation fuels (SAFs): 180,000 flights have already been operated with hybrid fuels and the industry is investing in developing SAFs on a commercial scale with the potential to reduce carbon emissions by 80%.IATA, The cost of going green, 2017
  • Market-based measures to cap and reduce emissions: In addition to the EU ETS, aviation will be the first industry to have a global scheme to limit CO2 emissions in 2021. CORSIA, which is overseen by ICAO, will deliver projects that will reduce carbon by around 2.5 billion tons between 2021 and 2035. 80 countries have signed up, covering 77% of global aviation CO2 emissions.

Technology, Operations and Infrastructure

Progress has already been meaningful through the application of these measures. While the number of flights in Europe increased by 8% and the number of passengers by 50% from 2005–2017, CO2 emissions from aviation grew only by 16% during this period, thanks also to the use of larger aircraft and higher load factors (the fraction of seats that are occupied).European Aviation Environmental Report 2019. The report also found a 60% increase in passenger kilometres between 2005 and 2017, which indicates that passengers are increasingly using air transport for longer distances where there are limited transport alternatives. However, further progress is needed.

There is a misconception that a tax would somehow incentivise airlines to invest more in sustainable technologies and fuels than they do today. Significant investments, primarily in more fuel-efficient aircraft, have taken place for decades and have accelerated in recent years. Over the next decade, A4E members will invest approximately €170 billion in new aircraft models. Taxes divert funds away to less efficient spending instead of spending on further technological improvements, without creating any environmental incentives.

In addition, ICAO also adopted a new global CO2 emissions certification standard for aircraft in 2017, which will apply to new aircraft designs from 2020. This will lead to further improvements in fuel efficiency, which is projected to improve by a further 12% in the coming decades. Aviation is also the first industry to adopt such a global standard.The standard will also apply to newly built existing aircraft models from 2023. All aircraft will have to meet the standard by 2028 or effectively cease production. The standard covers virtually all types in the global commercial fleet, including passenger, cargo and business aircraft. See ICAO Fact Sheet on Aircraft Co2 Emissions Standard Metric System for further information.

Since 2014, airlines’ own technical and operational measures, such as improved descent and ascent procedures, have alone saved emissions equivalent to 1.6 million intra-EEA flights or 100 days of flying.SEO and To70, 2019 The introduction of Free Route Airspace has saved more than 2.6 million tonnes of CO2 since 2014.Free Route Airspace allows airlines to freely plan their routes between defined entry and exit points within a given airspace. See European Aviation Environmental Report 2019. Instead of taxes, European governments could immediately help to reduce emissions by 10% through better air traffic management in Europe, a reform that has been delayed for almost two decades. Due to the current fragmentation, airlines often cannot fly the most direct and optimal routes leading to greater fuel consumption and hence emissions than would otherwise be the case.

Sustainable Aviation Fuels 

European airlines are also involved in R&D projects to create SAFs that can be produced on a commercial scale. A4E members are investing in the first production plants for SAFs in Europe the Netherlands and the UK, which are expected to commence operations by the early 2020s. A4E members are also actively involved in pilot projects to develop electric aircraft. Such efforts reflect the industry’s awareness of its responsibility. A tax does not incentivise such measures and limits the financial capacity of European airlines to invest in innovation and new, cleaner technology.

Synthetic fuels as well as biofuels, which are produced from a variety of sources, such as household waste or cooking oil, are a critical component in this equation and are expected to reduce CO2 emissions by up to 80%.IATA, Cost of Going Green, May 2017 While many parts of the economy have had low-carbon or zero-carbon options for energy available for several years — especially electricity produced from sources such as hydro, solar and wind – these have not been readily available for aviation. Other forms of transport can more readily shift to electricity. The supply of SAFs is currently limited, and it will take time before they are available on a commercial scale. This lack of supply drives up the price. At present, Sustainable Advanced JetA-1 fuel is three times more expensive than standard kerosene. Supportive policies can accelerate the availability of SAFs so the benefits can be reaped sooner.For further details, A4E’s policy paper on SAFs is available on request.

Market-Based Measures 

That is where market-based measures have a role to play. The establishment of a global scheme to tackle CO2 is a notable achievement. It is a rare example of an industry asking governments to be regulated in order to manage its carbon footprint. CORSIA has major potential to limit aviation emissions and the advantage of broad coverage.If all ICAO Member States sign up to CORSIA by 2021, over 3.2 billion tonnes of CO2 could be mitigated through this scheme (an annual average of 215.8 million). This is particularly important for three reasons:

  1. International aviation is a global industry with strong competition;
  2. The airline sector is capital-intensive and characterised by low profit margins;
  3. Most of the future growth in aviation will take place outside of the EU, with China and India accounting for 45% alone.World Economic Forum, China is leading Asia’s aviation boom, November 2018

A global scheme offers a level playing field for European airlines, provides a global solution to the global carbon challenge, and minimises the risk of loss of market share and carbon leakage. A4E fully supports the EU’s ambition that CORSIA should be as robust as possible and believes it should be the key mechanism to curb aviation emissions. It will help to achieve one of the industry’s key goals: carbon-neutral growth from 2020 onwards.

Such market-based measures that put a price on carbon are preferable to taxes, as they are a more cost-effective way to cut emissions based on clear incentives: the less you pollute, the less you pay. As such, they drive efficiency in every aspect of an airline’s business.


Aviation taxes do not produce any meaningful environmental benefits and come with significant socio-economic costs. They reduce social benefits for EU citizens and hamper growth and job creation.

From an environmental perspective, the cost-effective reduction of emissions is the key outcome, not the cost of flying per se. It follows that public support and resources must focus on the most meaningful measures and promising solutions. EU and national policies must incentivise sustainability and help bring about the decarbonisation of the industry, not penalise airlines for a perceived lack of environmental performance. Taxes are not a silver bullet.

Concretely, the EU should design a regulatory framework to increase the production capacity of SAFs in Europe based on robust sustainability criteria. EU action is needed to speed up the development of these fuels. Sufficient supply and availability will help to bring the price down to a competitive level compared with conventional fuels. It is primarily the industry that is currently investing in this domain.

This would not just deliver environmental benefits but would also be an important economic opportunity for the EU’s transition to a low- or zero-carbon economy, with the prospect of the EU leading the rest of the world in the development of innovative fuels for a strategically important industry.

Market-based measures such as CORSIA should also replace any form of taxation, as they achieve carbon reduction and reward environmental efficiency. We encourage the EU to continue to support the expansion of CORSIA to as wide a range of participants as possible.

Member States must also take ownership and responsibility for making progress towards a genuine Single European Sky for more direct flights and less fuel burn, which can save up to 10% of CO2 emissions in Europe. This must be a priority for the Commission, Member States and the European Parliament.

A4E is committed to a close dialogue with the EU institutions and national governments on effective strategies to make aviation even more sustainable while preserving the socio-economic benefits of the connectivity that only air transport can provide.