Aviation’s £7 Billion Subsidy Per Year In UK Needs To Be Dropped

Aviation reportedly receives £7 billion per year in subsidies in the UK. This is one of the most harmful sectors to our climate, yet Great Britain is subsidizing it as if it’s saving dolphins and whales. In fact, whereas countries like the USA, Canada, Australia, Japan, Thailand, and Vietnam tax fuel use for domestic flights, the UK doesn’t. Whereas 23 EU countries apply VAT to domestic flights and the USA, Australia, Canada, and others also tax domestic flights, the UK doesn’t.

These are just a few of the issues that the gang over at Transport & Environment’s UK offices identified as needing corrected.

The organization notes that “the aviation sector is undertaxed: it does not ‘pay its way.’ VAT is not applied to airline tickets, nor is there any tax on jet fuel. This is the direct opposite of the ‘polluter pays principle.'”

And while all of that concerns domestic flights, there’s no denying that international flights are a huge climate threat and have historically been ignored far too often. As such, “T&E also recommends that international air passenger duty (APD) is explicitly reformed along environmental lines, by applying a simple pence-per-kilometer rate. This would make APD directly proportional to distance flown and class of seat, thereby more accurately reflecting the actual emissions caused by an individual.” Yes, please.

Overall, an analysis from Energy Systems Catapult indicates that the air transport sector is paying the lowest effective carbon price of the whole economy.

T&E cuts to the chase again: “Airlines are required to take part in the UK Emissions Trading Scheme (UK ETS). However, there are some obvious flaws in the scheme’s design which allows airlines to not pay for all the greenhouse gases they produce. In complete ignorance of the polluter pays principle, airlines receive a substantial amount of UK ETS carbon allowances for free. Furthermore, long-haul flights — where the majority of greenhouse gas emissions occur — are not included in the UK ETS. This needs to change for the UK ETS to ever be seen as net zero compliant — a stated aim of the Government.”

For more, read T&E’s full 9-page response to the UK government’s consultation on aviation tax reform.

Despite the notes higher up about taxing domestic flights and fuel use, the UK isn’t the only country that continues to subsidize the aviation industry to a large extent. The markets are distorted in two major ways when it comes to aviation. First of all, governments, like the UK’s, give improper tax breaks to the aviation sector in an overly generous way. Additionally, the massive externalities from burning aviation fuel and creating emissions in other ways is typically not corrected for, meaning that the economy is distorted. We are not even living and operating in a “free market” if we are settling for or encouraging these distortions.

If you live in the UK and would like to speak out to encourage more sensible aviation policy, provide your feedback to the UK government’s consultation on aviation tax reform. T&E has made it easy by providing 9 pages of responses that you can read and use to inspire your commentary.