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Airline industry challenges proposed premium flyer levy due to potential economic impacts

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Airline industry challenges proposed premium flyer levy due to potential economic impacts
Research
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Nick Careen Senior Vice President, Operations, Safety and Security | International Air Transport Association

The International Air Transport Association (IATA) has expressed concerns over the Global Solidarity Levy Task Force's (GSLTF) proposal to impose a premium flyer levy, citing potential negative impacts on the airline industry and broader economic consequences. The GSLTF estimates that such a levy could generate EUR 78 billion annually, which is approximately three times the global estimated profit of USD 32.4 billion for airlines in 2024.

Willie Walsh, IATA’s Director General, criticized the proposal, stating that it fails to consider the thin net profit margins of airlines and their significant commitments to sustainability. "The airline industry is an economic catalyst, not a cash cow," said Walsh. He emphasized that imposing additional taxes would hinder airlines' ability to invest in achieving net zero carbon emissions by 2050, an effort projected to cost USD 4.7 trillion.

IATA also highlighted the existence of CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), a globally agreed mechanism aimed at managing carbon emissions from international aviation. According to IATA, overlapping measures like the proposed levy could undermine CORSIA and lead to inefficiencies.

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Walsh further argued that the GSLTF's proposal lacks an assessment of its impact on economies and travelers. He warned that targeting premium travel could disrupt route networks essential for connectivity and increase costs for all travelers.

Independent research commissioned by IATA indicates public skepticism about air travel taxation. Findings show that 73% of respondents view green taxes as government greenwashing, while 79% believe there are already too many taxes on flying. Additionally, only 9% support taxation as a means to compensate for carbon emissions associated with flying.

Walsh concluded by advocating for investments in Sustainable Aviation Fuels (SAF) as a more effective approach than taxation to achieve environmental goals while maintaining economic benefits provided by air transportation.

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