Tax levies in Europe decried as job-killers

By Johanna Jainchill

041612Wttc_410x232TOKYO — The theme of the World Travel & Tourism Council (WTTC) Summit held here last week was how to lead the industry through times made turbulent by global uprisings, unpredictable economies and natural disasters.

But, perhaps predictably, the turbulence that rocked the gathering most was in the sky. In panel discussions and keynote speeches, the delegates decried regulatory and taxation schemes targeting aviation as not just burdensome but job-killing.

Travel industry CEOs and other top executives in attendance focused primarily on the European Union’s Emissions Trading Scheme and the U.K.’s Air Passenger Duty (APD) tax.

In a scathing indictment of the APD, Martin Craigs, CEO of the Pacific Asia Travel Association (PATA), called it the “height of hypocrisy,” asserting that the U.K. charges a family of four leaving Britain $500 while the country is “lecturing other people about free trade.”

He also said the U.K. was “unreasonably and illogically taxing and harassing” airlines, resulting in the depression of job creation in Europe and as far away as Asia. He cited research indicating that 91,000 British jobs were being lost due to the tax.

“If these European governments, through combined efforts to tax air travel, suppress demand by 1% until 2030, that will be 6.5 million less jobs in Asia-Pacific,” he said. “That is unacceptable economically and morally.”

Craigs was one of a chorus of travel industry leaders here who implored the industry to unite against such policies.

“We have to get more sophisticated in how we advocate to governments,” he said. “Western governments don’t get it about aviation and travel. They are in their jobs to create jobs, and their policies destroy job opportunities.”

DavidScowsillDavid Scowsill, CEO of the WTTC, said that many countries are asserting that the E.U.’s Emissions Trading Scheme is illegal. Some airlines are preparing lawsuits, he said, while others were being advised by their government not to pay the fees.

The scheme assesses a tax on airlines to offset the costs of dealing with carbon emissions that occur not only within E.U. borders but in the airspace over countries where flights originate or depart. Several governments have said the scheme violates their sovereignty.

“The WTTC is working closely to take action on behalf of our industry with growth and jobs as our primary focus,” Scowsill told delegates here.

No E.U. or U.K. government representatives attended the summit to defend either policy.

Willie Walsh, CEO of International Airlines Group, parent of British Airways and Iberia, called the emissions scheme “another tax” and said the E.U. was “imposing their solution on the rest of the world.”

He said it was not the cap-and-trade scheme itself but “the regional approach that I disagree with. It risks undermining the credibility of emissions-trading schemes as a solution to global problems.”

Declaring that the E.U. should consider only including those emissions that take place in the airspace of E.U. member countries, he said the policy was causing European airlines to withhold new aircraft orders “at a time when Europe needs them to inject growth into weak economies.”

Walsh said the aviation industry directly employs more than 5.5 million people worldwide and contributes $425 billion to world GDP. Moreover, he predicted, by 2026, aviation will contribute $1 trillion to world GDP.

WTTC-AW“Flying is a vital part of the world’s economic infrastructure,” Walsh said. “Thousands of jobs and billions of dollars are at risk.”

Citing what he called an attack from environmental regulators, Walsh said aviation would contribute no more than 5% of total global carbon emissions by 2015.

“It is not the pariah it’s often made out to be,” he said of the industry. “That’s not to say we can relax or shy away from playing a full part in tackling climate change.”

Walsh also took aim at the U.K.’s APD, calling it a “disgrace” and saying that the British government calls it an environmental tax but uses the money for nonenvironmental purposes.

He Zongkai, executive vice president of China Southern Airlines, was one of several airline executives who discussed the need to reduce regulation and increase open-skies policies. He said that the regulations needed to recognize the phenomenal pace of growth in Asian countries.

“We want to see progress in open skies,” he said. “Unless markets are open, we will not be able to keep abreast with the development in this industry.”

Follow Johanna Jainchill on Twitter @jjainchilltw. 

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