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In a nutshell, we’d need two significant changes to the way things work at the moment. First, HMRC would need access to data that is already captured by the Home Office, on passenger movements in and out of the country. This would have to be stored in an automated database that airlines could access in real time when selling tickets to customers. Second, airlines would need to start recording customers’ passport numbers at the point of ticket sale - instead of before boarding as is currently the case.
The pressure for a new runway at Heathrow or Gatwick comes from the growth ambitions of the UK aviation industry. The hub airport argument about business flights that the aviation lobby use is an elaborate construct to mask what they really want this new capacity for - a big increase in leisure flights.
The Department for Transport (DfT) predict a more than doubling of demand for air travel by 2050 on present trends. It is this rising demand that the aviation industry want a new runway to be able to meet. Yet the Committee on Climate Change (the Government's expert advisors) say that we can only have about half as much growth in passenger demand as the DfT predicts if we stick to our climate targets.
By setting the frequent flyer levy at rates that would keep demand growth within these limits, we can also remove the need to build new airport capacity. If the Government consent to a new runway at either Gatwick or Heathrow it can only mean that they are planning not to meet the targets in the Climate Change Act.
Because of the high number of unknown factors in how different passengers' flying behaviours might respond to this reform, and the range of choices that could be made about how to calibrate the actual tax schedule applied to ticket prices, this is very difficult to estimate with confidence. But if we set the levy at a rate that meets climate targets, our model suggest that it could bring in about twice as much tax revenue as APD does over the period to 2050.
Well, the best thing for the climate would be if everyone were to stop flying immediately. Every long haul flight emits as much carbon as everything else a typical person does in a year. But people aren’t going to stop flying. We really treasure the very real benefits that the technological miracle of human flight brings to our lives. So we need to find a way to maximise those benefits while minimising the harm caused.
As a society, what we value from flying is occasional holidays to explore the world and escape our sometimes drab and rainy island, plus the economic benefits of international trade and inbound tourism. With this proposal we can protect those things while focusing efforts to reduce flying on the passenger group that is causing the lion’s share of the problem - the frequent flyers.
For serious climate wonks - this is all based on meeting our targets under the Climate Change Act. The latest science suggests that these targets may not be adequate to achieve a high probability of not exceeding the 2 degree threshold. See scenario 4 in the NEF modelling paper.
Some people on low incomes would be helped to fly for the first time by this reform. But the modelling shows that by applying a progressively rising tax rate for each flight beyond the first, this small increase would be hugely outweighed by the reduction in demand growth at the top end of the market.
We’d like access to better data on this but from what we can see, although low-income migrant communities are more likely than others in their income bracket to fly, they are still unlikely to fall into the frequent flyer category that this tax reform will target. Most should be beneficiaries of the reform as flying once or twice a year will be cheaper under the proposal. Higher income migrants who choose to visit their families more often can reasonably be expected to pay more tax to do so.
Business flights by UK residents are in long term general decline, and are such a small proportion of the total that we could in theory exempt them from from the Levy altogether and still get the environmental and social benefits we are aiming for.
We don’t think this is the right way to go however since businesses should also be incentivised to reduce their flying, and exempting them from tax altogether would be very open to abuse as wealthy individuals start companies solely to take advantage of the tax loop for business travel. The best option is probably to charge the levy to companies for their employees’ business flights rather than the individuals flying, with each company having a tax-free flight allowance based on company size.
We would like to commission further work to look at the market impacts of this proposal in more detail, both for the aviation sector itself and for other sectors that are currently heavily reliant on air travel.
The UK had a trade deficit on air travel and tourism of £13.3 billion last year. What this means is that British people travelling abroad spent a lot more money overseas than foreign visitors to the UK spent here. Two out of three flights at British airports are taken by Brits. Statistically, frequent flyers tend to be much wealthier than the average Brit, so they are very likely to be taking more money out of the country with them when they leave too. Meanwhile, most foreign tourists don't visit the UK more than once each year, so they would be beneficiaries of the reform.
The economic benefits of air travel all arise from in-bound tourism and international trade. Most air travel, whilst we might enjoy it, takes money out of the British economy.
Unfortunately there is no technological solution to this problem in sight. Air travel is slowly improving its efficiency, by about 1.5% each year - but global passenger growth continues to surge ahead at around 5% each year.
Electric passenger jets might be possible one day in the distant future but there’s no chance of seeing one any time soon, probably not even in our lifetimes. So far biofuels have been a huge disappointment. Using land we need for food crops to grow feedstock for jet fuel is a fool’s errand, and the biofuels in use today very often have higher ‘life-cycle’ carbon emissions than the fossil fuels they are meant to replace. Currently, the only way to reduce emissions from flying effectively is to do less flying. That’s what makes this such a tricky problem to solve.
Ideally, yes. But the UN body in charge of tackling this problem, ICAO, has made no progress towards a solution in the entire 18 years since Kyoto. ICAO is now saying the global aviation industry will aim for ‘zero-carbon growth’ from 2020 onwards. But what this actually means is continually rising emissions from air travel, with a market mechanism to pay others to make extra emissions cuts.
The problem is that ICAO is made up of representatives of national aviation industries - the CEOs of airports and airlines and their colleagues. Because there is no effective technological solution to aircraft emissions, this means the only way to cut emissions from flights is to cut flights. They don’t want to do that because they have built their careers on an ever growing aviation industry. So don’t hold your breath for the UN to solve this problem for us.
It’s also true that Britain has a particular problem with flying - we do more of it than the people of any other nation. We decided to include international aviation emissions under the UK’s Climate Change Act - albeit with a uniquely generous target of a more than doubling of aviation emissions from our 1990 baseline - but still haven’t made any plans for how to actually meet this target.
The frequent flyer levy is a way to do this that still lets most of us get what we want out of air travel: regular but occasional foreign holidays.
Unfortunately the efficacy of the EU ETS has been systematically undermined from the outset by lobbying from high carbon corporate interests. This has led to a huge oversupply of permits which has prevented the ETS from reducing emissions effectively in any sector of the economy, let alone aviation, which has in any case sought and won wide ranging exemptions that mean only a small fraction of European-based flights are now covered by the scheme.
It is also important to note that the Committee on Climate Change’s recommendations on controlling passenger demand growth already factored in a working ETS - something that has still not come to pass, and may never now materialise.
That’s why we are proposing the database only records flight frequency - how many times an individual flies each year - and not destinations. Airlines already capture far more data on their passengers than this, which they use to inform their marketing and business strategies.