(Bloomberg Opinion) -- Michael O’Leary of Ryanair Holdings Plc is an unlikely spokesman for how aviation can avoid killing the planet. The budget travel evangelist has delighted in disparaging “eco-warriors” and casting doubt on climate science. But as chairman of the European airline association, A4E, he’s now front and center of the effort to persuade governments not to impose new climate taxes on the industry. It’s not going well.
This week the European Commission’s president Ursula von der Leyen unveiled a plan to make the continent carbon neutral by 2050. Her Green Deal is still thin on detail, but it’s already prompted plenty of criticism — from the green groups who say it doesn’t go far enough to the big polluters who fear it will harm their competitiveness, such as coal-dependent Poland and the airlines.
One aim of the Green Deal is to make the price of transport “reflect the impact it has on the environment.” Accordingly, Europe will review aviation’s tax exemptions — kerosene isn’t taxed — and consider cutting the free allowances allocated to airlines under Europe’s emissions trading system.
The airlines think they’re being unfairly maligned. They contribute about 2% of global emissions, a fraction of what cars and trucks produce. But unlike road transport, the aviation industry doesn’t have a convincing plan to decarbonize. Europe’s airlines are spending 170 billion euros ($189 billion) on new fuel-efficient aircraft, but these will still spew out carbon. Synthetic fuels are expensive and battery limitations mean emission-free commercial flights are years away.
Aviation is typical of the trade-offs we’ll have to make to get to net-zero emissions. So far we’ve only done the easy stuff that doesn’t force people to give up much or pay more for cheap products and services. The airlines are lobbying for better air traffic management in Europe’s crowded skies, which would cut the amount of fuel used. But there’s only a certain amount of carbon we can keep emitting before things go from bad to catastrophic.
The question of who will have to cut back most on their polluting raises issues around economic growth and fairness: The top 10% of most frequent fliers took more than half of all flights from England last year, while almost half the population don’t fly at all. Airlines don’t even agree among themselves about whether to punish the business lounge elite or the weekend City breakers.
IATA, the airline trade body, boasted this week that more than 4.5 billion passengers will take a flight this year as tickets become ever cheaper. The average return fare, adjusted for inflation and taxes, is almost two-thirds lower than it was 20 years ago. “Flying is freedom,” Iata’s Alexandre de Juniac intoned.
But even flying fanatics are no longer convinced that its growth should be unconstrained. Over-tourism in the Mediterranean has brought this to wider attention. When the environmental impact of a business isn’t priced in, there can be such a thing as too much freedom.
Ryanair makes the reasonable point that aviation taxes are a levy on the poor. Making flights more expensive will hurt those for whom 20 euros in new taxes, say, is the difference between flying and staying home. It’s fine to encourage people to take a train, but rail fares are often higher, and decent services are concentrated in richer European countries. A similar debate is raging in the car industry, where the cost of electric batteries could make small cars — often bought by the young and elderly — uneconomical.
Hence the budget airline Wizz Air Holdings Plc struck a nerve with a video that calls for the business class cabins of its big legacy rivals to be banned.(2) “We think you’re doing great… harm to our planet… Are all those empty seats worth the damage they cause?” the narrator asks.
Wizz is, of course, talking its own book; it doesn’t offer business class. But in a carbon-constrained world, abolishing business and first class isn’t so outlandish. Because of their ability to sell out flights and cram passengers on-board, Wizz and Ryanair are Europe’s two most efficient airlines when measured on CO2 per passenger km traveled.
Naturally, the older carriers don’t see it that way. Ryanair’s promotion of tickets that cost less than 10 euros is “economically, ecologically and politically irresponsible,” according to the Lufthansa chief executive officer Carsten Spohr. KLM of the Netherlands is even encouraging consumers not to fly if they don’t have to.
The airlines still hope to find a way out of the impasse. EasyJet Plc will offset the carbon produced by all its flights, for example by paying to plant trees. That will cost the airline just 25 million pounds a year, equivalent to about 26 pence per passenger or 3 pounds per ton of carbon produced. But such measures haven’t always delivered the promised benefits and have been likened to the old Catholic practice of selling indulgences.
While the price of European carbon permits has risen above 20 euros a ton, that’s probably too low to really affect ticket prices or encourage the use of expensive synthetic fuels. In 2019 Ryanair paid 115 million euros for emission allowances, or less than 1 euro per passenger.(1)
The Green Deal is billed as a “growth strategy” but nobody should pretend this won’t involve hard decisions. The noisy complaints are an industry realizing its license to expand and pollute is being revoked.
(1) On flights lasting less than five hours
(2) If you include air passenger duty, it claims the total for environment taxes is about 4 euros per passenger.
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Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.
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