Good riddance to Dutch travel tax

The Dutch travel tax has been so successful, it has to be scrapped:

The Dutch Government is to scrap from July 1 its air passenger ticket tax, first dubbed the ‘eco’ tax when it was introduced against major opposition by aviation and local industry last year. The controversial departure tax, which ranges from 11 to 45 euros, is blamed for a steep decline in passenger traffic at the main Dutch airports, particularly at Amsterdam Schiphol.

The tax was billed as a “green tax,” meaning that it was intended to raise the cost of flying sufficiently to deter passenger travel — and hence greenhouse gas emissions — on the margin. It apparently did this swimmingly well, better than I would have expected:

Schiphol Airport, Europe’s fifth biggest in terms of passenger enplanements, recorded a drop of 430,000 passengers in February, a 13.7% fall against the same month a year ago. The number of locally boarding passengers fell by 17.7%. The number of transfer passengers, who were exempted from the tax, declined by 8.5%.

As the story notes, this tax was not levied on transfer passengers in an attempt to keep KLM and its Schiphol hub competitive with airlines based at Paris, London Heathrow, Frankfurt, and Copenhagen. Since transfer passengers make up a huge share of Schiphol’s business, the surcharge would never have made much of a dent in the Netherlands’ aviation carbon footprint. The fact that transfer passengers were exempted and that the tax is pulled just when it seems to be working vindicates the complaints that it is a “revenue grab.”

The suspension of this tax also illustrates a tax problem. In an age of free movement across jurisdictional boundaries, tax competition is heightened, especially in areas like the low countries where a competing, lower-tax airport may be just a short drive away. “The airport operator along with Dutch carrier KLM had previously warned that potential passengers would try to avoid the tax by flying from airports across the border in Belgium or Germany,” the story report. “The Belgian Government has already abandoned a proposal to introduce a similar tax.” Unless the EU or a larger jurisdiction is going to impose a charge like this one, countries that impose it on themselves in a global downturn are making an economic death wish.

See my previous posts on the Dutch travel tax here, here, and here.

[H/T: Cranky]

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“There’s no part of our operation that government can’t find a way to improve.”

TEMPE — Echoing Doug Parker’s plea for the government to “do no harm” to the airline industry, C. A. Howlett, US Airways’ top government affairs officer, outlined the challenges the industry — and US Airways in particular — face in the policy environment. His primary focus was the pending FAA reauthorization bill. Put off since 2007, the bill has been passed by the House but no action has been taken in the Senate. “We will maybe get this in calendar year 2009 but no one is betting anything heavy on that particular forecast,” he quipped.

Howlett is in no rush to get the House bill passed, because it has several provisions that give US Airways and other airlines pause. The bill increases the Passenger Facility Charge (PFC) from $4.50 to $7.00. PFCs are used to fund airport improvements but are levied by airlines when passengers buy tickets. This, Howlett said, would add $2 billion to the airline industry’s costs. “Airports have the ability to raise revenues by raising our landing fees and charges,” he added. “Not all airports are the same. . . . [Raising landing fees is]a better way to finance projects.” Besides, he said, airports got $1.1 billion in the stimulus bill, plus $1 billion for security improvements.

Also of concern in the House’s FAA bill are labor issues regarding collective bargaining procedures, the passenger’s bill of rights provisions, and limitations on foreign repair stations. Howlett said that there is a provision inserted at the behest of the firefighters’ union that would cost US Airways alone $15 million per year at their hubs.

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ATA conference call on airlines’ environmental performance

Since fuel consumption and greenhouse gas emissions correlate nearly exactly, U.S. airlines have a financial incentive to improve their environmental performance. According to officials at the Air Transport Association, the national trade group for commercial airlines, environmental performance continues to improve and other initiatives are on deck.

Speaking in a conference call with several aviation bloggers, ATA vice president for environmental affairs Nancy Young identified environmental performance, improving the nation’s air traffic control infrastructure, and energy policy as the airlines’ top policy priorities. The desire for fuel efficiency leads to greenhouse gas emissions reduction, she said: “We couldn’t be more motivated to do the right thing there.” Among these initiatives are alternative, environmentally and food-supply friendly fuels. Young said that it is much harder to develop this kind of fuel for air-based engine units. A 50/50 synthetic blend is currently being tested, she said, with the aim of having 50 percent of the jet fuel supply in alternatives by 2025.

ATA has also adopted an industry-wide goal of improving fuel efficiency by 30 percent by 2025. This can be done, she said, by upgrading fleets, investing in new aircraft (e.g., replacing American Airlines’ MD-80s with B-737s) and enhancing current aircraft (such as fitting them with winglets). John Heimlich, ATA’s chief economist, added that more efficient air traffic control navigation — such as optimal flight paths, continuous descent, and the like — would improve both operational and environmental performance. Heimlich also defended the recent spate of baggage fees as an environmental initative: “When the customer is imposing a fuel penalty on us, as with baggage, we pass that cost on to them.” The airlines are cutting down on fuel use by modifying passenger behavior.

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Britain keeps, raises Air Passenger Duty

Britain is keeping in place — and raising — its Air Passenger Duty, a per-passenger charge levied on airline itineraries originating in Britain. The government had promised to design a new charge based on aircraft; the current charge does not correlate actual emissions to charges for them. Two aircraft of identical capacity but with different fuel efficiencies are assessed the same amount of APD. Even worse, private aircraft, cargo aircraft, and transfer passengers (mostly at Heathrow) are exempt from APD, meaning that commercial travelers to destinations in Britain are bearing the brunt of aviation’s climate impact there. If Britain is serious about taxing its own travelers and airlines to mitigate climate change, then it needs to align charges with actual impacts.

See also my earlier post on the challenges of green taxation in aviation.

UK flight taxes to rise as reform dropped [FT]

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Airline to cut carbon emissions! . . . by doing what it was already doing anyway

An interesting item in the Commercial Appeal of Memphis, my hometown newspaper:

FedEx issued its first Global Citizenship Report Wednesday, touting plans for big cuts in pollution by jets and delivery trucks. . . . On the environmental front, the company aims to cut carbon dioxide emissions by FedEx Express jets by 20 percent within less than 12 years.

The article continues:

FedEx fuel consumption of about 1.5 billion gallons last year ranked behind the largest passenger airlines, which put more flights in the air. Fuel was 12.1 percent of the company’s total operating costs in fiscal 2008.

“We’re a large user of fuel, but we’re not the largest,” [sustainability director Mitch] Jackson said.

No, but according to an interview with CEO Fred Smith in the Wall Street Journal, it’s the second-largest user of energy in the world — after the U.S. military. See comment below.

To curb the appetite for oil, FedEx Express in 2005 set goals of a 20 percent reduction in carbon dioxide emissions by its jets and a 20 percent increase in fuel mileage for delivery vehicles.

The report showed that jet emissions have been reduced 3.7 percent on a pounds-per- available-ton-mile basis in three years, while vehicle fuel economy is already up 13.7 percent.

This article might lead you to think: “Good for FedEx. Look at the way they care about the environment. What an upright corporate citizen.” It’s good for the reader that at least one outlet has gotten the rest of the story. According to ATW Daily News:

Key to the increased efficiency will be the replacement of its 90 727Fs with at least 87 757-200 converted freighters by 2016. The 757s will reduce “fuel consumption up to 36% while providing 20% more payload capacity,” it said.

FedEx has been planning this fleet transition for years (with a focus on fuel and labor savings and increased medium haul capacity). How great for FedEx — they get environmental plaudits while doing exactly what they were doing all along. Unfortunately, this kind of reporting is par for the course at the CA, which years ago — through a series of redesigns and changes in editorial leadership — shifted away from serious reporting into local cheerleading, soft and fluffy features, and barely edited press releases.

In other news: FedEx has a blog! Welcome to the aviation blogosphere!

FedEx will do its part for cleaner environment [Commercial Appeal]
FedEx sets target to lower aircraft CO2 emissions by 20% by 2020 [ATW Daily News]

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Obama, McCain advisers on transportation issues

Top policy advisers to Barack Obama and John McCain differed on key transportation issues at a forum in Washington this morning, but they agreed, in the words of McCain adviser Douglas Holtz-Eakin, when it comes to transportation, “the ratio of importance to discussion on the campaign trail is high.”

Downey

Mortimer Downey, Obama’s senior transportation adviser and Bill Clinton’s deputy secretary of transportation, emphasized Obama’s detailed transportation plan, which I blogged about here. “I can’t recall a candidate who’s put together such a full-fledged transportation plan,” he said. Among the infrastructure problems the next president will tackle will be to “have an air traffic control system that works.”

Downey identified three “vehicles” through which Obama would improve transportation: First, a short-term boost in spending to create jobs and provide economic stimulus. Second, a ten-year, $60 billion “National Infrastructure Reinvestment Bank.” Third, a federal highway spending bill (due next year) with fewer earmarks and a systemic approach.

Holtz-Eakin

Holtz-Eakin, a former director of the Congressional Budget Office, spoke of McCain’s agenda (or lack thereof) in two categories: process and the federal role. On process, he noted McCain’s opposition to all earmarks and his support for economic review, return-on-investment analysis of transportation projects, and “performance and accountability measures.” Holtz-Eakin emphasized the need to identify properly the federal role in transportation planning and spending in relation to local and state agencies and “the important role of the private sector.”

As for Obama’s National Infrastructure Reinvestment Bank, Holtz-Eakin said “it isn’t something [McCain] supports . . . very reminiscent of Fannie Mae and Freddie Mac.”

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McCain and Obama speak out on general aviation

The Aircraft Owners and Pilots Association have released the candidates’ answers (or, more accurately, the campaigns’ answers) to their election questionnaire. One of the interesting points about this questionnaire is that even though John McCain has not articulated an aviation agenda, he/his campaign can draw on his Commerce Committee experience to answer these questions pointedly and with examples. Barack Obama’s answers are vague, inconclusive, and sometimes evasive.

For example:

General aviation airports are an important part of the national air transportation system but are often faced with the threat of closure or limits on access. How will you support general aviation airports as part of the national airport system?

McCain:
If I am elected, one of my top transportation priorities will be to modernize the air traffic control system so it can handle the increased traffic that is forecast. The current system cannot efficiently handle these increases. Gridlock in the sky and on the ground at our airports won’t just result in longer delays for airline passengers, but it will also affect general aviation—especially in the busier airspace around our major metropolitan areas. Under such a scenario, it could become very difficult for pilots to use general aviation airports in that airspace, particularly at peak times. In my view, making better use of the air space won’t benefit just commercial aviation, but general aviation as well.

Obama:
General aviation produces over a million jobs in America and is an invaluable part of our economy and the lifestyle of American families across the nation. As president, I will engage the general aviation community in the FAA decision making process and take steps, as I did as a state senator, to ensure that government continues to determine how best to meet the needs of general aviation practitioners.

On the controversial subject of user fees, McCain points out that the acrimonious debate is harming all parties. Obama says, well, not much of anything:

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“Green idealists fail to make grade, says study”

An item of interest from the Guardian:

According to the researchers, people who regularly recycle rubbish and save energy at home are also the most likely to take frequent long-haul flights abroad. The carbon emissions from such flights can swamp the green savings made at home, the researchers claim.

Stewart Barr, of Exeter University, who led the research, said: “Green living is largely something of a myth. There is this middle class environmentalism where being green is part of the desired image. But another part of the desired image is to fly off skiing twice a year. And the carbon savings they make by not driving their kids to school will be obliterated by the pollution from their flights.”

Some people even said they deserved such flights as a reward for their green efforts, he added.

Only a very small number of citizens matched their eco-friendly behaviour at home by refusing to fly abroad, Barr told a climate change conference at Exeter University yesterday.

The research team questioned 200 people on their environmental attitudes and split them into three groups, based on a commitment to green living.

They found the longest and the most frequent flights were taken by those who were most aware of environmental issues, including the threat posed by climate change.

Questioned on their heavy use of flying, one respondent said: “I recycle 100% of what I can, there’s not one piece of paper goes in my bin, so that makes me feel less guilty about flying as much as I do.”

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It’s easy being green

A much-trafficked article yesterday from Ireland’s Sunday Business Post offers a thorough takedown of Richard Branson’s green claims about the Virgin Group’s airlines:

In September 2006, Virgin boss Richard Branson pledged €1.9 billion towards tackling global warming. For the next ten years, he announced, the profits from his aviation and rail businesses would go towards combating the biggest, most complex problem that mankind has ever faced. . . . However, a look at the not-very-small print revealed that this amazing gesture would not be a matter of taking the profits from Branson’s polluting industries and using them to protect vast tracts of the Amazon.

In fact, the money would go to a new division of the Virgin conglomerate, called Virgin Fuel. Branson was simply gearing himself up to make more money. But as always, the PR spin was that he’d be doing the rest of us a favour in the process.

Branson has built an empire on this perception. . . . Whether it’s flights, records, mobile phones, cola, radio, television, hotels, trains or holidays, sticking the word ‘‘Virgin’’ in front of something supposedly makes it cheaper yet cooler, with the bearded, grinning boss fronting many of his own ad campaigns. Because if a hippy says it’s all right, then it must be. Mustn’t it?

Since Virgin Fuel was set up in 2006, the tide has very much turned against bio-fuels with the realisation that far too much agricultural land could be eaten up by fuel crops. Palm oil, one of the major biofuels, is contributing to global warming as virgin (no pun intended) rainforests in countries such as Malaysia and Indonesia are decimated to make way for palm plantations.

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What’s Dutch for “told you so”?

The Dutch “green tax” on aviation, which I’ve blogged about here and here, is already negatively affecting Amsterdam’s Schiphol Airport, according to a report:

Some 50,000 fewer passengers are expected to use Amsterdam Schiphol airport, one of Europe’s busiest, this summer on account of a Dutch environmental tax on flights, it was reported Saturday.

“We’re expected zero growth in 2008, and in fact a decrease (in passenger numbers) in July and August,” an airport spokesman was quoted as saying by the domestic ANP news agency.

Tax means fewer travellers at main Dutch airport: report [AFP/Breitbart]

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