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Airline bosses criticize a Dutch plan for an EU-wide phaseout of fossil fuel subsidies, claiming that affordable greener travel alternatives are needed before such a move can be considered.
Ryanair CEO, Michael O’Leary, and Lufthansa Chief Executive, Carsten Spohr, express their concerns during a briefing, stating that train fares are still too expensive to replace air travel. They believe that cutting support for aviation to make it more sustainable will have negative consequences.
Last month, the Dutch government revealed that it provided up to €46.4bn in 2023 to support the use of fossil fuels through direct subsidies and tax schemes indirectly increasing polluting energies. Over €3.6bn was allocated to airlines, as aviation fuel is currently fully exempt from taxation in the EU.
The Dutch Climate Minister, Rob Jetten, emphasizes the importance of reforming the tax system and reducing subsidies to achieve a clean transition. He suggests that governments should redesign market rules. However, he believes that fossil fuel subsidies, especially those resulting from international agreements in the airline and shipping industries, need to be addressed at the EU level.
Despite these arguments, O’Leary dismisses the Dutch push for fossil fuel subsidy phaseout, referring to it as a “wish list,” and states that affordable alternatives must be available before making such changes.
Ourania Georgoutsakou, managing director of Airlines for Europe, adds that increasing fuel taxes for airlines will raise costs, ultimately affecting passengers.
Fuel expenses comprise a significant portion of airlines’ operating costs, accounting for about 25%. Decarbonizing the aviation sector remains challenging, with alternative jet fuels still in their early stages of development.
The airline industry calls for more support to increase production and reduce the cost of sustainable fuels. European airlines have historically struggled with profitability due to thin margins, limiting their investment capacity for decarbonization.
Despite these challenges, European airlines are projected to post a combined $5.1bn net profit this year, following substantial losses during the pandemic.
Wopke Hoekstra, the EU’s new climate commissioner, supports plans to phase out fossil fuel support schemes, but the outcome is uncertain.
An EU proposal from 2019 aimed at removing many fossil fuel subsidies remains stalled, as it requires unanimous approval from all 27 member states, which is unlikely to happen.
EU ministers will discuss support for fossil fuels in preparation for the UN COP28 climate summit.
The Dutch government is taking strong measures to cut carbon emissions and achieve net-zero status by 2050, including increased air passenger duty and flight restrictions at Amsterdam Schiphol airport.
Other European countries, including Ireland, Austria, and Denmark, express their support for the subsidy phaseout plan.
Jetten acknowledges that certain sectors will have to pay extra energy taxes to rectify the long-time use of fossil fuels at low prices.
Additional reporting by Andy Bounds in Brussels
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