Air France-KLM is battling new green taxes on top of the coronavirus crisis - in a test of growing policy tensions between righting Europe’s crippled airlines and delivering on climate goals.
The Franco-Dutch group, sustained by 10.4 billion euros ($12.2 billion) in state-backed loans, faces higher duties in both home markets as well as the European Union (EU) plans to hike airlines’ carbon costs.
The struggle unfolding around Air France-KLM is part of a larger reckoning for carbon-intensive industries as efforts to tackle global warming spawn more taxes and regulation. While campaigners say those are long overdue, crisis-hit airlines warn their timing and severity will cost thousands more jobs and hurt development of lower-carbon technologies.
New taxes “do not support emissions reductions”, said Air France-KLM Chief Executive Ben Smith in response to proposed increases in French passenger duties.
“In fact, it’s counterproductive and would deprive us of finances that could otherwise be invested in environmental projects,” he told an online industry forum this month.
Tensions can only rise as emissions goals are toughened to slow dangerous climate change. The European Union’s executive now wants to cut greenhouse gas output by 55% in the next decade rather than the previous 40%, from a 1990 baseline.
While the pandemic has dampened climate protests, led by Extinction Rebellion and Swedish activist Greta Thunberg, their political legacy must be squared with the economic emergency.
Green wave
French municipal elections saw the ecologist EELV party take Lyon, Bordeaux and Strasbourg in a June 28 “Green Wave”. The next day, President Emmanuel Macron promised to advance 146 proposals from a “citizens’ climate convention”.
Those include an airline duty increase to €30 per short-haul economy passenger and €400 for long-haul business, from their current €1.50-18 range. At 2019 traffic, officials say the sector would pay €4.2 billion.
Published in The Express Tribune, September 29th, 2020.
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