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Analysis: French Government Raises Airline Taxes
The French government has announced plans to raise airline taxes to fund railways. The tax will apply to first-class and business-class tickets. The new taxes are part of France’s efforts to promote train travel to meet its environmental goals.
The increase will be included in France’s 2024 finance bill and would bring in roughly €100 million ($110 million) by 2027. French transport minister Clément Beaune said that the taxes will apply to first and business-class tickets because the passengers that fly these classes are not as sensitive to price increases as passengers in economy class.
The French aviation industry is concerned that this new tax will be anti-competitive because the industry already sends substantial investments into environmental initiatives. The industry is also advocating for a new tax for the advancement of the aviation sector.
France has been in the spotlight for years for putting remarkable restrictions on its aviation industry. It recently banned short-haul domestic flights that are under 2.5 hours where a comparable rail service exists, except for those that are required for international connections. Though the move only impacted a select few flights, it was one of the most aggressive actions a European nation has taken to date to limit aviation because of its environmental impact.
In October 2022, France imposed additional restrictions on private jets by increasing taxes on aviation fuel, bringing the taxes in line with those imposed on cars.
Aviation’s Environmental Impact
Aviation has long been at the center of debates over how to regulate its impact on the environment. Aviation is not the most-polluting form of transportation, as the volume of cars on the road means that they emit more greenhouse gasses than the aviation industry. While commercial aircraft do burn a lot of gas at face value, fully loaded aircraft achieve hundreds of gallons per seat mile, making them three to four times more efficient per person than even the most efficient hybrid cars.
Private jets are often cited as bigger pollutants per person because they burn similar amounts of fuel but carry significantly fewer people; while a domestic narrowbody aircraft operated by a mainline airline can carry between 150 and 180 people, private jets usually carry up to a dozen.
The question arises, then, as to whether France’s focus on limiting commercial aviation is somewhat misguided and whether a true effort to decrease aviation’s carbon footprint necessitates that greater focus should be placed first on private aviation.
This question additionally arises when it is considered that the most recent taxes will be placed on, as France itself has said, passengers who will not notice a small price increase for taxes.
Will This Tax Really Work?
If France was to crack down on aviation to prioritize rail, they need to convince the people that fly in first and business class that taking the train is more worth their time and money than flying. If there is no change in prices in first and business classes, the taxes that France brings in will likely be lower than the income they could make by selling more train tickets.
France is trying to play a careful game: take action to solve a prominent problem that is critical to its administration without annoying wealthy political donors. However, this will inevitably prove to be another situation where an easily-implemented ideal situation is avoided because of concern over donations.
The fact of the matter is that small taxes that will generate an extra €100 million over four years, when considering how many people fly first and business class even domestically, will not disincentive the wealthy travelers and billion-dollar-corporations who can pay for premium classes from buying them; as mentioned, these travelers won’t even notice the increase.
It is true that first class and business class are worse for the environment than economy class due to the reduced passenger density – the same amount of gas to carry fewer people – and the added waste from more drinks, snacks, meals, and amenities. But change will not be exacted if the people who create this waste, namely the wealthy people and corporations who purchase business class, are not forced to change.
For that change to happen, either France needs to make flying in First and Business class significantly less attractive – more taxes and restrictions – or it needs to make trains significantly more attractive by adding more services and more destinations and adding more amenities.
This might be tricky, since France would need to find a way to stimulate demand on train services to small communities to be able to compete with the regional airliners that can easily find a niche in small cities. It’s one thing to fly a 50-seat Embraer E145 or Bombardier Dash 8 to a small runway once or twice a day; it’s a different feat entirely to build tracks and stations and to relegate expensive engines, large train cars, and train workers to that same city.
Still, airlines around the world have proven it’s possible to fly relatively-large aircraft into small destinations. Airlines like Ryanair, easyJet, and flyDubai have stimulated demand to small cities not because these small cities have significant appeal but because the airlines offered cheap flights to those towns in the first place.
Thus, perhaps we can take a middle ground here. Though France should increase restrictions on aviation if it really wants to make a stand against climate change, if it does not want to unilaterally crack down on flying, perhaps it can use the extra taxes it generates from aviation to expand services to smaller destinations and towns that would rather take the train but fly out of necessity. Or they could spend the money to improve onboard amenities to outpace airlines and make taking the train a more attractive option than flying.
France could also improve connections between rail and aviation. In Germany, for example, it is not uncommon for travelers coming from far-flung international destinations to be able to book an onward itinerary on a train instead of on another plane. While there are still airplane options that compete with the train connections, having railway options easily accessible to passengers who would otherwise fly will naturally increase rail ridership by forcing people to consider taking the train and offering more scheduled connection times that might be more appealing than the aviation options alone.
We’ve focused a bit on premium travelers in this article because those classes will be affected by France’s most recent push. But how about leisure travelers? Passengers who fly in on economy may consider trains if the trains are for some reason more appealing.
The addition of economy class to airplanes made flying cheaper across the board, and that trend has continued as more ultra-low-cost carriers have forced legacy airlines to cram more seats into planes to compete. Perhaps it is worth following this business model on trains. Making seats an inch or two closer together could make room for more seats onboard trains. More seats mean you can carry more passengers in the same railcars without needing to lengthen platforms and redesign track changes or signaling as you would by making trains longer. Could a proliferation in train classes – essentially adding “economy basic” class to trains – drive down the cost of train tickets enough to convince leisure travelers on a budget to take the train more instead of flying?
Aviation Restrictions Around the World
Even if France’s restrictions are useful, their method is not applicable around the world. In countries like the United States, Russia, and Australia, which are geographically huge and diverse, building infrastructure that could support widespread car and train usage is highly impractical. Airplanes can fly over these wide, diverse geographical areas much more easily and efficiently than other vehicles, which might expend extra energy traversing tall mountains and scorching deserts.
Countries like Canada have very remote areas that are not accessible by road or rail. Where it is impractical for slower boats to bring in critical supplies like food and medical materials, airplanes must be used to quickly and affordably access the area. And in South America, where deforestation is rampant and geography is just as diverse as in the United States, destroying additional natural reserves to build rail infrastructure and roads may prove unpopular.
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