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Aviation

Taxing time for the industry

Ahead of the introduction of a national aviation tax, Anna Wilson, Head of Public and Regulatory Affairs at SAS, would prefer to see investments in innovation and international agreements in order to promote a transition to a more sustainable industry.

 

 

Aviation tax

The situation in Sweden: Introduced 1 April 2018. The tax is levied on every ticket at three different levels – SKr60, 250 or 400, depending on how far you are flying.

The situation in Norway: They have had a controversial aviation tax since 2016. Now the government is discussing ways of modifying the aviation tax to make it a better instrument for promoting the conversion to sustainable aviation.

The situation in Denmark: Denmark has no aviation tax and there are no plans to introduce one.

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What does the aviation tax mean for travelers? 

“It means that from 1 April, it will be more expensive for everyone to fly from a Swedish airport. The tax is based on distance and has three levels – SKr60, SKr250 and SKr400 for the longest flights.  The government’s intention with this aviation tax is to reduce the number of air travelers. The consequences of this will include fewer departures and routes at some airports, which will affect everyone who needs to travel to do business. For example, it will mean that a service provider located in Luleå with lots of customers in our major cities has increased travel costs compared with other companies that are geographically closer to their customers. Many sports clubs may have to pay hundreds of thousands of kronor in increased travel costs to participate in various tournaments and competitions throughout Sweden and the world. A family of four flying from Umeå on vacation may have to pay SKr2,000 more than a family living in southern Sweden, who can fly from Kastrup, where there is no aviation tax.”  

Is any distinction made between leisure and business travel?

“The aviation tax will be included in the price, so everyone buying a ticket will pay the same, whether they are traveling on vacation, or as an employee on a business trip.” 

What does it mean for airlines such as SAS? 

“The aviation tax inquiry estimates a drop of more than a million air travelers every year in Sweden. Reduced passenger numbers will make it difficult for us to carry out the positive and necessary investments we want to make, such as conversion to biofuel and new technologies, which would provide a sustainable, long-term reduction in climate impact. A reduction in capacity would have consequences for our air travelers in Norway, Denmark and Sweden, who are a particular focus for SAS. If the conditions for operating a profitable business deteriorate dramatically within a particular country, we will be compelled to look at how we can adapt our business. Traveling is something we consider positive for the development of the whole world and providing more sustainable air travel is something that SAS is pursuing. We would also like to see a focus on legislation.”

Why does SAS not consider the aviation tax to be the best way to achieve more sustainable air travel? 

At SAS, we are particularly critical of the structure of the tax, because it’s not linked to any environmental projects to reduce emissions or accelerate the adaptation of the aviation industry. According to the inquiry, the tax may even lead to an increase in emissions, as more people will drive instead. Over many years, at SAS we have worked to reduce our climate impact and every year emissions per passenger are decreasing, despite considerable growth in numbers. If the aviation industry is to become more sustainable at a faster pace, investment is needed in research and innovation in areas such as aviation technology, new materials, straight routes and fossil-free fuels. A Swedish tax that aims only to make it more expensive to fly does not help the adjustment process, however. On the contrary, it risks hampering our work. 

“Discussion of the matter often ignores the benefits of aviation. The airline industry is an important part of our infrastructure and it gives everyone in our elongated country the same opportunity to travel. We often talk about the importance of entrepreneurship and there are many small companies that are starting up across the country, while at the same time the government is localizing several activities. What happens if it’s no longer possible to travel easily from one end of the country to the other?”

"If the aviation industry is to become more sustainable at a faster pace, investment is needed in research and innovation in areas such as aviation technology, new materials, straight routes and fossil-free fuels."

How are the discussions going in Norway and Denmark? 

“Norway introduced an aviation tax in summer 2016, despite major protests. The consequences are that routes have been discontinued or moved and an airport has closed down. The tax has also hit the profitability of airlines, which has had a knock-on effect on departures and routes. This has led the government to discuss ways of revising the tax to make it a better instrument for reducing emissions and helping the aviation industry to convert to biofuels. We will have to wait and see how this discussion ends, but it is in line with our view on the matter. In Norway, they can see the importance of aviation as a means for all citizens of Norway to have equal opportunities to live, work and thrive across the entire country. This has led Avinor, the company that owns the airports, to adopt an aggressive target for all flights under 1.5 hours long to be flown using electric airplanes by 2040. It would also be incredibly positive for Sweden to have the same target. Denmark has no plans to introduce an aviation tax at the moment.”  

Almost a year ago, you, along with BRA and Norwegian, proposed an alternative. What was the response? 

“Our joint alternative focuses on biofuels. Now, the government has commissioned an inquiry to analyze how the aviation industry’s use of biofuel can be increased and promoted in order to reduce climate-changing emissions. This is a very positive step and is moving towards the goal of large-scale production of biofuel in Sweden, made primarily from forestry waste. This in turn means an opportunity to create new jobs in Sweden. The important thing now though, is that they keep the momentum going and turn words into action.”

What more can the aviation industry do to achieve more sustainable aviation?

“We have action plans designed to reduce emissions in the short, medium and long term. SAS is investing heavily in new and efficient aircraft and uses fossil-free fuel to the extent it is available. But SAS cannot make all the changes itself. For example, if we were able to fly in a straighter line across Europe, that would directly reduce emissions by around 10%. This would require political decisions to be made by the EU and Sweden. The environment is a global issue, which is why the UN has agreed a global climate deal for aviation. From 2020, we will pay for increases in our emissions at global level, which will bring about real reductions in emissions, unlike national aviation taxes. SAS is also ISO 14001-certified, which means that we consider the environment in all our decision-making processes. For example, we have installed winglets/sharklets at the end of the wings to reduce fuel consumption.  We have switched to lighter seats and interiors in order to reduce fuel consumption and we wash our aircraft with Dry Clean, a new method using biodegradable detergent that requires 95% less water than before. At the same time, we are working on dozens of projects of all sizes to reduce our climate impact in various ways.

How do you see the future of aviation? 

“It is my conviction that we must join forces to work for more sustainable travel so that aviation can continue to provide accessibility, human interaction and development throughout the world. SAS, in common with the rest of the aviation industry, has clear roadmaps and climate targets to reduce emissions in line with the Paris Agreement. It won’t be an easy journey, but the aviation industry is too important to be grounded.”

Last edited: March 21, 2018

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