13March
The Conservatives have proposed altering the tax structure on aeroplane flights. Ideas include adding VAT to internal flights, charging fuel duty to flights within the UK, and altering the base upon which passenger duty is levied. Much of the press attention has concentrated on the end-game, a personal carbon allowance, to allow a certain distance (perhaps 2000km) per person per year at a lower tax rate, with a higher tarrif for flights over that limit. That proposal is predicated on a complex personal carbon allowance system, and is a long-term aspiration.
As an interim measure, the Conservatives say that they want to tax the flight, rather than the passenger. This makes an awful lot of sense, as it's the presence of the aeroplane rather than the passenger that is the root cause of the carbon dioxide emissions. It makes particular sense when we recall how many planes spend much of the day scuttling about half-full. May we propose a reasonably simple formulation to this end.
1) Levy a flat charge per passenger seat for each aeroplane landing at a UK airport. For the sake of argument, say this is £10. It is to be paid by the passenger on the seat they occupy, and by the airline on seats that are empty.
2) Then levy a variable charge, with three elements: the distance travelled on the flight, the capacity of the 'plane, and the cleanliness of the aeroplane. Clean 'planes might be charged at 1p per passenger per km; older and dirtier 'planes might be charged at 3p per passenger per km. Multiply these three factors together, and charge to the airline. It will then be for the airline to adjust its own prices, or substitute smaller and/or cleaner aircraft, so that it can recoup this tax.
For instance, let us consider three flights.
New Air flies from Edinburgh to Detroit, a journey of 4000km. It uses brand-spanking-new Boing 797 'planes, and fills 341 of the 375 seats.
Flat charge: £10 x 375 = £3750
Variable charge: £0.01 x 4000 x 375 = £15,000
Income from passengers: £10 x 341 = £3410
Remaining tax: £15,340, £44.99 per passenger.
Private Air charters out six-year-old planes, and is today going from Birmingham to Teesside, a trip of 200km. All four seats on board are in use.
Flat charge: £10 x 4 = £40
Variable charge: £0.018 x 200 x 4 = £14.40
Income from passengers: £10 x 4 = £40
Remaining tax: £14.40, £3.60 per passenger.
Onion Air flies from Birmingham to Paris, a journey of 400km. It uses T-reg WMPTE buses with wings, and fills 63 of the 86 seats.
Flat charge: £10 x 86 = £860
Variable charge: £0.03 x 400 x 86 = £1032
Income from passengers: £10 x 63 = £630
Remaining tax: £1262, £20.03 per passenger.
Onion Air would need to increase its ticket price by £20 in order to retain the same level of profit. But their rivals Garlic Air, also filling 63 of 86 seats, uses squeaky-clean aircraft. Its remaining tax-per-head is just £9.11. Some passengers will defect from Onion to Garlic, ensuring that the latter's tax charge drops further, to a minimum of 1p per passenger per kilometre when the plane is full. (Think why this happens.)
These are back-of-the-envelope figures - it's quite possible that a real-world application could run from 3p to 10p per passenger km, and insist that all aircraft have 10 seats, even if they don't. These are implementation details; the underlying principle appears sound.
We note that most other EU countries charge VAT on their internal flights; it would surely be possible for the union to agree to charge that tax on all flights within the EU, regardless of whether they cross national boundaries. Similarly, it would be possible for the EU to agree to levy fuel duties on all its internal flights. Both measures would push up the cost of within-EU flights by a non-trivial amount.
Nothing suggested here would stop people from having their one holiday per year, the main gripe against the plans rumoured so far. They would act as a disincentive to the frequent flyers, perhaps reducing unneccesary travel for business, or cutting people's short breaks from four to three per year. At this stage, curbing the growth is a necessary (though not sufficient) condition to reduce carbon emissions.
