African Airlines And EU Emission Tax

The aviation industry in Africa has been experiencing stunted growth owing to various factors militating against the smooth operations of both indigenous and foreign airlines in the region. These factors include lack of infrastructure, obsolete faculties, multiple taxation, high fares etc.

The high taxes imposed on airlines by airport authorities in Africa and the increasing cost of oil in the international market have affected the profitability of those carriers as passengers are wont to seek alternative means of transport in the face of unbearable fare hike.

However, a handful of African airlines have continued to remain afloat even as successive African governments appear to be indifferent to their plight. While they are grappling with these factors that are inimical to their growth, European Union has compounded their problems with the introduction of carbon emission tax which is aimed at reducing pollution from airlines flying in any part of Europe. Aviation accounts for three per cent of global green house gas emissions.

Under this plan, airlines touching down or taking off in the 27-nation European Union must account for Co2 emission.

The Chief Executive Officer of South African Airways, Siza Mzimela has warned that the combination of depressed demand, high fuel prices and increased taxes would make this year a challenging one for the aviation industry.

Commending on this development, the Corporate Communication Manager for Airbus, Linden Birns said an emission trading plan was not necessarily bad. However, he said the EU’s action was dangerous as it could create a precedent for each aviation jurisdiction to create its own scheme, which would amount to multiple taxation. He also mentioned that South Africa was contemplating a carbon tax for industries, including the aviation industry.

African, American and other US-based airlines have kicked against the carbon dioxide emission tax being imposed on airlines. Lufthansa, German airline has already informed its passengers to brace up for higher ticket prices as it refuses to shoulder the cost of a carbon-trading scheme at the centre of a brewing trade sport.

The world’s second largest long-haul carrier after Dubai’s Emirates said it would add the cost from the EU’s Emission Trading Scheme to its existing fuel surcharge, which makes it the first carrier to provide details of how it plans to cope with the additional burden.

Also, Lufthansa would hire temporary staff as flight attendants for routes to cut costs. A spokesman for the carrier said about 200 flight attendants would be employed by a Lufthansa-owned temp agency rather than the carrier itself.

“In the face of intensive competition, especially of companies from non-EU countries whose production is subject to emissions trading to only a small degree, Lufthansa will have to pass on the burden via ticket prices, as suggested by the EU,” it said in a statement.

Recently, Lufthansa raised its existing surcharges between 102 and 122 euros per international flight and 31 euros for domestic and European flights. It said this was purely to cover fuel cost.

The United States, China, India and other nations of the world have condemned the scheme on the grounds that it infringes on their sovereignty. The US Congress has agreed to a provision in sweeping aviation legislation that will put Europe on notice over its mandate for airlines worldwide to pay for carbon emission. The bill is expected to be passed by congress in the coming weeks.

Europe is really upset with this development, saying that any congressional action over the law could harden diplomacy on both sides of the Atlantic and potentially lead to a trade fight.

The US government is considering retaliatory steps on its own to pressure Europe to retreat and negotiate a global carbon emissions policy for aircraft at the United Nations. Members of the EU delegation to the United States are expected to meet this week with state department officials to review the latest developments.

According to transportation secretary, Ray LaHood, “there are a lot of dissensions going on and we need to continue to talk to them.”

“The EU law is a very bad scheme for the airlines. I’ve told my colleagues in Europe that congress is very upset,” he said.

US-based carriers affected by the EU policy are American Airlines, US. Airways, United Airlines and Delta Air-lines. US. Carriers have already raised their fares to cover the EU tax regime.

Aviation analyst, Mr. Taiwo Adenekan who also expressed his view on this matter, aligned himself with African Airlines Association, the umbrella body for the continent’s airlines that condemned the imposition of carbon emission tax on airlines flying to Europe.

“African governments can also introduce the same tax regime to European airlines operating in  the continent. This option is heavy on passengers because it amounts to double taxation. The International Air Transport Association (IATA) should come in to arbitrate on this matter. There is the need for the Nigerian Civil Aviation Authority (NCAA) to convene a workshop on climate change in Africa’s aviation sector to discuss the issue of pollution and aged aircraft,” he added.

Another expert, Olumide Ohunayo said the scheme would generally increase fares to Europe, increase leasing and purchase of fuel-efficient aircraft, thereby putting pressure on finances and cash flow.

“It will reduce leisure travel and stunt the growth of low cost carriers. Air Asia, a long haul low cost carrier is pulling out of Europe while Rynair is reducing frequencies despite the high cash flow. Response from African governments as a whole or individually is not encouraging even with a belated statement from AFRAA,” he added.

Nigeria ranks high among other African nations that allegedly charge airlines excessively. Recently, the Nigerian Airspace Management Agency (NAMA), Federal Airports Authority of Nigeria (FAAN) and Nigerian Civil Aviation Authority (NCAA) introduced a $60 terrorism charge on airlines. It is laughable that these parastatals have taken over the job of security agencies while their primary responsibilities are crying for attention.

Apart from countries like South Africa, Kenya and Ethiopia that have recorded remarkable progress in the aviation sector, Nigeria and many others are still battling with infrastructural decay. Thanks to the Minister of Aviation, Mrs. Stella Oduah Ogiemwonyi for the re-modelling of the terminal buildings in some of the airports. Nigerians and other users of the airports are really impressed by these laudable initiatives as they are also looking forward for the completion of these projects in record time.

However, the Secretary-General of African Airlines Association (AFRAA), Dr. Elijah Chingosho has commended the African Airline operators for their determination to stay in business in the face of the numerous challenges that have retarded their wheel of progress. He urged them to take advantage of the growth that is being experienced in the global aviation industry to expand their operations and strategically position themselves as key link between Africa and other regions of the world.

Reward Akwu