IATA opposes the “ill-advised solidarity tax proposal”
The International Air Transport Association (IATA) expresses deep disappointment over the recommendation of the Solidarity Levy Task Force (GSLTF) to target air transport in its effort to “improve the mobilization of national revenues from developing countries and support international solidarity (particularly in relation to climate change mitigation and adaptation, pandemics, and other development issues)”.
L’IATA (Association du transport aérien international) représente quelque 350 compagnies aériennes qui assurent plus de 80 % du trafic aérien mondial.
An initial assessment of the GSLTF proposal reveals serious shortcomings:
- A competitive airline industry does not generate excessive profits: The GSLTF announcement, which contains no meaningful detail, cites a CE Delft estimate that a tax on “premium” travel could generate revenue of EUR 78 billion (over USD 90 billion) per year. This represents about three times the profits of the global airline industry, valued at USD 32.4 billion in 2024. The structurally thin profit margin of airlines (estimated at an average of 3.4% for the entire industry in 2024, which is about half the global average for all industries) must also be considered in political deliberations.
- The airline industry’s commitments to sustainability represent several trillion dollars: Airlines have committed to eliminating net carbon emissions by 2050. This effort is expected to cost USD 4700 trillion over the period from 2024 to 2050. This will ensure that aviation can deliver its direct contribution of 3.9% of global GDP, as well as 86.5 million jobs worldwide, while addressing its estimated share of 2.5% of global carbon emissions. Increasing aviation taxes on airlines, as the proposal wants, will limit the industry’s ability to invest in solutions likely to reduce long-term emissions.
- There is already a specialized climate finance mechanism for aviation: The GSLTF proposal neglects the role of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which was adopted under the International Civil Aviation Organization (ICAO) as the first globally accepted measure for managing carbon emissions in an industrial sector, namely aviation. The GSLTF States were among those who created CORSIA, on the principle that it would be the only harmonized market-based measure for managing international aviation carbon emissions. Overlapping measures, such as the solidarity tax, would undermine CORSIA and lead us towards a fragmented, inefficient and incoherent global policy framework. It is essential that all States (including those in the GSLTF) focus their efforts on the success of CORSIA rather than promoting redundant measures. CORSIA critically needs support, primarily from states that need to make carbon credits available so that airlines can meet their obligations under CORSIA and states can receive their climate financing.
- Failure to assess cost growth is an unavoidable consequence of the proposed tax: Furthermore, the GSLTF has not published any assessment of the impact of such a levy on the economies of states to which funds are intended, or the broader impact on all travelers. There are no details on how the funds would be used either. While the GSLTF presents its proposal as targeting premium travel, it does not acknowledge the crucial importance of this segment to route network viability. Punishing premium travelers or burdening the industry with excessive taxes would upset the dynamics that allow for the connectivity relied on by nearly five billion travelers this year. The GSLTF’s proposal would make airlines less efficient and add more financial pressure. This would result in higher costs for all travelers and for air freighted goods. The reduced affordability for an industrial sector that is a vital economic catalyst would ultimately have the unintended consequence of weakening economic growth.
“The airline industry is an economic catalyst, not a cash cow. Yet governments casually suggest a tax on air travelers that is three times the annual profits of the airline industry, without considering the side effects in a real world for an industry that offers a lifeline to remote communities, stimulates tourism markets, and ships local products to global markets. Furthermore, although the specifics of the GSLTF’s proposal are not specified, history teaches us that these taxes are simply paid into the public treasury, and very little of these revenues go toward adapting to climate changes,” says Willie Walsh, IATA’s General Director.
“The GSLTF claims that these solidarity taxes won’t increase the cost of living for ordinary citizens and won’t impact household budgets. That’s false. The reality is that if implemented, the GSLTF’s recommendations will raise the cost of air travel for all travelers and do more harm than good. Taking tens of billions from aviation will impair its ability to invest to achieve net zero by 2050, change the route dynamics to the extent that connectivity will suffer, and deprive countries of the critical economic support provided by air transport,” adds Mr. Walsh.