Saturday, October 15, 2011

European Airlines Taxes

In an article found in the New York Times it was reported that an advisor for the European Court of Justice published an opinion that supported the proposed law to charge the airlines for their green house gas emissions. It was proposed that the airlines that fly in and out of Europe should be held responsible for their emissions and therefore charged for them. This would cause the true cost of air travel to be realized in that the airlines would be held responsible for the pollution that they are putting into the atmosphere which can be considered an externality. Airlines say that this would infringe on the sovereignty of the nations that they are based in and would go against the so called freedom of the high seas. However the law is not set in stone yet and would provide some room for negotiations such as only charging flights that leave Europe or not charging the airlines for the emissions that they produce outside of European Union air space. The article says that this would cause a price increase for trans-Atlantic one way airfare of only $2.70 to $16.15; however the airlines say that the price increase would be much higher than that.
I feel that this is a good way to make the airlines responsible for the emissions that they produce. However I think that a much bigger tax is going to be required before it would be advantageous for the airlines to make investments in a cleaner energy source. Such a small price increase would not deter enough people from trans-Atlantic flight for the airlines to lose enough profit and thereby force them to look into alternate forms of power. But if this system were enacted worldwide it might produce enough lost profit that the airlines would be pushed to develop a system for fueling their planes that had much less environmental impact and thus lower the external costs of operating and as a result the price of an airline ticket.
--Matt Timmons

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