There Needs to Be a Climate Tax for Frequent Fliers

How many times did you fly in 2019? If you took more than six flights, or three roundtrips, you flew more than 98% of the world population. Consequently, you also contributed much more carbon than all other humans on the planet.

Even if most of the world flies occasionally (or not at all), the emissions from air travel are soaring. Annual number of air passengers is projected to more than double its 2019 level by 2050. And that means even more emissions from air travel if no actions are taken to reduce it.

There are some promising lower-emission aviation technologies, but without policy intervention to promote them, they will be adopted slowly. Earlier this month, the International Civil Aviation Organization (ICAO) adopted a 2050 net-zero carbon emissions target for international aviation. This goal marks the first global commitment to tackle aviation emissions, but it comes with an up to $4 trillion dollar price tag, which includes the cost of low-carbon aircraft, fuels, and infrastructure needed to achieve deep cuts in emissions.

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While the industry needs to invest heavily in these technologies, consumers would likely have to pay higher prices for the greener alternative—think renewable energy and electric vehicles in their early days. Currently, sustainable aviation fuels are 2 to 5 times more expensive than fossil jet fuel. In fact, only about 2% of airline customers have been voluntarily paying extra to offset their flight emissions. But there’s a potential solution: a mandatory climate tax.

A conventional carbon tax (fixed price per tons of CO2 emitted) would raise the cost of flying across the board and potentially price out travelers with low income, many of whom may have never flown before.

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Globally, the unequal access to air travel is extreme. In 2019, the richest 20% of the world took 80% of the flights. The 2% of the world population who flew more than six times accounted for 40% of the total passenger flow. This unequal participation in air travel calls for a climate tax that fairly distributes its cost burden. The fairness can be assessed on a few levels: the cost burden on occasional fliers, on low-income travelers, and on countries with low historical emissions.

As an aviation researcher at the International Council on Clean Transportation, I, along with my team, explored policy designs that could raise $4 trillion dollars while addressing these equity concerns. Our study modeled generating 121 billion dollars of tax revenue (the annualized amount of $4 trillion) using a frequent flying levy (FFL) in 2019. The levy increases with each flight taken in a year, from $9 for the second flight to $177 for the 20th. The first flight of any given year would be tax-free. This levy concentrates the tax burden on frequent fliers who are wealthier and usually reside in high-income countries.

The study also estimates that an FFL would have generated 81% of its revenue from the 2% of global population who took more than six flights, and virtually all (98%) of its revenue from the world’s richest 20%. Meanwhile, if you fly only occasionally, the FFL’s impact on your travel spendings should be minimal. If there is a flat climate tax on every flight, people in the lower income brackets would have to cut back travel the most, as they are more price sensitive. Conversely, the wealthier, frequent fliers may take as many flights as they did without the tax.

Moreover, access to air travel varies greatly among countries. Residents in developed countries averaged two flights in 2019, while the rest of the world on average took 0.36 flights. Since developed countries have a larger share of frequent fliers, an FFL would generate 67% of its revenue from developed countries, compared with 51% under a flat climate tax. This concentration of cost burden closely tracks countries’ historical emissions: developed countries emitted about 70% of aviation CO2 between 1980 and 2019.

The historical emissions directly affect the carbon budget left for the next few decades, if we were to limit temperature increase to well-below 2 degrees Celsius. The FFL would allow countries in the Global South to grow their aviation markets without prohibitive cost burdens, especially those about to have a lot of first-time fliers. High-income countries would shoulder a majority of the decarbonization costs even though they may not grow as fast.

An FFL takes into consideration the inequality of air travel within each country as well. The idea of a frequent flying levy was first introduced in the UK as a demand management policy. In the UK, 20% of the households took about 75% of the flights; if the levy could nudge each frequent flier to cut a few flights, the emissions would decrease materially without burdening the rest of the country.

We can also think of the FFL as a mechanism to decouple the growth of air travel from its negative environmental impacts. The levy amount can be pegged to the price premium of cleaner fuels, rather than a demand reduction target, as done in the ICCT study. If the frequent fliers paid to decarbonize air travel, the act of frequent flying would no longer be problematic from the emissions standpoint. The industry can also expand into previously under-serviced markets with climate neutral operations. Emerging markets, especially Africa, have a lot of potential for air traffic growth and airport expansion. If clean technology has already penetrated the global market, those future markets can operate with lower carbon intensity as their foundation.

An alternative of frequent flying levy is to tax based on the total miles flown in a year, called “Air Miles Levy,” with some initial miles designated tax-free. Flying distance better correlates with emissions than flying frequency does, but an Air Miles Levy could penalize those who has essential need for flying long-haul, for example to visit family overseas. After all, long-haul flights have much fewer alternatives compared with short-haul flights.

So how would you implement an FFL? There are indeed quite a few logistical hurdles. Major ones include creating an accurate and privacy-protected flying frequency database, distinguishing leisure travel from business travel, and establishing a governance framework for revenue usage. Initial policies can start on the country-level and simplify the process using a tiered levy schedule or focusing on the flights after achieving certain loyalty status with an airline.

Regardless of its design, the bottom line is that any climate tax related to air travel needs to consider the unequal access to the service to-date and the uneven growth of the industry going forward. In the meantime, frequent fliers, either voluntarily or through mandated policy, will have the opportunity to turn themselves from a creator of the problem to its solver.