Words by Alex Joseph
On June 1, 2023, the European Union’s Transport Commission announced that the legislative body had ruled out a ban on private jets before the end of 2024. However, after a proposed ban on certain private flights in France and a new tax alongside a similar proposed ban on all domestic flights in Belgium, it is hard not to see that in the long term private aviation, especially in the EU, must pre-emptively rather than reactively adapt to the changing tides of climate legislation if it is to survive.
These changes are an important reminder that all businesses require some form of social license to continue to operate, and when goodwill is exhausted public and legislative pressure can remove this license. The tobacco industry, firearms, coal and gambling are all industries that have had their social licenses restricted due to social and political pressures. Aviation could soon join that list. Yet while these industries were unable to substantively redesign their products to reduce harm, that isn’t necessarily the case with aviation. In addition, under a harsher legislative climate, companies that fail to adapt are likely to disappear. It therefore becomes crucial for those in business aviation to understand how aviation regulation is changing.
Targeted for legislation
Whilst it might seem peculiar that a sector that only accounts for around 2% of aviation emissions has been singled out for ire from legislators, the reasoning behind such pressure starts to come into focus when per capita emissions and the context of the wider impact of the ultra-wealthy on the environment are considered.
Emissions from private jets are up to 14 times higher per passenger than those flying on commercial airlines and thus appear particularly unnecessary where most major destinations are well-serviced by commercial flights. Where demand for private jets has increased by 31% between 2005-2020 and wealth inequality continues to rise, conversations around taxation are coming to the fore. According to a 2018 study published in the journal Global Environmental Change, 1% of the world’s population is responsible for 50% of aviation emissions and that 1% should pay for the environmental damage they are causing.
Tobias Konik, CEO of tax consultants FCC Aviation says most charter companies based in Europe prioritize compliance with existing regulations to ensure operations can go ahead. He says, “When they pick up a passenger and there is an inspection, if they don’t have the relevant documentation it could prevent an aircraft from taking off.”
Such mistakes can be embarrassing and costly to a firm’s reputation. However, changing environmental tax burdens may create a push to put more thought into how operations are conducted.
Konik uses Portugal’s current carbon tax as an example. At around €2,000 (US$2,150) for a private jet flight to Newark, USA, it might not make much of an impact at present, when such a flight typically costs five figures. However, it might begin to make a difference if these taxes rise further or span a wider range of countries. More prospective clients may re-evaluate if a charter flight is worth it despite its benefits. This is increasingly the point of such taxes ‒ to discourage private flights and push consumers towards greener methods of transportation by raising costs.
From bottom to top
Jo Dardenne, aviation director at the think tank Transport & Environment believes it is only natural governments are targeting those who fly the most with higher taxation to pay for the effects of their emissions. Reduction of demand is crucial to achieve targets. “We published a study two years ago, which suggested we use private jets to kickstart decarbonization of the sector, making them no longer part of the problem, but part of the solution,” she says.
Private jets make up a relatively small percentage of total emissions. They typically use smaller aircraft and fly shorter distances, whereas according to European air traffic network manager Eurocontrol, 50% of emissions come from the top 6% longest flights. Yet the first electric and hydrogen aircraft are going to need to be tested, developed and improved in commercial environments to help fund and refine innovations in green aircraft. As battery energy densities and hydrogen propulsion technology improve, the superior efficiency of electric motors may begin to offer a legitimate challenge to classic kerosene engines.
Dardenne says, “Most business jets’ flights are under 500km, which could be a plausible range for electric and hydrogen aircraft. But regulators need to make them pay for their disproportionate impact on the climate and introduce legislation that requires them to go green.”
To achieve this, Transport & Environment proposes a mandate for private jets to be fossil fuel-free by a certain date. Dardenne believes that it is inevitable that the companies that innovate will be the ones who survive.
Small electric and hydrogen aircraft are under development by companies including Universal Hydrogen, Aura Aero and Eviation. These and other options are planned to enter into service later this decade.
Dardenne believes that cheaper and less radical measures, such as offsetting are attractive because of their low cost and immediacy, but according to Dardenne will not be effective in decarbonizing the sector.
For instance, she points out that CORSIA, an international aviation offsetting program, only covers the growth in emissions above 85% of 2019 levels. “It also has some offsets, such as those to prevent deforestation, with methodologies to calculate CO2 savings that are questionable, hardly permanent and which do not help the sector decarbonize. And countries such as Brazil, India and China have not even indicated whether they’ll apply the scheme.”
In the intermediate period, SAF (sustainable aviation fuel) will act as a stop-gap, but ensuring that this fuel is genuinely sustainable is another issue. SAF has limited feedstocks and to be truly sustainable needs to come from waste products such as used cooking oils.
The fuel can be up to six times as expensive per liter as kerosene, and carbon taxes could increase the demand and price further. Markets such as the UK are proposing mandates on minimum usage of SAF as soon as 2025, making the use of the fuel a priority for those beginning their decarbonization journey.
Dardenne points out that whilst private aviation might act as a test bed for some technologies, the steps for tackling aviation emissions are to reduce, rationalize and then decarbonize. Therefore, climate legislation should seek to reduce demand in parallel to promoting decarbonization.
The effect of rapidly changing regulatory frameworks is more complexity and less clarity. An example is Belgium’s recent higher taxation on shorter-haul flights. With most emissions coming from long-haul flights, Dardenne believes targeting short-haul does not make sense, aside from where short-haul demand is rising faster than long-haul. Such missteps are more likely when politicians prioritize the optics of legislation. Loopholes around free carbon allowances in emissions trading schemes could also soon be closed, with the UK proposing to reduce these between 2024 and 2026.
There are also likely to be many minor changes to operations over the next few years which are worth keeping track of. Legislation to tackle practices such as tankering, and the stockpiling of fuel in aircraft to avoid paying exorbitant duties or costs elsewhere are likely to be some of the first to be outlawed completely. SAF mandates and bans on certain short flights are similar measures.
Looking forward at the possible evolution of business aviation markets, it appears that operators who fly low frequency at higher ticket prices are more likely to survive than those trying to make private travel affordable. Regulation outside of the EU is generally more favorable to business and private aviation and thus it is also plausible that the industry’s market centers outside of the USA may shift towards BRICS economies.
However, with green aviation for business jets within touching distance, it makes the most sense for the sector to adopt these technologies as soon as possible.