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Oykie
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FT: EU plans tax on aviation fuel - to be announced on 14th of July

Wed Jul 14, 2021 8:52 am

According to Financial Times EU will propose a tax on aviation fuel under their new plan ‘Fit for 55’. It will be revealed on Thursday 16th of July. Fit for 55 is a detailed plan for how EU will cut CO2 emission by 55% by 2030.

The article group A4E opposes the plan and says:

Airline group A4E has said new carbon taxes for the sector are “ecologically and economically counterproductive” and that market-based carbon pricing should be the only main form of CO2 pricing placed on the industry. 

“An intra-EU kerosene tax could lead to a competitive distortion within Europe’s internal market and globally,” said A4E. “A possible kerosene tax that would set minimum tax rates for intra-EU flights is likely to have the most negative impact, as it may open the door to different rates inside the single market.”


https://www.ft.com/content/5df5fb54-274 ... 04d045edb5

Depending on how it is implemented could this help Qatar, Emirates and Turkish airways in competition with European airlines? If nonstop Europe to Asia will be very expensive, it might be cheaper with a stop in the Middle East? Maybe it will be cheaper to fly by Istanbul to the U.S.?

I can see that inside Europe it will create a level playing field for bio fuels, but out of Europe it can leave European airlines less competitive. It will be interesting to see what they propose. Ideally I would like this resolved in ICAO of IATA and agreed upon globally.
Last edited by SQ22 on Wed Jul 14, 2021 4:28 pm, edited 1 time in total.
Reason: Title updated
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DUSZRH
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Re: EU to propose tax on aviation fuel

Wed Jul 14, 2021 9:17 am

The current discussion is about intra EU flights. The airlines are scared that long term bilateral agreements with more countries might follow. (UK, CH, US). It might make feeder flights more expensive, the bulk is on P2P.

I prefer a fuel tax against the currently common departure fee, as it incentives fuel saving.
 
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zeke
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 9:22 am

Oykie wrote:
According to Financial Times EU will propose a tax on aviation fuel under their new plan ‘Fit for 55’. It will be revealed on Thursday 16th of July. Fit for 55 is a detailed plan for how EU will cut CO2 emission by 55% by 2030.

The article group A4E opposes the plan and says:

Airline group A4E has said new carbon taxes for the sector are “ecologically and economically counterproductive” and that market-based carbon pricing should be the only main form of CO2 pricing placed on the industry. 

“An intra-EU kerosene tax could lead to a competitive distortion within Europe’s internal market and globally,” said A4E. “A possible kerosene tax that would set minimum tax rates for intra-EU flights is likely to have the most negative impact, as it may open the door to different rates inside the single market.”


https://www.ft.com/content/5df5fb54-274 ... 04d045edb5

Depending on how it is implemented could this help Qatar, Emirates and Turkish airways in competition with European airlines? If nonstop Europe to Asia will be very expensive, it might be cheaper with a stop in the Middle East? Maybe it will be cheaper to fly by Istanbul to the U.S.?

I can see that inside Europe it will create a level playing field for bio fuels, but out of Europe it can leave European airlines less competitive. It will be interesting to see what they propose. Ideally I would like this resolved in ICAO of IATA and agreed upon globally.


What you have quoted states “set minimum tax rates for intra-EU flights”, that to me is effectively saying “domestic” flights within the common EU market, not “international” or flights entering, exiting, or overflying the EU.
“Don't be a show-off. Never be too proud to turn back. There are old pilots and bold pilots, but no old, bold pilots.” E. Hamilton Lee, 1949
 
Toinou
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 9:27 am

Oykie wrote:
“An intra-EU kerosene tax could lead to a competitive distortion within Europe’s internal market and globally,” said A4E. “A possible kerosene tax that would set minimum tax rates for intra-EU flights is likely to have the most negative impact, as it may open the door to different rates inside the single market.”

It's rather fun to see them complaining about a distortion in the internal market while this would solve an existing one: the fact that other means of transport have to use taxed energy. I think their PR may improve vastly...

I'm still not understanding the reason why this tax won't apparently be applied to private planes.
 
Oykie
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 9:49 am

zeke wrote:
Oykie wrote:
According to Financial Times EU will propose a tax on aviation fuel under their new plan ‘Fit for 55’. It will be revealed on Thursday 16th of July. Fit for 55 is a detailed plan for how EU will cut CO2 emission by 55% by 2030.

The article group A4E opposes the plan and says:

Airline group A4E has said new carbon taxes for the sector are “ecologically and economically counterproductive” and that market-based carbon pricing should be the only main form of CO2 pricing placed on the industry. 

“An intra-EU kerosene tax could lead to a competitive distortion within Europe’s internal market and globally,” said A4E. “A possible kerosene tax that would set minimum tax rates for intra-EU flights is likely to have the most negative impact, as it may open the door to different rates inside the single market.”


https://www.ft.com/content/5df5fb54-274 ... 04d045edb5

Depending on how it is implemented could this help Qatar, Emirates and Turkish airways in competition with European airlines? If nonstop Europe to Asia will be very expensive, it might be cheaper with a stop in the Middle East? Maybe it will be cheaper to fly by Istanbul to the U.S.?

I can see that inside Europe it will create a level playing field for bio fuels, but out of Europe it can leave European airlines less competitive. It will be interesting to see what they propose. Ideally I would like this resolved in ICAO of IATA and agreed upon globally.


What you have quoted states “set minimum tax rates for intra-EU flights”, that to me is effectively saying “domestic” flights within the common EU market, not “international” or flights entering, exiting, or overflying the EU.


When I re-read it I realize that it’s about intra EU flights.
Dream no small dream; it lacks magic. Dream large, then go make that dream real - Donald Douglas
 
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scbriml
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 9:49 am

Toinou wrote:
I'm still not understanding the reason why this tax won't apparently be applied to private planes.


Because that might impact the elites?
Time flies like an arrow. Fruit flies like a banana!
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Toinou
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 10:05 am

scbriml wrote:
Toinou wrote:
I'm still not understanding the reason why this tax won't apparently be applied to private planes.


Because that might impact the elites?

While it's all too clear to me, I still hope they might be another reason. How foolish of me!
 
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Aesma
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 10:24 am

If you own a plane and fly it privately fuel is already taxed.

The problem is most private jets are owned by companies.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
chonetsao
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 10:34 am

To the OP, yes I think it will help Qatar, Emirates etc. in competition. I wonder if European airlines and American counterpart will carry extra fuel towards Europe is the fuel tax gets raised year after year like the consumer fuel taxation in UK.
 
FluidFlow
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 10:42 am

chonetsao wrote:
To the OP, yes I think it will help Qatar, Emirates etc. in competition. I wonder if European airlines and American counterpart will carry extra fuel towards Europe is the fuel tax gets raised year after year like the consumer fuel taxation in UK.


I am pretty sure Qatar, Emirates etc. do not offer intra European flights. So if Airlines want to bring in extra fuel from outside Europe it would be a pretty stupid way of operating...
 
tomcat
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 10:46 am

After a delay of many years, EU is finally catching up on the USA in terms of taxation of the domestic flights, including a tax on commercial jet fuel. The government-imposed taxes on air transport are indeed numerus in the USA and this doesn't seem to have significantly affected the US domestic market. I understand the rebuttal of A4E but the American example shows it's not such a bid deal.

https://www.airlines.org/dataset/government-imposed-taxes-on-air-transportation/
 
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Aesma
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 10:59 am

tomcat wrote:
After a delay of many years, EU is finally catching up on the USA in terms of taxation of the domestic flights, including a tax on commercial jet fuel. The government-imposed taxes on air transport are indeed numerus in the USA and this doesn't seem to have significantly affected the US domestic market. I understand the rebuttal of A4E but the American example shows it's not such a bid deal.

https://www.airlines.org/dataset/government-imposed-taxes-on-air-transportation/


All flights are pretty taxed in the EU, more than in the US. In your link I see the fuel tax is 4,3 cents a gallon, is that a joke ?
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
tomcat
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 11:08 am

Aesma wrote:
tomcat wrote:
After a delay of many years, EU is finally catching up on the USA in terms of taxation of the domestic flights, including a tax on commercial jet fuel. The government-imposed taxes on air transport are indeed numerus in the USA and this doesn't seem to have significantly affected the US domestic market. I understand the rebuttal of A4E but the American example shows it's not such a bid deal.

https://www.airlines.org/dataset/government-imposed-taxes-on-air-transportation/


All flights are pretty taxed in the EU, more than in the US. In your link I see the fuel tax is 4,3 cents a gallon, is that a joke ?


It is what it is but along the passenger ticket tax and the flight segment tax, taxation on domestic flights is substantial in the USA. As far as I know, there is no VAT applied on intra-EU flights.

Also, I understand there are also the state taxes to take into consideration on top of the US federal taxes.

All in all, in terms of taxing domestic flights like any other service, the USA are "ahead" of the EU. It's just that the US tax rates are as always lower than the ones we could anticipate in the EU.
 
MIflyer12
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 11:23 am

tomcat wrote:
Also, I understand there are also the state taxes to take into consideration on top of the US federal taxes.



I don't believe there are any state taxes applied to U.S. tickets. Here's a low fare DTW-FLL one-way from ITA Matrix:



Tickets cannot be purchased directly from ITA Software.
Provide this information to a travel agent to help them match the fares found.
Make sure to provide the exact booking and fare codes shown.
Fare for 1 adult
Fare 1: Carrier NK UA14NR DTT to FLL (rules)
Passenger type ADT, one-way fare, booking code U
Covers DTW-FLL (Economy)
$53.94
US Transportation Tax (US)
$4.06
US Passenger Facility Charge (XF)
$4.50
United States Flight Segment Tax Domestic (ZP)
$4.30
United States Passenger Civil Aviation Security Service Fee (AY)
$5.60
Subtotal per passenger
$72.40
Number of passengers
x1
Subtotal For 1 adult
$72.40
This ticket is non-refundable.
Fare Construction (can be useful to travel agents)
DTT NK FLL Q39.06 14.88UA14NR USD 53.94 END ZP DTW XT 4.06US 4.30ZP 5.60AY 4.50XF DTW4.50
Total Airfare & Taxes
$72.40


By making XF, ZP and AY flat taxes the overall tax rate is regressive: a higher tax rate on this cheap coach fare that on a $409 F cabin fare.

U.S. state gasoline taxes ranged from about $0.14 per gallon to $0.62/gallon last year, on top of the $0.184/gallon Federal tax.
 
davidjohnson6
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 11:27 am

On a long-haul flight like JFK-CDG it's possible to buy more fuel than necessary in JFK, tanker it across the Atlantic, and then buy less fuel (and pay less tax) in CDG for the return.... but the cost of the tankering fuel long-haul is non-trivial
The major aviation market for flights to/from the EU with strong short-haul demand is the UK, and London in particular. Tankering fuel from London to Frankfurt for example to counter high tax rates may interest an airline's accountants. Will the UK feel an obligation to start taxing aviation fuel as well ? Should be more than possible for UK politicians to present this as "pro environment" rather than being part of an EU scheme
 
tomcat
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 11:32 am

MIflyer12 wrote:
tomcat wrote:
Also, I understand there are also the state taxes to take into consideration on top of the US federal taxes.



I don't believe there are any state taxes applied to U.S. tickets. Here's a low fare DTW-FLL one-way from ITA Matrix:



Tickets cannot be purchased directly from ITA Software.
Provide this information to a travel agent to help them match the fares found.
Make sure to provide the exact booking and fare codes shown.
Fare for 1 adult
Fare 1: Carrier NK UA14NR DTT to FLL (rules)
Passenger type ADT, one-way fare, booking code U
Covers DTW-FLL (Economy)
$53.94
US Transportation Tax (US)
$4.06
US Passenger Facility Charge (XF)
$4.50
United States Flight Segment Tax Domestic (ZP)
$4.30
United States Passenger Civil Aviation Security Service Fee (AY)
$5.60
Subtotal per passenger
$72.40
Number of passengers
x1
Subtotal For 1 adult
$72.40
This ticket is non-refundable.
Fare Construction (can be useful to travel agents)
DTT NK FLL Q39.06 14.88UA14NR USD 53.94 END ZP DTW XT 4.06US 4.30ZP 5.60AY 4.50XF DTW4.50
Total Airfare & Taxes
$72.40


By making XF, ZP and AY flat taxes the overall tax rate is regressive: a higher tax rate on this cheap coach fare that on a $409 F cabin fare.

U.S. state gasoline taxes ranged from about $0.14 per gallon to $0.62/gallon last year, on top of the $0.184/gallon Federal tax.


About the state taxes, Wiki is listing state taxes on jet fuel but I don't know how reliable Wiki is on this subject.

https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States#Aviation_fuel_taxes
 
FluidFlow
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 11:57 am

davidjohnson6 wrote:
On a long-haul flight like JFK-CDG it's possible to buy more fuel than necessary in JFK, tanker it across the Atlantic, and then buy less fuel (and pay less tax) in CDG for the return.... but the cost of the tankering fuel long-haul is non-trivial
The major aviation market for flights to/from the EU with strong short-haul demand is the UK, and London in particular. Tankering fuel from London to Frankfurt for example to counter high tax rates may interest an airline's accountants. Will the UK feel an obligation to start taxing aviation fuel as well ? Should be more than possible for UK politicians to present this as "pro environment" rather than being part of an EU scheme


The real question is, will the fuel be actually taxed or will it just be a tax that is applied theoretically. So the airline has to log the fuel use on a specific sector and the tax will be applied per sector and not on the actual fuel bought.
 
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gdg9
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 12:19 pm

If anyone is interested on ICAO and taxes, as I was after seeing this thread - https://www.icao.int/publications/Docum ... 2ed_en.pdf
@dfwtower
 
davidjohnson6
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 1:01 pm

FluidFlow wrote:
The real question is, will the fuel be actually taxed or will it just be a tax that is applied theoretically. So the airline has to log the fuel use on a specific sector and the tax will be applied per sector and not on the actual fuel bought.


Tax collector departments of Govts in many countries have rules about how fast an airline can depreciate an aircraft - this prevents an airline from reducing its tax bill. In the same way, a Govt can also have rules about the minimum amount of fuel that is required for different aircraft types to fly a distance (e.g. 100 nm) on a great circle basis. This should prevent any airlines from claiming that a 7 hour transatlantic flight used almost zero fuel
 
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par13del
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 1:22 pm

FluidFlow wrote:

But OP is wrong, non-EU airlines will not get any benefits out of that because there will be no tax on any flight leaving the EU. So CDG-IST (no tax no matter who is the carrier), CDG-ATH (taxed no matter who is the carrier).

So you think the end game for the EU carriers is to have one company do international travel and another domestic travel?
The issue is increasing the cost of doing business, I do not think the EU carriers will want their domestic pax to bear the full financial load, it will essentially kill the market which in my opinion is what the tax is all about, remove the flying polution. France is already working on limited stage length domestic flights, so the principle is the same, uses taxes to get the required behaviour.
I would in the long run expect the politicians to look for ways to "increase" the cost of international carriers by using their trade agreements, which will level the playing field.
 
LCDFlight
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 1:33 pm

Will the tax be applied equally to rail, road and sea transportation?

If not, they don't care about CO2; it is just a ploy.
 
FluidFlow
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 1:33 pm

par13del wrote:
FluidFlow wrote:

But OP is wrong, non-EU airlines will not get any benefits out of that because there will be no tax on any flight leaving the EU. So CDG-IST (no tax no matter who is the carrier), CDG-ATH (taxed no matter who is the carrier).

So you think the end game for the EU carriers is to have one company do international travel and another domestic travel?
The issue is increasing the cost of doing business, I do not think the EU carriers will want their domestic pax to bear the full financial load, it will essentially kill the market which in my opinion is what the tax is all about, remove the flying polution. France is already working on limited stage length domestic flights, so the principle is the same, uses taxes to get the required behaviour.
I would in the long run expect the politicians to look for ways to "increase" the cost of international carriers by using their trade agreements, which will level the playing field.


Why would you need to split the business because of the tax? Every flight within the EU (what is actually an international flight in most case) will be taxed no matter who operates it. Every flight leaving the EU will not be taxed.

I use the EU for simplicity, i fully expect it to be the EEA group of countries.

So there will actually be no change for European airlines in the way as it will affect all competitors too. I also expect that tickets leaving the EU will be exempt, so BER-FRA-JFK will have no tax (despite the intra EU leg) on it so that LH will have no competitive disadvantage over TK offering BER-IST-JFK (that would be excluded from tax due to no intra EU leg).

What I expect in the future that GB will be pressured into introducing a tax on GB-EU flights equal to the tax charged for intra EU flights. IAG and easyjet will be the bargain chip here.
 
FluidFlow
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 1:34 pm

LCDFlight wrote:
Will the tax be applied equally to rail, road and sea transportation?

If not, they don't care about CO2; it is just a ploy.


road and rail are taxed, electricity and fuel do not come tax free.
 
tomcat
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 2:01 pm

While on this forum we focus on the impact of this plan on the airlines, I wonder how easy this plan will be accepted by the EU member states. The most peripheral members of the EU, the Nordic countries excepted, have hugely benefited from the trafic liberalization and the emergence of the low cost airlines. The air transport liberalization is actually one of the few successes of the EU policy. If the scheme would render these low cost flights totally unattractive, it could trigger a strong opposition among the affected member states. Let's also keep in mind that countries like Romania, Bulgaria, Greece, and Portugal are and will remain less accessible by train from the densely populated areas like Benelux and Germany. Personally, I see this plan facing more headwind from some member states than from the airlines.
 
Toinou
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 2:33 pm

FluidFlow wrote:
What I expect in the future that GB will be pressured into introducing a tax on GB-EU flights equal to the tax charged for intra EU flights. IAG and easyjet will be the bargain chip here.

And Switzerland.
And it will probably soon be a part of bilateral air transport agreements (at least new of reviewed ones).
 
MohawkWeekend
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Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

Wed Jul 14, 2021 3:13 pm

Does anyone know what the current level of tax on Jet is in Europe ? Right now the US Federal tax is $0.194 per gallon.


I did find it interesting that individual US States have varying taxes on turbine fuel. I imagine that might lead to some fuel tankering similar to what may happen in Europe
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    par13del
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    Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

    Wed Jul 14, 2021 3:42 pm

    FluidFlow wrote:
    Why would you need to split the business because of the tax?

    One does not need to split the business, the reason why "international" carriers not domiciled in the EU may have an advantage is because those in the EU may try to minimize the effect of the tax by spreading the increase cost across both international and domestic lines.
    Example, a 5% added tax on domestic fares does not have to mean that all domestic fares will increase by 5%, an airline can decide to lower domestic fares by 3% and increase international fares by 2%, the effect of the 5% increase in the cost of doing domestic business will be subsidized by the international arm, which in effect will place an additional increase which is not being borne by non-EU carriers, so an advantage.
     
    bennett123
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    Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

    Wed Jul 14, 2021 5:30 pm

    par13del wrote:
    FluidFlow wrote:
    Why would you need to split the business because of the tax?

    One does not need to split the business, the reason why "international" carriers not domiciled in the EU may have an advantage is because those in the EU may try to minimize the effect of the tax by spreading the increase cost across both international and domestic lines.
    Example, a 5% added tax on domestic fares does not have to mean that all domestic fares will increase by 5%, an airline can decide to lower domestic fares by 3% and increase international fares by 2%, the effect of the 5% increase in the cost of doing domestic business will be subsidized by the international arm, which in effect will place an additional increase which is not being borne by non-EU carriers, so an advantage.


    Not sure that your sums add up.
     
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    Aesma
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    Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

    Wed Jul 14, 2021 6:09 pm

    MohawkWeekend wrote:
    Does anyone know what the current level of tax on Jet is in Europe ? Right now the US Federal tax is $0.194 per gallon.

    I did find it interesting that individual US States have varying taxes on turbine fuel. I imagine that might lead to some fuel tankering similar to what may happen in Europe


    For US airlines it's 0.043$ per gallon not 0.194$.

    There is no EU wide tax on it at the moment, that's why we're talking about one being introduced ! The issue is the Chicago convention, the EU is made up of 27 countries so an EU wide tax would be in breach of the Chicago convention.

    Each EU country can tax fuel if they wish, like the US has done.

    From what I can find Germany was thinking of a 33 cents/litre tax, which combined with other current environmental taxes (departure tax I'm guessing) would amount to 65 cents/litre or about the same as what fuel for cars is taxed.

    So 70 times more than the US tax...
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    marcelh
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    Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

    Wed Jul 14, 2021 6:14 pm

    tomcat wrote:
    The air transport liberalization is actually one of the few successes of the EU policy.

    That’s just your opinion….
     
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    par13del
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    Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

    Wed Jul 14, 2021 7:24 pm

    bennett123 wrote:
    par13del wrote:
    FluidFlow wrote:
    Why would you need to split the business because of the tax?

    One does not need to split the business, the reason why "international" carriers not domiciled in the EU may have an advantage is because those in the EU may try to minimize the effect of the tax by spreading the increase cost across both international and domestic lines.
    Example, a 5% added tax on domestic fares does not have to mean that all domestic fares will increase by 5%, an airline can decide to lower domestic fares by 3% and increase international fares by 2%, the effect of the 5% increase in the cost of doing domestic business will be subsidized by the international arm, which in effect will place an additional increase which is not being borne by non-EU carriers, so an advantage.


    Not sure that your sums add up.

    It does not have to, we are talking about what they could do to distribute cost.
     
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    william
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    Re: FT: EU plans tax on aviation fuel - to be announced on 14th of July

    Wed Jul 14, 2021 7:38 pm

    So again, where does the money from Carbon taxes go to? Serious question, is there a tree planting program this goes to do reduce the carbon in the atmosphere? Or is this just another "revenue enhancer" for the EU countries?
     
    Galwayman
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    Re: FT: EU plans tax on aviation fuel - to be announced on 14th of July

    Wed Jul 14, 2021 8:00 pm

    Flights to/from the non contiguous regions of the EU - Greece, Ireland etc will of course need to be exempt obviously .....
     
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    Dutchy
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    Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

    Wed Jul 14, 2021 9:30 pm

    tomcat wrote:
    The air transport liberalization is actually one of the few successes of the EU policy.


    That is your opinion, an opinion not based on facts. The EU is a massive success, even so, that it is being copied all over the globe. But that digresses from the topic a bit.

    Yes, this forum is aviation orientated. The impact of the Green Deal will be felt in the aviation world. It is unavoidable. Aviation does add to the pollution total, doesn't matter how much you will spin it, in the end, that is undeniable. It is quite unreasonable to exempt aviation. They have had this advantage ever since the Chigaco treaty, right after WWII. That is coming to an end. The impact on aviation will be that it will diminish, at least the intra-EU flights. Probably the feeder flights will be excempt, in one way or another. But LCC, like EasyJet and Ryanair, will have to rethink their business plan. We, as the EU population, will have to rethink our use of planes, a weekend in Barcelona and the next weekend in Berlin, might not be all that needed to live a happy life.

    I think it is a good thing. Aviation has quite an impact on its immediate surroundings as well as climate change and the environment. To give an example, a consultancy firm release a paper on this topic, they said the prosperity (not just economic, but also social and welfare) will be negatively impacted if Schiphol is to be expanded, 2,3 - 3,1 billion euro's even.

    As for aviation: enjoy, but in moderation (which is a slogan for drinking alcohol in the Netherlands, but I feel it is also quite appropriate for flying)
    Many happy landings, greetings from The Netherlands!
     
    User avatar
    Dutchy
    Posts: 12523
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    Re: FT: EU plans tax on aviation fuel - to be announced on 14th of July

    Wed Jul 14, 2021 9:33 pm

    william wrote:
    So again, where does the money from Carbon taxes go to? Serious question, is there a tree planting program this goes to do reduce the carbon in the atmosphere? Or is this just another "revenue enhancer" for the EU countries?


    Part of it will go to lower-income families to combat the cost rise of the Green Deal. It is not just aviation, it is about taxation of all fossil fuel use.
    Many happy landings, greetings from The Netherlands!
     
    MohawkWeekend
    Posts: 840
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    Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

    Wed Jul 14, 2021 9:33 pm

    Aesma wrote:
    MohawkWeekend wrote:
    Does anyone know what the current level of tax on Jet is in Europe ? Right now the US Federal tax is $0.194 per gallon.

    I did find it interesting that individual US States have varying taxes on turbine fuel. I imagine that might lead to some fuel tankering similar to what may happen in Europe


    For US airlines it's 0.043$ per gallon not 0.194$.

    There is no EU wide tax on it at the moment, that's why we're talking about one being introduced ! The issue is the Chicago convention, the EU is made up of 27 countries so an EU wide tax would be in breach of the Chicago convention.

    Each EU country can tax fuel if they wish, like the US has done.

    From what I can find Germany was thinking of a 33 cents/litre tax, which combined with other current environmental taxes (departure tax I'm guessing) would amount to 65 cents/litre or about the same as what fuel for cars is taxed.

    So 70 times more than the US tax...


    So I have to ask - why in the world is jet fuel not taxed in the US like diesel fuel?
      300 319 320 321 707 717 720 727 72S 737 73S 734 735 73G 738 739 747 757 762 ARJ B11 C212 CRJ CR2 CR7 CR9 CV5 D8S DC9 D9S D94 D95 D10 DH8 DTO EMB EM2 E135 E145 E190 FH7 F28 F100 FTRIMTR HRN L10 L15 M80 M90 SF3 SWM YS11
       
      MohawkWeekend
      Posts: 840
      Joined: Tue Jan 08, 2019 2:06 pm

      Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

      Wed Jul 14, 2021 9:34 pm

      MohawkWeekend wrote:
      Aesma wrote:
      MohawkWeekend wrote:
      Does anyone know what the current level of tax on Jet is in Europe ? Right now the US Federal tax is $0.194 per gallon.

      I did find it interesting that individual US States have varying taxes on turbine fuel. I imagine that might lead to some fuel tankering similar to what may happen in Europe


      For US airlines it's 0.043$ per gallon not 0.194$.

      There is no EU wide tax on it at the moment, that's why we're talking about one being introduced ! The issue is the Chicago convention, the EU is made up of 27 countries so an EU wide tax would be in breach of the Chicago convention.

      Each EU country can tax fuel if they wish, like the US has done.

      From what I can find Germany was thinking of a 33 cents/litre tax, which combined with other current environmental taxes (departure tax I'm guessing) would amount to 65 cents/litre or about the same as what fuel for cars is taxed.

      So 70 times more than the US tax...


      So I have to ask - why in the world is jet fuel not taxed in the US like diesel fuel?
      Does anyone know why this industry is so favored?
        300 319 320 321 707 717 720 727 72S 737 73S 734 735 73G 738 739 747 757 762 ARJ B11 C212 CRJ CR2 CR7 CR9 CV5 D8S DC9 D9S D94 D95 D10 DH8 DTO EMB EM2 E135 E145 E190 FH7 F28 F100 FTRIMTR HRN L10 L15 M80 M90 SF3 SWM YS11
         
        User avatar
        Dutchy
        Posts: 12523
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        Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

        Wed Jul 14, 2021 9:40 pm

        Aesma wrote:
        The issue is the Chicago convention, the EU is made up of 27 countries so an EU wide tax would be in breach of the Chicago convention.


        Actually, it would not be a breach of this convention, it doesn't say anywhere that no one can tax aviation, it doesn't even mention tax in the original text.
        Many happy landings, greetings from The Netherlands!
         
        MIflyer12
        Posts: 9855
        Joined: Mon Feb 18, 2013 11:58 pm

        Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

        Wed Jul 14, 2021 9:44 pm

        MohawkWeekend wrote:
        So I have to ask - why in the world is jet fuel not taxed in the US like diesel fuel?
        Does anyone know why this industry is so favored?[/quote]

        If the U.S. had just 12 buyers for 80% of the diesel consumed (as the major passenger air carriers plus UPS and FedEx do for jet fuel), we probably wouldn't have much of a tax on diesel, either.
         
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        Dutchy
        Posts: 12523
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        Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

        Wed Jul 14, 2021 9:48 pm

        MohawkWeekend wrote:
        MohawkWeekend wrote:
        Aesma wrote:

        For US airlines it's 0.043$ per gallon not 0.194$.

        There is no EU wide tax on it at the moment, that's why we're talking about one being introduced ! The issue is the Chicago convention, the EU is made up of 27 countries so an EU wide tax would be in breach of the Chicago convention.

        Each EU country can tax fuel if they wish, like the US has done.

        From what I can find Germany was thinking of a 33 cents/litre tax, which combined with other current environmental taxes (departure tax I'm guessing) would amount to 65 cents/litre or about the same as what fuel for cars is taxed.

        So 70 times more than the US tax...


        So I have to ask - why in the world is jet fuel not taxed in the US like diesel fuel?
        Does anyone know why this industry is so favored?


        Three arguments:
        - Legal: It is an international industry and above international waters, nobody has jurisdiction. They used the shipping industry as a blueprint, that isn't taxed either, and it isn't regulated on the high seas, that's why they pollute like crazy and they burn the filthiest fuel that is out there.
        - Moral: during the end of WWII, and the aftermath of the war there was an optimistic feeling and an urge to have no more war. That brought in the idea, if people would expand their horizons and meet people from all over the globe, this will lead to more understanding between nations and less war.
        - Practical: aviation was very small compared to now, so the problem was not great, so giving aviation a favored space was ok, it didn't have a great impact.
        Many happy landings, greetings from The Netherlands!
         
        tomcat
        Posts: 766
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        Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

        Wed Jul 14, 2021 10:56 pm

        Dutchy wrote:
        tomcat wrote:
        The air transport liberalization is actually one of the few successes of the EU policy.


        That is your opinion, an opinion not based on facts. The EU is a massive success, even so, that it is being copied all over the globe. But that digresses from the topic a bit.

        Yes, this forum is aviation orientated. The impact of the Green Deal will be felt in the aviation world. It is unavoidable. Aviation does add to the pollution total, doesn't matter how much you will spin it, in the end, that is undeniable. It is quite unreasonable to exempt aviation. They have had this advantage ever since the Chigaco treaty, right after WWII. That is coming to an end. The impact on aviation will be that it will diminish, at least the intra-EU flights. Probably the feeder flights will be excempt, in one way or another. But LCC, like EasyJet and Ryanair, will have to rethink their business plan. We, as the EU population, will have to rethink our use of planes, a weekend in Barcelona and the next weekend in Berlin, might not be all that needed to live a happy life.

        I think it is a good thing. Aviation has quite an impact on its immediate surroundings as well as climate change and the environment. To give an example, a consultancy firm release a paper on this topic, they said the prosperity (not just economic, but also social and welfare) will be negatively impacted if Schiphol is to be expanded, 2,3 - 3,1 billion euro's even.

        As for aviation: enjoy, but in moderation (which is a slogan for drinking alcohol in the Netherlands, but I feel it is also quite appropriate for flying)


        I don't see the point of debating the degree of the EU success on an aviation forum, I'm not sure why you bring it. My opinion that air transport liberalization in the EU is a success is based on the observation that the low cost airlines are regularly gaining market share and that in 2019, they owned about 33% of the European market. In find this to be a success and it's a very visible one for the general public. There was a drop from 35% market share in 2017 but I believe this is due to the bankruptcy of Air Berlin in the second half of 2017. Since then, the low cost airlines have resumed gaining market share (2020 is not representative of the actual market situation though).

        https://www.statista.com/statistics/111 ... re-europe/

        Thanks to this success, remote regions of the EU enjoy a high connectivity with the rest of the block and thanks to that they have experienced a boom in tourism and also have got an influx of new residents (mostly retired people from northern Europe). In this context, here is an article from 2019 alluding to the "Resistance from Mediterranean countries" regarding a potential tax on kerosene (and by extension, any scheme that would significantly increase the cost of flying across EU). This resistance is very real, especially given the absence of viable alternative to air transport for these regions (night train to Crete or Canarias islands anyone?). That's why I don't think that the airlines will actually be the toughest opponents to that scheme. This consideration is also based on the observation I made upthread that a tax on kerosene and a sales tax are already applied on domestic flights in the USA and I have never read any American member of this forum complaining about these taxes or reporting that the US airlines were greatly affected by them. The US domestic market is actually one of the major sources of profits for the US airlines.

        https://www.euractiv.com/section/aviation/news/why-we-are-far-from-imposing-a-tax-on-kerosene/
        Last edited by tomcat on Wed Jul 14, 2021 11:04 pm, edited 1 time in total.
         
        hpff
        Posts: 136
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        Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

        Wed Jul 14, 2021 10:57 pm

        Dutchy wrote:
        Aesma wrote:
        The issue is the Chicago convention, the EU is made up of 27 countries so an EU wide tax would be in breach of the Chicago convention.


        Actually, it would not be a breach of this convention, it doesn't say anywhere that no one can tax aviation, it doesn't even mention tax in the original text.


        The closest thing is that aviation fuel is exempt from customs duty, which is also inapplicable here.

        Depending on how high the tax is, it could lead to tankering. It also appears to be an incentive to replace the current fuel with something greener.
         
        tomcat
        Posts: 766
        Joined: Thu Sep 28, 2000 4:14 am

        Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

        Wed Jul 14, 2021 11:03 pm

        Dutchy wrote:
        Aesma wrote:
        The issue is the Chicago convention, the EU is made up of 27 countries so an EU wide tax would be in breach of the Chicago convention.


        Actually, it would not be a breach of this convention, it doesn't say anywhere that no one can tax aviation, it doesn't even mention tax in the original text.


        The Chicago convention was among others aiming at avoiding double taxation of fuel. I also remember reading that the convention didn't prevent the taxation of fuel but it was just stating that taxation needs to be arranged by bilateral agreements between countries. If this is correct, the EU scheme could just be a template of such a bilateral agreement that the member states would apply provided that they all agree to sharply increase the cost of air transport across EU.
         
        User avatar
        par13del
        Posts: 10919
        Joined: Sun Dec 18, 2005 9:14 pm

        Re: FT: EU plans tax on aviation fuel - to be announced on 16th of July

        Wed Jul 14, 2021 11:09 pm

        Dutchy wrote:
        Aesma wrote:
        The issue is the Chicago convention, the EU is made up of 27 countries so an EU wide tax would be in breach of the Chicago convention.


        Actually, it would not be a breach of this convention, it doesn't say anywhere that no one can tax aviation, it doesn't even mention tax in the original text.

        Perhaps it is about time the "Get out of jail free" card is removed from the EU and its member nations. The member nations have ensured that any negotiations related to travel to the EU must be negotiated with the EU, not the member nations, but each nation retains its signatory status to the Chicago Convention. The individual nations should be removed and one record maintained for the EU thus ensuring that all negotiations and representations are done as a single unit and single vote.
         
        afgeneral
        Posts: 148
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        Re: FT: EU plans tax on aviation fuel - to be announced on 14th of July

        Wed Jul 14, 2021 11:39 pm

        Galwayman wrote:
        Flights to/from the non contiguous regions of the EU - Greece, Ireland etc will of course need to be exempt obviously .....


        might as well add some of Eastern Europe

        Bucharest to Vienna by train is something like 18 hours out of which 2 hours spent at the border in the middle of the night, dogs sniffing around, baggage checks and all

        you can't have an economic Union with free movement of people where you make it difficult for people to get around, EU's job is to make it easier and cheaper to travel
         
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        Aesma
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        Re: FT: EU plans tax on aviation fuel - to be announced on 14th of July

        Thu Jul 15, 2021 1:37 am

        william wrote:
        So again, where does the money from Carbon taxes go to? Serious question, is there a tree planting program this goes to do reduce the carbon in the atmosphere? Or is this just another "revenue enhancer" for the EU countries?


        We will see but the overall idea is not to increase taxes significantly. So depending on what environmental taxes bring in, other taxes could be lowered. Or tax credits could be given to people/companies.

        One issue with doing this is that the goal of the tax is not to bring in revenue but to incentivize airlines in this case to find alternatives to fossil fuels. So ideally the tax wouldn't generate any revenue.
        New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
         
        Toinou
        Posts: 350
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        Re: FT: EU plans tax on aviation fuel - to be announced on 14th of July

        Thu Jul 15, 2021 7:31 am

        afgeneral wrote:
        you can't have an economic Union with free movement of people where you make it difficult for people to get around, EU's job is to make it easier and cheaper to travel

        In reality, they freedom of movement in EU has many limitations. However, there is an almost complete freedom of movement for workers, which is really not the same.
         
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        Leovinus
        Posts: 114
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        EU Climate Policy Airline Impact And Solutions

        Thu Jul 15, 2021 7:46 am

        Topic:
        The new EU climate proposal would entail a 10-year phased introduction of taxes on aviation fuel to get them in line with the rest of the transport sector. It would also force suppliers to blend SAFs into aviation fuel from 2% from 2025 and to 63% from 2050. To get around the problem of "tankering" (i.e. tanking up on cheap standard fuel elsewhere before flying back into the EU) restrictions will be put into place.

        Of course this is so far a proposal and subject to lobbying and change, but is an important part in the overall climate policy proposal.

        Source: https://www.reuters.com/business/aerospace-defense/eu-climate-blueprint-pressures-airlines-cut-emissions-2021-07-14/

        Discussion:
        Instead of discussing the pro's and con's of environmental legislation (there is enough of that in other threads) I was wondering where the aviation and wider industry stands with regards to SAF's, Hydrogen, Electricity etc. Is there any tech we might see scaled up in the short term to fulfil these kinds of plans responsibly? How could industry face these issues with the tools on hand and on the near horizon? Are engines and other infrastructure ready for SAFs when they come available? Are certification organisations ready to test and approve the required changes?
         
        EIBPI
        Posts: 258
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        Re: EU Climate Policy Airline Impact And Solutions

        Thu Jul 15, 2021 8:00 am

        Good topic.

        A 10 year phase in for aviation fuel tax is pretty generous, for something the industry has seen coming for a long time.

        There is now even more pressure on Airbus and other manufacturers to delivertheir hydrogen technology roadmaps.

        It will be interesting to watch different global approaches: the US is currently very much SAF focussed, while European investment is on technology (hydrogen through combustion or fuel cell). It is not very clear to me which way China is leaning.
         
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        Leovinus
        Posts: 114
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        Re: EU Climate Policy Airline Impact And Solutions

        Thu Jul 15, 2021 8:19 am

        EIBPI wrote:
        Good topic.

        A 10 year phase in for aviation fuel tax is pretty generous, for something the industry has seen coming for a long time.

        There is now even more pressure on Airbus and other manufacturers to delivertheir hydrogen technology roadmaps.

        It will be interesting to watch different global approaches: the US is currently very much SAF focussed, while European investment is on technology (hydrogen through combustion or fuel cell). It is not very clear to me which way China is leaning.


        I'm honestly most interested in what kind of cooperations could be founded on this. I don't think we'll necessarily see one solution that fits all in the short term. A mixture of hydrogen, electric, and SAF's is likely. And considering that all of these solutions have wider applications it would be in the interest of the aviation industry and their subcontractors in the space to form industrial cooperations. And also for the EU overall. Shipping industry, cars, and energy storage is all affected. So is infrastructure outside of the aviation space.

        I don't know where we stand though with regards to technology maturity. From what I know algae seems like the most likely candidate for carbon neutral SAFs, but it would require massive investments to get production volumes up. Algae could theoretically be grown in enormous off shore facilities and pumped ashore. Or in desert environments where it doesn't compete with agriculture. Maybe something for OPEC nations for when the oil runs out? I know only of a few startups in the field though.

        Hydrogen, so long as its sourced from green energy, is a good storage medium and a "known" technology. And it's not standing still, with lightweight pressure vessels etc. being developed together with more advanced fuel stacks. But it'd require a wholesale replacement of aircraft unless they can be economically retrofitted. Either running engines directly (inefficient) or through electricity via fuel cells. Again I don't really know of any industrial actors currently that would be able to scale up a complete solution for hydrogen in anything but short range aircraft. Airbus has shown proposals, but they're just that. Who'd make the engines? How'd the hydrogen infrastructure look for them? Etc.

        But if Europe is the first mover one all of this it might have an advantage in laying standards through industrial cooperation for other nations to follow suit. We still haven't sorted the plug standard for cars though so I'm a little sceptical...

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