Will new EU environmental edicts increase the cost of our holidays?
There has been some kerfuffle in the press this week about new EU environmental measures apparently set to ramp up the cost of travel. It was stirred up by a report by the consultants, Deloitte, for the Spanish Association of Airlines. This suggested that, because of proposals by the European Commission to reduce greenhouse gas emissions and the possibility of a new Spanish “ticket tax” on flights, the increase in the cost of holidays to the Costas could result in a drop of up to 11 million international tourists to Spain.
But what is the reality behind these claims? The EU proposals are part of its Fit for 55 initiative which refers to an impressive, if ambitious, target to reduce net emissions by member states by at least 55 per cent by 2030. A package of measures is expected to result in 11 separate directives focussed on key environmental areas such as waste disposal, energy generation and emissions from transport, including aviation.
The first point is that these directives have yet to be finalised. A spokesperson for the EU pointed out that negotiation between the European Council, Parliament and Commission is continuing, so no final directives have yet been agreed. One of the proposals is to require an increase in the amount of synthetic fuels used by airlines, but the Commission says there is no specific mention of taxation, which in any case is the responsibility of different member governments.
Meanwhile, the suggestions that an additional charge of £6 or £7 may be added to the cost of Spanish flights – is a separate development. According to the Spanish mission to the EU, this is a proposal in a domestic white paper on tax reform, and has also yet to be agreed or implemented.
Spain’s Association of Airlines didn’t immediately respond to my request for more information about its Deloitte report, but whatever comes of the EU directives or the suggested tax, I can’t see how they would make a significant impact. There are much bigger influences on fares.
Few of us welcome higher taxes – and tourists and travellers have always been an easy target. In fact, over the last couple of decades, it is the British government which has been far more aggressive than other EU countries in targeting air transport. Starting at £13 for a short haul departure, our rates of Air Passenger Duty are among the highest in the world. And yet the overall cost of flying – which is surely the key thing – remains near historic lows.
Way back in 1990, and again in 2007, I researched the cheapest airfares from London to a variety of different destinations. I’ve just done the same exercise once more. (The 1990 survey was the lowest price during the whole year, for 2007 and 2022 it was for flights in September/October). The results speak for themselves:
True, today’s fares quoted above – all with Ryanair – allow only a small cabin bag, so you would have to add another £50 or so on the return fare to take more luggage. Those for 1990 and 2007 include a checked-in bag but they were still the cheapest options at the time and they are also the real fares charged. If you adjust for inflation, £159 in 1990 equates to £402 in 2022, and £50 in 2007 is equivalent to £77 now.
There is little doubt that the cost of flying looks set to rise, not so much because of increasing taxation, but higher fuel and other operating costs. In August, Michael O'Leary, CEO of Ryanair predicted that its average one-way fare would rise from €40 (£33.75) last year, to roughly €50 (£43.90) over the next five years. But even a 20 per cent rise over five years, seems unlikely to be enough to deter us from our holidays in the sun.
