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Airline Bailouts Set To Double To €26bn As Countries Fail To Impose Binding Green Conditions

Brussels, 30 April 2020 Airline polluters are now seeking more than €26 billion in taxpayers’ money - double the amount of just a week ago - according to the European airline bailout tracker compiled by Carbon Market Watch, Greenpeace and Transport & Environment. Governments have agreed €11.5 billion in financial aid and a further €14.6 billion is under discussion. None come with binding environmental conditions for airlines to clean up their act.

Air France-KLM will receive up to €11 billion in financial aid from the French and Dutch governments, while Germany has reportedly agreed to plough €9 billion into Lufthansa. Air France’s loan guarantee comes with non-binding requests to reduce emissions on domestic flights and buy more fuel-efficient planes. There is no request to tackle pollution from non-domestic flights, which are responsible for 90% of airline emissions in Europe.

Andrew Murphy, aviation manager at Transport & Environment, said: “France’s green requests are a first but we had non-binding commitments for years and airline pollution ballooned. Marginally more efficient planes won’t put a dent in emissions if airlines still burn fossil fuels that they buy tax-free. Governments should require the industry to take up greener fuels and pay taxes like the rest of us.

Gilles Dufrasne, policy officer at Carbon Market Watch, said: “We must avoid a social catastrophe, but blank cheque bailouts to airlines are not the solution. They will simply put the sector back on its totally unsustainable growth path. Any bailouts must be just, both socially and environmentally.

Lorelei Limousin, Greenpeace EU climate campaigner, said: “Injecting taxpayers’ money into one of the world’s most polluting industries - with no strings attached - makes no sense at all. Without binding conditions, airlines are already threatening to dump thousands of staff and continue to pump out massive amounts of climate-wrecking emissions. If the European Green Deal means something, short-haul flights have to go and investments need to roll out more clean alternatives like trains.

Worryingly, Germany’s environment minister has indicated that now is not the moment to ‘green’ a Lufthansa bailout, adding “but there will be a time after the crisis”. However, Austria’s vice-chancellor and transport minister have both said any bailout for Lufthansa subsidiary Austrian Airlines should come with climate conditions.

The European Commission’s climate chief Frans Timmermans supports governments applying environmental conditions to state aid.[1] However, competition boss Margrethe Vestager opposes greening the EU’s guidelines for public support.[2] The Commission should issue guidelines to ensure taxpayers’ money is only given with social and environmental requirements attached, the NGOs argued.

Air France increased its emissions within Europe by 5.7% in 2019 alone.[3] KLM emissions were up 3.5%. Aviation has been one of the fastest-growing contributors to climate change over the last two decades, with a 24.5% increase in emissions over the past five years on flights within Europe.

At the same time, the sector depends heavily on public support — from tax exemptions from VAT and kerosene tax, to state aid for airports, low-cost airlines and infrastructure linking airports with nearby cities. Airlines also get 85% of their allocated pollution permits for free under the EU’s carbon market. The kerosene tax exemption in Europe alone is valued at €27 billion a year. Other more sustainable transportation methods — such as rail — have not benefited from such generous tax treatment.

More detailed information is available in the European airline bailout tracker.

[1] On 21 April 2020, European Commission vice-president Frans Timmermans told a hearing of the European Parliament environment committee:

“On state aid, and other investment strategies, the question that was put to me was can member states apply criteria such as greening with state aid? The answer to that is yes. [...]”

[2] Politico, 20 April 2020: Direct state-aid conditionality not best green recipe, Vestager says

[3] Transport & Environment: Big airline polluters grew emissions in 2019 ahead of expected COVID drop

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