SA domestic airfares could increase as a result of the government’s plans to introduce a carbon tax on domestic airlines, which could be followed by a carbon tax on international flights.
National Treasury has confirmed that emissions from domestic flights will be subject to its domestic carbon tax regime. According to Chris Zweigenthal, CEO of the Airlines Association of Southern Africa, the domestic carbon tax regime will be implemented in 2017.
However, complications could arise for SA airlines that operate both domestic and international routes should South Africa decide to retain its domestic carbon tax once an international carbon reduction solution is in place.
International negotiations on the aviation sector in response to climate change are being dealt with by the International Civil Aviation Organisation (ICAO) and a global market-based measure (GMBM) is under consideration, says Treasury.
Zweigenthal says, aside from a tax, the GMBM could come in the form either of carbon offset programmes or emissions trading schemes. “Iata is looking to introduce one solution as agreed on by all states around the world,” he says.
June Crawford, CEO of Barsa, says a way forward in terms of the international solution will be determined at the upcoming 39th ICAO assembly, taking place between September 27 and October 9.
Treasury will then have a follow-up discussion with the Department of Transport and the industry in early October to consider the outcomes from the ICAO meeting.
As ICAO recognises that domestic situations around the world may differ, each state has the option of applying the domestic solution it deems necessary. National Treasury says its proposed domestic carbon tax regime could be incorporated within the solution decided on for international air services for this sector at a later stage.
But Zweigenthal says the airline industry is opposed to a separate domestic carbon tax and believes the international solution should be applied domestically so airlines aren’t required to manage different solutions around the world. “This would increase administrative and cost burdens on airlines,” says Zweigenthal.
“Airlines would need to recover these costs in some way, whether through increased fares or improved efficiencies determined by each airline in question."
