Darling's pie in the sky

There has been much speculation over Alistair Darling's first pre-budget report and his plans to green the aviation industry.

The chancellor has suggested replacing duty on tickets with a charge based on the type of plane and the distance it will be travelling. This will, he claims, encourage airlines to increase their efficiency (by reducing per-passenger emissions) and to use the latest and most efficient planes to further reduce their tax bills.

Darling believes that efficiency gains will reduce aviation's CO2 emissions, enabling the industry to grow "sustainably". This may sound good in the corridors of Westminster, but is unlikely to work in the real world. The industry has focused on efficiency to promote its green credentials, but efficiency gains often mask an increase in overall emissions, as airlines cram more people into their planes in a battle to maximise the economies of scale.

This is borne out by aviation manufacturing trends. With no alternative fuels or techno-fixes in the pipeline, the latest batch of "green aeroplanes" have focused on increasing capacity to increase efficiency. The Airbus A380 may use less fuel per passenger kilometre than a 747, but it's carrying 115 more passengers. Net result: more CO2 pumped into the atmosphere per flight.

If the number of flights fell accordingly, this would be a positive step, but the industry is dedicated to rapid expansion and these new planes will all be additional. A wholesale shift to larger planes to meet efficiency targets would be a disaster for CO2 emissions and the climate. Hundreds of new super-jumbos are not going to make the skies any cleaner, any more than the most efficient home cinema will lower your electricity bill - when discussing energy efficiency in industrial and domestic energy use this is called the "rebound effect".

While long-haul operators and traditional airlines like British Airways may possibly see a small drop in passengers, budget short-haul operators - the section of industry where growth is strongest - may actually benefit from these changes. Industry rarely cries out to be regulated, but easyJet were among the first to call for these changes - hardly an indication of the tough measures we need to curb emissions growth.

Unlike traditional airlines, who profit from ticket sales, the cheap flights economic model revolves around at-seat services - charging a captive audience for a sandwich or a scratchcard. For budget airlines, ticket prices must be kept as low as possible to get more people through the door. Air passenger duty (APD) preloaded "cheap" tickets with a £10 surcharge, often doubling the initial cost of a ticket. This closed the price gap between train and plane, helping to steer passengers towards a more sustainable mode of transport.

While all airlines will doubtless offload the extra cost onto their passengers, the budget carriers are more likely to increase service charges than ticket prices, to keep prices low and tempt more passengers aboard. Removing APD from "point of sale" knocks £10 off ticket prices, playing into the hands of an industry that already gives away tickets to get more people on planes. Darling's plans are unlikely to reduce the number of people flying - the only real way to reduce emissions in the long term.

It's too early to tell what effect these changes will have on aviation - they won't take effect until 2009 - but they are unlikely to reduce the industry's emissions. More likely is a price war fought with renewed vigour, with more and more people encouraged to fly as low-cost carriers compete to boost their efficiency. If Darling were serious about tackling aviation's emissions, he'd tackle the £9bn subsidy that keeps the cost of flying so artificially low. Small tweaks to the tax system, and business as usual, are no longer options.

First published on commentisfree.com.