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Schiphol Group and KLM: Sustainable alternative to ticket tax

KLM and Schiphol Group Pressrelease - 1 Jun.07

Schiphol Group and KLM sent a letter to Prime Minister Balkenende containing a proposal to commence with emissions trading during the current cabinet term. Like the cabinet, the Dutch aviation sector applies sustainability as a strategic spearhead and regards it not only as an intrinsic part of corporate responsibility, but also as a fundamental condition to be able to continue operating and competing in the future. The sector is investing in production process sustainability. Additionally, a number of different initiatives have been launched to scale down greenhouse gas emissions. These include fleet renewal and making adjustments to the current KLM fleet, energy storage in the runways, purchasing sustainable energy, and using bio fuels.

The coalition agreement states that Schiphol must be able to grow within the existing environmental and noise limits. According to the coalition agreement, taxes are appropriate only when consumers and businesses have alternatives to their environmentally harmful conduct. However, for the majority of flights taking off from Schiphol, no such alternative exists. The agreement also states that the necessity of maintaining a level playing field in Europe will not be overlooked. The aviation sector considers the one-sided introduction of a ticket tax in the form of the ‘ecotax' as counterproductive. According to the Netherlands Environmental Assessment Agency (MNP), this type of tax does not yield any benefits for the environment and it is detrimental to the competitive position of main port Schiphol; consequently, it is also detrimental to Dutch aviation’s competitive position.

Based on CPB (Netherlands Bureau for Economic Policy Analysis) calculations, there will be a drop in demand of about 10 – 15 percent. Some of the passengers and traffic will move to other airports outside the Netherlands, which means that on balance people will not be flying any less. Therefore, the tax presents a significant threat to the competitive position of both main port Schiphol and KLM, which as a Dutch airline, would be affected the most severely. The tax represents a doubling in visit costs, which are the total costs that an airline incurs for coming to Schiphol. Because KLM and the Dutch airlines must compete at an international level, the tax cannot simply be passed on to passengers. In addition, the sector can no longer use this money for investments in sustainability. Finally, the tax will have adverse consequences for employment with the loss of 10,000 – 12,000 jobs.

Better alternative
Schiphol and KLM believe that there is a far better alternative to the ticket tax. An alternative that will enable the government’s ambitions regarding sustainability and the environment with respect to aviation to be achieved actively, in harmony with the coalition agreement.

The alternative is that the Dutch aviation section will start emissions trading during the term of this cabinet in exchange for the ticket tax and in anticipation of the aviation sector’s entry into the European emissions trading. Doing so will enable partial compensation of the CO2 emissions produced by the Dutch aviation sector as from 2008. By choosing this alternative, the Dutch aviation sector could surpass the government’s current target of reducing CO2 emissions by 20 percent compared to the level in 1990 by 2012. In doing so, the Dutch aviation sector would create a unique situation, effectively putting the Netherlands ahead of the rest of the world in terms of climate policy.

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