ESG Five: US senators aim to raise $19bn in new aviation taxes, an NGO targets frequent flyer programmes, and more…

In this regular report series complementing Ishka’s bi-monthly ESG Extra, Ishka highlights five noteworthy aviation ESG developments in the past seven days, from white papers and technological breakthroughs to policy announcements and legal challenges.

Here are five new ESG developments to keep in mind:

 

1. US senators propose raising $19bn in ‘luxury aviation’ surcharges – While the debate on whether to tax or restrict private aviation is prevalent in Europe (from the UK’s Labour Party to the environment ministries of Austria, France, and the Netherlands), there has been limited political traction for similar arguments in the US, the world’s largest business aviation market. That could be changing. Ishka learned this week that at the end of July, a bill to impose surcharges on private jet travel and certain first class and business tickets was introduced to the US Congress by Democrat Senator Sheldon Whitehouse (the same sponsor of the 2021 Sustainable Aviation Fuel Act, which served the basis for SAF incentives later introduced under the Inflation Reduction Act). Bill S.2599 (labelled the Air Fair Act) is co-sponsored by two other Democrat senators and would aim to raise an estimated $19 billion annually in surcharges. It would do so mainly through a $190/tonne CO2 levy for private domestic flights (and equivalent based on flight duration for private international flights) and a surcharge on first and business class tickets. The revenue would be reinvested into aviation decarbonisation, air pollution control, and transportation infrastructure.

2. Leasing association ALI announces ESG e-learning platform – Aircraft Leasing Ireland (ALI) has announced a collaboration with industry contributors to develop an ESG e-Learning platform for the aircraft leasing and aviation industry in Ireland. ALI, the world’s largest aircraft leasing association, said the platform will be structured in line with the ALI sustainability charter and will provide modules covering Climate Action & Net Zero, Technology & Innovation, Waste & Circular Economy, Diversity & Inclusion, Ethical Business Practices, Employee Wellbeing, Community Engagement, Industry Leadership, Standardisation and Accountability & Reporting. Launch is targeted by early Q4 2023.

3. Frequent flyer, steady polluter – argues new Possible report – Environmental UK NGO Possible (the same NGO that in May 2022 brought attention to aviation’s record of missed sustainability targets) has just published a new report addressing the climate impact of frequent flyer status. Titled Pointless, the report highlights the negative side of frequent flier rewards: an increase in travel emissions by incentivising a carbon-intensive activity and carbon-intensive seating options. The report assesses the different levels of frequent flyer membership by British Airways and Virgin Atlantic. Flying enough to qualify for FFP membership requires emissions between 7 and 112 times higher than the average UK air travel footprint. The NGO is calling for an end to frequent flyer programmes by UK airlines.

4. US Air Force to invest $235 million in JetZero blended wing start-up – The US Air Force on 16^th August selected JetZero for the next phase of a blended wing body prototype, with the Department of Defense to invest $235 million over four years to fast-track its development, with additional private investment expected. The announcement is a major boost for US start-up JetZero (not related to the UK’s Jet Zero strategy or Jet Zero Council), which is aiming for an entry-into-service of 2030 with 100% SAF compatibility, and “the internal volume to accommodate zero-carbon emissions hydrogen.” The company claims the blended-wing design can achieve 50% less fuel burn and more range with the same payload (approximately 250 seats) as equivalent ‘traditional’ tubular designs. A full-scale demonstrator is targeted to fly in 2027 powered by Pratt & Whitney GTF engines.

5. New Ishka+ Original on ESG metrics – In a new Ishka+ Original webinar, Pegasus Airlines, MUFG Bank, and two pivotal industry associations (Impact and IATA) provide an update on the progress to harmonise ESG metrics for airlines and aviation sustainable finance, from efforts in the year so far to expectations for the 12 months ahead.

 

See more recent ESG aviation finance reports by Ishka Insights. For story tips and feedback, email eduardo@ishkaglobal.com

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