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3 NEWS 04.08.2022 FROM PAGE 1 Air Malta executive chairman David Curmi said the company's position "is not different to that taken by most other airlines". "e position of Air Malta is that of an airline operator," he said. "ere may however be other considerations that government may have to take." Air Malta warned in its statement that a tax on aviation fuel will not result in a modal shift to another mode of trans- port but will merely have a negative im- pact on the Maltese islands' economic and social cohesion while isolating the country. It added that as a peripheral country highly dependent on tourism, the impo- sition of a tax on aviation fuel will put Malta at a disadvantage with neighbour- ing leisure destinations outside the EU. e directive proposed by the Euro- pean Commission deals with various aspects and not just aviation fuel. e proposal is to introduce a progressive tax on aviation fuel supplied in the EU for intra-EU flights. e tax will start from a minimum rate of 0% in 2023, gradually increasing by a yearly 10% to reach 100% over a period of 10 years. Sustainable Aviation Fuels (SAFs) would benefit from a zero-tax rate to promote their uptake in the first 10 years. e taxation of fuel for cargo flights is optional and member states within the context of air service agree- ments could extend the taxation to non- EU flights. e proposal requires unanimous ap- proval of all member states since it con- cerns taxation and talks at European Council level are expected to ramp up in view of the January 2023 target for entry into force of the directive. Air Malta is warning that the imposi- tion of the fuel tax on intra-EU flights only will lead to serious distortion of competition among carriers by putting at a disadvantage those which serve the intra-EU market only. "Very hard hit will be the regional car- riers, such as Air Malta, which provide the critical connectivity from the pe- ripheries, outermost regions, islands, and small island member states to mainland Europe where they feed into the larger hubs to enable passengers to reach their destination or connect to the rest of the world," the carrier said. It noted that the extra costs will have a ripple effect on the economies of these territories, which are highly dependent on air transport for their connectivity. "Air Malta is of the view that taxation is not the answer to aviation sustainability and the reliance on taxation as the solu- tion for cutting aviation emissions in the EU's 'Fit for 55' is counterproductive to the goal of sustainable aviation – a tax will merely siphon much needed funds from the industry that could support emissions reducing investments in fleet renewal, clean technologies and the transition to SAFs," Air Malta said. It called for the proposal on taxing aviation fuel to be replaced by produc- tion incentives for SAFs, which reduce emissions by up to 80% compared to the traditional jet fuel. "Taxation will destroy jobs whilst in- centivising the production of SAF will improve energy independence and cre- ate sustainable jobs," the airline added. e national carrier reiterated its commitment to achieve net-zero car- bon emissions from its operations by 2050. Air Malta started the renewal of its fleet in 2018, moving from old Air- bus A320ceo to greener A320neo and by 2024 the entire feel will consist of a single-type aircraft. e airline said that with the deploy- ment of the new energy-efficient air- craft, it will significantly reduce fuel consumption, CO2 emissions and noise footprint. European Parliament seeks SAF uptake In the beginning of July, MEPs adopted a position on the draft EU rules that will force EU airports to have flights uplift- ing a minimum share of SAF, starting from just 2% in 2025, right up to 85% by 2050. e proposed rules aren't final yet. To become law, they have to be agreed by negotiators from the European Par- liament and EU member states during so-called trialogue talks due to start in September. But experts believe SAF will cost Air Malta six times as much as jet fuel, ac- cording to previous statements by Air Malta officials to a Chamber of Com- merce debate. A study by Amsterdam Economics and the Royal Netherlands Aerospace Cen- tre predicts EU islands, like Malta, could be outliers that will suffer up to €60 and €70 ticket price increases. Spain, an ex- ample of a country deemed 'peripheral' due to the larger amount of kilometres flown within the European economic area, could see price increases of over €65 in 2030 and then over €114 in 2035. In an online debate on the Fit For 55 targets organised by the Chamber of Commerce in 2021, an Air Malta offi- cial, Nadia Giordimaina, had remarked that SAF costs were five times that of Jet A1 fuel. "And this might mean that the ticket prices we got used to are a thing of the past unless there is the necessary support," she told the panel. Flying has certainly become awfully cheaper in the last 25 years, opening hundreds of under-served European cit- ies to a wider market of travellers seek- ing weekend trips and longer stays. Mal- ta's tourism authority subsidises landing fees for low-cost giants like Ryanair and Easyjet to bring more tourists. But SAF is now seen as the key to bal- ance out the environmental cost of tour- ism, where the decarbonisation of avia- tion will be a necessary process over the next decade, and where price increases will finance investment in technologies that reduce reliance on fossil energy. e proposed EU regulation suggests that airports with 2 million or less annu- al passengers should not be covered by SAF obligations, a threshold that Malta's sole airport does not fall under. EU airports situated in the Union's "outermost region", such as the Azores or Canary islands, will not be subject to the SAF rules, given their distances from the EU mainland. Government told MEPs to vote against While the Maltese government was unable to either convince European transport ministers, or obtain exemp- tions on sustainable aviation fuel for airlines landing at Malta International Airport, within the European Coun- cil, earlier this week it advised Maltese MEPs to vote against the Fit For 55 leg- islative position. All Labour MEPs voted against SAF, while Nationalist MEP David Casa sup- ported the EPP line and voted in favour of SAF despite submissions from the Maltese government that it would raise Air Malta costs and pricing. e government told MEPs that while the original Commission proposal from Brussels was to introduce a "gradual blending obligation" on SAF, the Euro- pean Parliament's proposals was to in- crease this share significantly. "is substantial increase might prove challenging for member states, such as Malta, which do not produce fuel and thus, rely heavily on imports," perma- nent representative Marlene Bonnici told MEPs. While Malta supported the Commis- sion proposal, it said MEPs should op- pose the increased targets proposed by the European Parliament's rapporteur, because this would raise prices for avi- ation. "Due to the increase in price of flight tickets, citizens will not be able to travel via flight to their intended destination as the cost of air transport starts to be- come prohibitive. is is obviously all the more relevant for a member state which depends so heavily on the avia- tion sector for connectivity, tourism and economic development." Malta appears to have been successful in pushing for an exemption from routes of less than 1,200km when departing from an EU airport. Crucially, it allows airlines to exempt themselves from hav- ing to use SAF if a member state au- thority has not replied to an exemption request within three months. But the EP position has not provided for such a system. Government position In July, Aaron Farrugia told MaltaTo- day it was "positive to see the European Parliament also moving in this direc- tion... further work on this dossier will be carried out throughout which Malta will continue to push forward its inter- ests, in order to for an agreement to be reached between the co-legislators." Farrugia said Malta is a strong support- er of this Fit For 55 proposal. "Shifting to smart and safe low- and zero-emis- sion aviation requires a radical change throughout the whole aviation industry and its supply chain. It is true that SAF is currently more costly than traditional fossil jet fuel. However, as the technology matures it will become more efficient and less costly for the industry and its custom- ers." Farrugia said passengers of airlines that use SAF will value the emission-reduc- tion benefits, and that phasing out fossil fuels will save Malta from further costs borne through the Emissions Trading System (ETS) and other fuel taxes. To bridge the price gap between con- ventional fuel and SAF, Malta is hoping to claim ETS allowances when SAF is used on flights which serve peripheral, insular and island regions. In forthcoming negotiations between Council and MEPs, Malta will adamant- ly push the line for an EU-wide SAF blending mandate only, to ensure a level playing field and sufficient access to SAF so as to bring costs down. Farrugia said the Council's agreement has the necessary safeguards for Malta's issues of peripherality, with its limited connectivity options. Whether it can drive home its position in the forthcom- ing negotiations with the European Par- liament is another matter. Air Malta warns aviation fuel tax would have 'a negative impact on Maltese islands' Air Malta warns air travel will become much more expensive if plans to tax aviation fuel are adopted

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