No international agreements against taxing aviation fuel

One question I have thought of that is seldom discussed is this:
  • How would global transportation have developed if there were no international agreements prohibiting the taxation of aviation fuel??
I have guessed that the more densely populated and industrialised nations of Europe and East Asia – where dense populations allow the distribution of air transport’s enormous fixed costs amongst many passengers – might have taxed aviation fuel very heavily, and potentially taxed it more than car fuels. In contrast, Australia, and other resource-rich nations, might have still maintained near-zero tax on aviation fuel, as this would be the only thing acceptable to those who own mines extracting titanium, which is largely used to make aircraft.

Without international agreements against taxing aviation fuel, I can imagine that cheap airfares across Europe and East Asia would never have developed, as taxing aviation fuel would have become a very good revenue source even if only available for intercontinental flights. International bus services would have been used much more across Europe and Asia, and more extensive high-speed rail networks would have crossed national boundaries. However, international airlines would likely have taken advantage of concessional or low taxes in natural-resource-rich nations to divert flights there (e.g. to Sydney) which would have made air travel less efficient.
 

BigBlueBox

Banned
Taxing air fuel is pretty stupid unless you are deliberately trying to kill off your own tourism industry and isolate yourself from the rest of the world. Even if there were no international agreements most countries wouldn't have gone for it, and if they did it would only be a small tax meant to fund airports and airline regulation in the same way that American gasoline tax funds road maintenance.
 
One possible result would be the creation of "low-tax aviation hubs" for long-range flights. For example, if aviation fuel taxes in Europe and North America were high, a clever Icelandic government would keep aviation fuel taxes low, thereby creating an incentive for planes to land at Keflavik.

A similar hub in the center of a continent, let's say in the Czech Republic, would convince lots of people to trade a few extra hours on a train or a bus for a much cheaper long-distance flight.
 
A Boeing 747-400 flying from London to New York burns approximately 70,000 kilograms of fuel (@82,353 liters). The cost of the fuel in the UK is 31 pence per liter (2015). The fuel required to fly from London to New York is approximately £18,500 ($25,000), thus the cost of fuel for a flight carrying 450 passengers, would work out as about £41 ($55) per passenger, before any added tax. The USA puts a $0.18 federal tax and states can be up to almost $0.60 per gallon tax. At $0.25 per liter ($1.00 per Gallon) we are taking $20,588.25 per flight or $45 per passenger. Add that to the ticket price. To the passenger not so costly but for governments rather lucrative. Insidious taxes. But I believe landing fees and taxes already nick us this much or more.
 
Taxing air fuel is pretty stupid unless you are deliberately trying to kill off your own tourism industry and isolate yourself from the rest of the world. Even if there were no international agreements most countries wouldn't have gone for it, and if they did it would only be a small tax meant to fund airports and airline regulation in the same way that American gasoline tax funds road maintenance.

I can see some countries like mine use it as protectionism measure, tho. Imagine fuel tax only for non state owned airlines or only for foreign airlines.
 
I can see some countries like mine use it as protectionism measure, tho. Imagine fuel tax only for non state owned airlines or only for foreign airlines.

Even better tax all fuel and give domestic airlines a deduction for the tax paid. More airlines need to partner with local carriers or create captive subsidiaries in all the destinations. No obvious mega carriers in this world.
 
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