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Thu 23 Jan 2020 08:50 AM

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Short-haul flights should be taxed, says Julius Baer exec

Diego Wuergler believes taxation is best way to deal with air travel-related climate change concerns

Short-haul flights should be taxed, says Julius Baer exec

Diego Wuergler, head of investment advisory at Julius Baer.

Governments can play a leading role in driving the fight against climate change by slapping a tax on short-haul flights.

That’s the view of Diego Wuergler, head of investment advisory at Julius Baer, who believes consumer behaviour is not adapting quickly enough to the associated threats to the environment.

Wuergler said: “When it comes to people like you and me, when it comes to individuals, air travelling can represent one third of one personal individual’s climate footprint. It’s huge.”

Air travel currently makes up about 2.5 percent of global carbon emissions, although this is considerably less than the fashion industry (8 percent) and the food industry (25 percent).

‘Flygskam’, or flight shaming, where passengers are encouraged to take a train rather than a plane, has been gathering plenty publicity in the last 12 months, particularly from Swedish teenage environmentalist Greta Thunberg, who famously crossed the Atlantic Ocean by boat last year to attend a United Nations global warming summit in New York, rather than taking a plane.

However, as he revealed Julius Baer’s Global Wealth and Lifestyle Report 2020, Wuergler said they haven’t seen a significant change from passengers.

“Do we see a change into the consumption behaviour as of today? Not yet. It’s really awareness which is going up, but we don’t necessarily see changing completely the behaviour,” he said.

Demand slowing

According to the latest data from the International Air Transport Association, growth in demand for air travel has been slowing, but the Global Wealth and Lifestyle Report noted, “this mainly mirrors the economic slowdown”.

The report added: “Direct fuel taxes are punitive because fuel is an airline’s biggest cost, and so a clear incentive to buy more efficient jets.”

Wuergler said: “Probably here the government can help, especially on short flights. This could, to a certain extent, have an impact and influence the way people move around the globe.”

The report predicted that oil demand would peak and decline after 2035, although it added: “This change will most likely come primarily from the electrification of road transport, not from changes in air travel habits or changes in airplane technology.”

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