If you were the kind of person who bets, and if you had the chance to lay odds on which political party would produce the single dumbest policy of the General Election, you’d never go far wrong betting on Solidarity/People Before Profit. And if you’d made that bet, then today you would have won.
— harrymcgee (@harrymcgee) January 29, 2020
This is, actually, a very useful development. For years now we’ve had the pretence from people like People Before Profit that Climate Change could be solved by “taxing the rich”. (In fairness, their stock answer to every problem is “tax the rich”, so perhaps they’ve only actually started thinking about this particular problem recently).
Now, let’s be very clear, this is a remarkably stupid solution, for various reasons. Let’s start with the cost to Airlines. The average Boeing 737, which remains the backbone of the Ryanair fleet, burns about 2,900 litres of Kerosene in a one-hour flight from Dublin to London. This means that the socialist tax plan will increase the cost of a single short haul flight by about €1,000. Assuming 200 passengers on the flight, and assuming that the company passes the tax on (as it surely will) this will make the cost of a flight from Dublin to London rise by about a fiver a passenger. The further you go, the more expensive the flight gets – so a two-hour flight to Paris should rise, in theory, by a tenner. Fifteen euros more for Vienna, and so on. A transatlantic flight? That will increase in cost by about €35 for the east cost, or nearly €60 more if you are flying to California.
Now, where the socialists make catastrophic errors is when it comes to their understanding of how markets work. In a competitive market, it is likely that at least some airline companies will try to absorb some of these extra costs without passing them on to the customer. The perfect solution, you might say. Fewer profits for the airlines, and more tax for the Government. But of course, those costs have to be paid from somewhere. And what’s the number one cost for an airline?
When you dramatically increase the costs for an airline, the easiest thing for them to do in terms of cutting costs is to reduce their plans to add new aircraft to their fleet, or to replace existing aircraft with newer ones. And why is that a problem? Well, it’s obvious:
Ryanair added that it is in the throes of a $20 billion (€18.2 billion) investment in a fleet of new aircraft which have the capacity to reduce fuel by 16 per cent per passenger and CO2 emissions by 40 per cent per passenger.
Airplane emissions, in other words, are already coming down, due to emergent technologies. But they’re coming down only because of vast investment by the carriers themselves in new aircraft. One reason carriers are making those investments is so as to reduce fuel costs. If you push up the cost of fuel, the benefit of that investment disappears. It’s probably easier just to push the cost increases on to passengers and blame the Government for it.
Now, People Before Profit, being, as they are, opposed to any kind of profits, have a solution for that as well. They’re going to sue the airlines to prevent the cost increases being passed on to passengers.
How does that work, exactly? Airlines can increase prices for any number of reasons. Try proving in court that the extra fiver on your London flight is because of fuel and not simply because your airline is having higher than normal demand at that time of year, or because their pricing strategy has changed in the round, or because the European union would consider such a lawsuit a violation of the single market. What people before profit really need here is a legislated price freeze on airline prices, which would be both illegal, and stupid, and would probably put airlines out of business.
Of course, the other problem with this plan is that airlines – you won’t believe this, but it’s true – do not have to buy their fuel in Ireland. There’s no law anywhere requiring that a Ryanair Airbus 320 refuels in Dublin, and not in Stanstead, which is that company’s main hub anyway. The cost increase will only apply to refuelling with fuels bought and used in Ireland. So the primary outcome of this policy is likely to be job losses at Irish airports, rather than increased costs to airlines.
Of course, being People before Profit, there’s always a back up plan:
The party also wants to impose a charge of 20 per cent on flight tickets for anyone flying more than four times a year pic.twitter.com/dTYm9FJBgE
— Jennifer Bray (@Jennifer_Bray) January 29, 2020
If they can’t get the airlines, they’ll get you instead. Now, most of us don’t fly 4 times a year. This kind of tax hits business travellers primarily. It directly increases the cost of doing business in Ireland – for some companies, that will be tens of thousands of euros a year in extra costs.
The secret to solving climate change, you see, is de-growth. To reduce emissions, we have to shrink the economy.
And if there’s one party in Ireland that we can guarantee to shrink the economy, it’s People before Profit.