Fuel Taxation in Aviation

The report analyzes 32 Air Service Agreements (ASAs) among COFFIS member states to identify legal obstacles to taxing aviation fuel. It finds that while the Chicago Convention does not prohibit such taxes, many bilateral ASAs contain prohibitions or non-discrimination clauses that require reform. The authors propose a 'Joint Agreement' as a multilateral mechanism to bulk-amend these treaties. For EU states, the Energy Taxation Directive (ETD) remains a primary structural barrier, though international agreements can override it. The report also estimates that taxing three specific UK flight routes could generate up to USD 3.1 billion in revenue.

• The 1944 Chicago Convention does not prohibit the taxation of fuel loaded locally ('at the pump'), only the taxation of fuel already on board an arriving aircraft.
• An analysis of 32 ASAs among COFFIS members reveals four categories of fuel tax regulation: three impose no restrictions, ten use reciprocity-based exemptions, twelve explicitly prohibit taxation, and four require non-discriminatory or most-favoured-nation (MFN) treatment.
• To efficiently overcome bilateral legal barriers, the report suggests a 'Joint Agreement'—a multilateral instrument that would override conflicting tax provisions in covered ASAs and allow for harmonized rules.
• For EU member states, Article 14.1 (b) of the Energy Taxation Directive (ETD) is the primary legal barrier, as it mandates a full fuel tax exemption for international flights.
• International agreements concluded by the EU can take precedence over the ETD; for example, the EU–United Kingdom Trade and Cooperation Agreement explicitly permits fuel taxation for flights between their territories.
• A fuel tax of USD 0.52/L on three analyzed UK routes (to Antigua and Barbuda, Canada, and the EU) could generate up to USD 3.1 billion in revenue, with the UK-EU routes contributing the vast majority (USD 1,438 million to USD 2,876 million).

APA

Wendenburg, A., Schaugg, L., Posada, E., & Culbert, V. (2025). Fuel Taxation in Aviation. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-10/fuel-taxation-aviation.pdf

Chicago

Wendenburg, Anne, Lukas Schaugg, Eduardo Posada, and Vance Culbert. Fuel Taxation in Aviation. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-10/fuel-taxation-aviation.pdf.

Wikipedia

{{cite report |last1=Wendenburg |first1=Anne |last2=Schaugg |first2=Lukas |last3=Posada |first3=Eduardo |last4=Culbert |first4=Vance |title=Fuel Taxation in Aviation |publisher=International Institute for Sustainable Development |date=October 2025 |url=https://www.iisd.org/system/files/2025-10/fuel-taxation-aviation.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wendenburg2025fuel, author = {Wendenburg, Anne and Schaugg, Lukas and Posada, Eduardo and Culbert, Vance}, title = {{Fuel Taxation in Aviation}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = oct, url = {https://www.iisd.org/system/files/2025-10/fuel-taxation-aviation.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }