On a recent ICE trip from Berlin to Bremen, I read in the Süddeutsche Zeitung that the German government will cut VAT for train tickets in 2020 to just 7% (about 10% off ticket price at present 19.5% VAT rates) and consider raising taxes for flights. I am in total support of this initiative knowing that all long-distance trains in the country are powered by renewable energy. In fact, Dutch, Danish, and German trains all have long-distance connections running completely on renewable energy, with other countries like Switzerland using over 90% renewable energy.
For journeys up to five hours, high speed trains averaging 200km/h can match the speed of airplanes. Trains even offer benefits such as a full service restaurant, in-train Wi-Fi, electricity sockets, meeting tables etc. Traveling by train is often more flexible and cheaper than flying with departures starting from once an hour. You can even bring as much luggage as you can handle without paying a surcharge.
There is, however, a small problem with this policy – it doesn’t factor in passenger convenience into the equation. Let’s take the example of traveling from Basel Bad in Switzerland to Berlin in Germany.
First, let’s cover a few technicalities for background information. Basel Badischer Bahnhof is on the border and physically located in Switzerland but is treated as a German station, hence domestic German fares and rules apply. Basel’s Euro Airport is considered a German airport even though it’s physically in France because it has three customs zone in France, Germany and Switzerland. Traveling between the two cities take about 7 hours by train and 1.5 hours by plane from Euro Airport to Schönefeld with EasyJet. Realistically, to get from city center to city center, the train takes 7 hours while the flight takes 6 hours. Both the train and the plane have 3 direct daily connections. The same-day one-way train journey costs €122.3 for a flexible ticket in second class while the same-day one-way flight costs €166.9 in economy with one 23kg piece of luggage and extra legroom (for comparable comfort to a train) on a weekday morning.
Looks good, right? Prices are comparable with the flight being a little more expensive for a time premium, same standard of comfort and reasonable luggage requirements are accounted for and both are same-day departures just after lunch time. Imagine if the train cost 10% less and the flight cost 10% more to encourage green travel, at €110 and €183 respectively, train travel would look even more attractive.
If everyone who flew from the Euro Airport had Berlin as their final destination this would be fair. But what if someone were to transit through Berlin to another location, like Warsaw? Under a short-haul flight tax regime, both legs of the flight would be over-taxed as there are no comparable rail routes between Basel and Warsaw in a similar convenience to air connections.
The same issue surfaces even for direct flights where there are no convenient direct rail connections. Imagine a traveler flying direct from Geneva to Munich, it would be unfair for them to shoulder an additional flight tax for an hour-long flight when the alternative is an 8-hour train ride with a change in Zürich.
To remedy this issue, I would propose that while all long-distance train routes should benefit from a tax reduction, not all airline passengers should suffer from a tax increase. The airline tax should be based proportionally on the environmental impact of the trip and only be multiplied for journeys that have a comparable railway route with the same or higher number of direct connections in the same day.
It would be futile to unnecessarily tax air travel where there is no eco-friendly alternative. Hence, it would also encourage the development of rail infrastructure to expand to serve these connections. There’s a lot of math to be done, but fair is fair.
