Air Passenger Taxes and High Speed Railways Decrease Co2 Emissions from Aviation : Evidence from Europe

Air travel and the associated greenhouse gas emissions have rapidly increased over the past decade. To contain this growth, many European countries have implemented passenger taxes on flight tickets. Meanwhile, some European countries have developed their High Speed Rail (HSR) network, which may have generated a shift from air to rail. In this article, we analyse empirically the combined effect of these taxes and HSR creations in Europe for the period 2001-2019. We use a difference-in-differences approach at the route-level. Our results show that both passenger taxes and HSR openings have had a negative effect on air travel. A 1 euro increase in passenger taxes leads to a 1% reduction in air traffic, while 1 km of HSR leads to a 0.24% reduction in air traffic on the main competing air route. Overall, our results suggest that passenger taxes, as well as HSR development, can be useful policy tools to reduce emissions by limiting air traffic. Over 2001-2019, the decrease in air traffic due to passenger taxes is equivalent to a 3% reduction of European CO2 emissions from aviation, while HSR openings longer than 50 km are equivalent a to reduction of 0.4%