00 Foreword The impact on demand of every air transport policy decision is an essential consideration. Without it, uncertainty over demand leads to ineffective counter-productive decisions. At the present time, the airine industry faces many cost pressures. The industry has made remarkable achievements in improving its efficiency. But cost pressures continue, from record high fuel prices to unjustified increases incharges airports, to further taxes imposed by governments. Higher costs The results in this report also have importantimplications inevitably lead to higher prices for airline passengers. for policies. The aviation industry is committed to a Therefore it is crucial that reliable and appropriate carbon-neutral-and eventually carbon- estimates are available to assess how higher prices future. IATAs 4-Pillar Strategy is already taking action on emissions reduction measures focusing impact on the level of demand for ait travel. This impact technology, infrastructure, operations and those brought will, of course, differ according to the level and location at about by well designed economic instruments. By contrast, nudimentary demand-side policies, such as This report provides groundbreaking new research into "green taxes", that try to reduce emissions by raising the sensitivity of artravel demand to changes in air travel prices and incomes, provides clear guidelnes for the the price of travel for passengers are likely to fail, With appropriate use of demand elasticities and robust and passengers having far fewer possibilities to be able to reliable estimates of their value. reduce their travel on routes subject to such a tax at a national or supra national levelsuch measures will provide Air transport provides economic benefits not just for its easy revenues for governments, but wil be ineffective in passengers and cargo shippers, but also for the wider terms oftheir main objective, economy by connecting businesses and individuals to understanding the impact on demand is the key to global markets. Modern just-in-time, global supply chains effective policy decisions concerning aviation and multinational businesses are made possible by global benefit of the industry, its users, the environment and the airline networks, Yet governments often fail to recognise this and continue to implement air transport policies that are not in the best interests of the aviation industry and the wider economy, Monopolistic airports that tase charges but do not improve the services they offer will see passengers quickly shift elsewhere Governments that Giovanni Bisignani impose new taxes on the industry are taking advantage Director General & CEO, of less sensitive movements in demand at the national ATA level to raise revenues at the industry's expense,