Tuesday, February 10, 2009

Upside down price incentives

The figures in the letter from Phillip Morris, Bristol to Newcastle by train £116.70 and by plane £43.98, show a clear financial incentive to fly (‘Why take the train when the plane is so much cheaper’, Open Lines, February 10). Our society often has its financial incentives upside down because of the way it shifts the social and environmental cost burden onto society and onto future generations instead of factoring them fully into the price individuals pay now.

Phillip’s flight to Newcastle emits between 122 and 160 kg of carbon dioxide for every passenger. Going by train would emit between 37 and 59 kg of carbon dioxide pollution per passenger. The environmental advantage of the train is very clear but it is not reflected in the price paid.

We should reassess all modes of transport and adjust price incentives using a mix of regulation and taxation. Travelling by rail needs to become cheaper and flying more expensive, to reflect their total costs. The huge subsidies to the airports industry hidden in government funding for regional development, roads and airport infrastructure need to go. £9 billion a year for investment in greener transport like trains would be gained if aviation fuel was taxed and aviation transactions were subject to VAT.


  1. I'm seeing this with the route planning for a conference in Amsterdam. Train would let be bring bike, but I'd have to cycle across london, get Eurostar to brussels and then change. For a lot of money. Plane is 100 quid return and faster. Admittedly, I'd be bikeless, but I could rent one there. What to do?

  2. Yes, several people have emailed me with similar accounts Steve. The situation is crazy! People should have more and better options, both in financial terms and in organisational terms.

  3. Simple solution. Charge the cost of the environmental damage caused to the fuel producers (oil companies). These costs are then passed down the the line so both the train operator and airline pay according to their fuel consumption.

    These costs will be reflected in the price of tickets, typically making air travel relatively more expensive but not necessarily cheaper than rail. Customers then make their choices based purely on cost and convenience without having to try to take account of environmental impacts since such impacts will have already been factored in to the cost.

  4. Chris

    Not quite that simple, surely?

    It is not just a case of the amount of fuel consumed, it is where the emissions caused by that consumption are released.

    In the case of aircraft that release is at high altitude and as a result is up to three times as damaging as the equivalent emissions released at ground (or rail) level.

    Charging based on fuel consumption alone will effectively see a subsidy paid to air traffic by rail (or any other ground level) traffic.

  5. To establish the total cost all costs and benefits should be assessed. Decisions then need to be made about the most appropriate way(s) to achieve prices that fairly reflect the total cost.

    There are may types of social and environmental impact to account for. Climate change, air quality, noise pollution, land take...


Genuine, open, reasonable debate is most welcome. Comments that meet this test will always be published.