Emissions from the aviation sector could be slashed by 38 per cent in 2020 as it faces longer-term pressure to become carbon neutral, according to a study by the Australian Institute.
The disruption to the global aviation sector unleashed by the spread of the coronavirus pandemic has resulted in country-wide lockdowns prompting the grounding of airline fleets and a decline in demand for air travel.
"The Covid-19 pandemic has resulted in approximately 10.3 million tonnes of carbon dioxide CO2 reduction in global air transport. CO2 emissions during February and March, with the remainder of March likely to show further deep falls," the study found.
The International Air Transport Authority estimates a 38 per cent decline in revenue per passenger kilometres, which serves as a yardstick for commercial airline activity. The study estimates a commensurate decline in emissions of 352.7 million tonnes in civil aviation this year, when compared with 2019. The decline in Australia would be around 8.8 million tonnes, the institute said.
A more extreme scenario, involving major airlines such as Qantas and Virgin maintaining cuts to schedules for up to nine months, could lead to emissions in Australia dropping 13.2 million tonnes, or about 56 per cent year-on-year, the institute said.
Airlines worldwide are suspending most or all of their passenger flights, grounding jets and cutting jobs or placing staff on extended leave as they attempt to preserve cash due to heightened travel bans as governments try to contain the spread of the deadly virus.
Infections from the coronavirus, which originated in China, have exceeded 1.1 million cases globally, with more than 58,000 deaths, according to Johns Hopkins University.
"The Covid-19 pandemic has the potential to permanently change flying habits and regulations, in particular regarding business travel," the Austrialian Institute noted.
"Businesses may be attracted to use videoconferencing facilities long after the coronavirus pandemic has eased in an effort to cut costs, cut travel times and improve productivity," it added.
Already precedent has been set with multilateral lenders such as the International Monetary Fund and the World Bank opting for teleconferencing amid the crisis.
Greenhouse gas emissions reduction strategies will also receive a boost noted the institute, which expects airlines to use 2020 as a baseline to offset future emissions.
"Due to the disruption to airlines, and resulting lower emissions caused by the Covid-19 virus in 2020, a low baseline will likely be set. If 2020 is retained as a baseline, airlines may have to offset more emissions than anticipated in the following years," the study noted.
Should airlines adopt this year as a baseline, the aviation sector would follow the lead of the energy industry in setting targets for becoming carbon neutral.
Global emissions relating to energy flatlined for the first time in 2019 as economies continue to make the switch from polluting fuels to cleaner power generation, the International Energy Agency said earlier this year.
The decline in demand for air travel has led to airlines globally requesting assistance from governments in the form of loans, guarantees and grants, with the Australian airline industry already receiving A$715 million ($430m, or Dh1.57bn) in assistance, plus a further regional package worth A$198m.
The IEA's executive director, Fatih Birol, has called for any stimulus packages offered by governments, including those to the aviation sector, to be linked to sustainability, focusing on clean energy technology or emissions reduction, the report added.
Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
SPECS
Nissan 370z Nismo
Engine: 3.7-litre V6
Transmission: seven-speed automatic
Power: 363hp
Torque: 560Nm
Price: Dh184,500
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if you go
The flights
Emirates offer flights to Buenos Aires from Dubai, via Rio De Janeiro from around Dh6,300. emirates.com
Seeing the games
Tangol sell experiences across South America and generally have good access to tickets for most of the big teams in Buenos Aires: Boca Juniors, River Plate, and Independiente. Prices from Dh550 and include pick up and drop off from your hotel in the city. tangol.com
Staying there
Tangol will pick up tourists from any hotel in Buenos Aires, but after the intensity of the game, the Faena makes for tranquil, upmarket accommodation. Doubles from Dh1,110. faena.com
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Teams in the EHL
White Bears, Al Ain Theebs, Dubai Mighty Camels, Abu Dhabi Storms, Abu Dhabi Scorpions and Vipers
The specs
Engine: 2.0-litre 4-cyl turbo
Power: 247hp at 6,500rpm
Torque: 370Nm from 1,500-3,500rpm
Transmission: 10-speed auto
Fuel consumption: 7.8L/100km
Price: from Dh94,900
On sale: now
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5