His fuel is not subsidised, it is simply taxed at a lower rate.

Thats a very different thing.

I don't think there needs to be an argument, moral or otherwise, in favour of cheap diesel for non road-going vehicles (it isn't just power boats).

The argument that should be made, and to my mind has not been made, is why road fuel needs to be taxed so heavily. So long as we take the view that not being taxed "until the pips squeal" is a subsidy, then being so taxed will be the norm. Plus of course it won't just be red diesel, but anthing and everything else.

As for pollution I would be more convinced that the government were serious about this if they taxed aviation fuel more heavily.

That stuff is burned by the ton, at high altitude where it does the most damage. So if you want to address global warming etc. then thats the place to start.