(photo: Brussels Airlines)
Mon 28 May 2012 – At a time when the European airline industry could help stimulate economic growth, politicians and regulators were holding back development through damaging regulations such as the EU Emissions Trading Scheme (ETS) and stifling progress on a Single European Sky. This was the message from a press conference held by European airline CEOs meeting in Brussels on Thursday, who are particularly angered by a perceived EU failure to avoid an impending trade war over the ETS. IAG’s Willie Walsh called on the Commission to put aside its “posturing” and “arrogant approach” over the current stand-off with countries such as India and China and help negotiate a global solution to aviation carbon emissions. Bernard Gustin, Chairman of the Association of European Airlines (AEA), said Europe had decided to teach the world a lesson on the environment but instead had invited retaliation.
According to Lufthansa CEO Christoph Franz, the EU’s fragmented and woefully inefficient airspace was wasting 16 million tonnes of CO2 each year, around 12% of total European airline emissions, and fuel worth €3.7 billion. “This is something that could be easily improved,” he told reporters after the AEA Presidents’ Assembly.
Franz said there had been a political willingness amongst EU states to create a single sky over Europe but there still existed a huge gap between willingness and implementation. He said EU states were failing to deliver on a performance target for the period 2011-2014 that required them to cut air traffic control costs to airlines by 3.5%, singling out the biggest EU countries, including Germany, France, the Netherlands and the UK, as the worst offenders.
“This should have been the initial step towards providing the benefits of a Single European Sky, and now it looks as though we are about to fail on this first step,” he warned. “And this is why the airline industry is furious. The Commission has to go back to the states and force them to comply with the target.”
It was the ETS, though, that came in for the harshest criticism with the airlines considering themselves unwilling victims in the political standoff between the EU and the world’s major nations over the scheme. Speaking on behalf of other European airline chiefs, Willie Walsh, CEO of IAG, the parent company of British Airways and Iberia, said he had expressed the industry’s frustration and anger that morning in a meeting with Commission Vice-President, Siim Kallas, concerning “the arrogant approach by the Commission over the EU’s rules to all airlines and all countries across the world.”
He said the industry had previously warned that including non-EU airlines risked a trade war at a time when Europe could least afford it.
“The Commission will counter this by pointing out 99% of airlines have complied with the scheme’s requirements. But you should not confuse compliance with acceptance,” he said. “We have had formal opposition from many countries and several of them have indicated they will take retaliatory action against Europe. We believe the Commission needs to move quickly to diffuse the tensions that are rising rapidly on a daily basis. It needs to show leadership and take concrete steps to move towards a global solution that the airline industry has been calling for over many years.”
Ten Indian and Chinese airlines have not complied with the March 31 deadline to submit emission reports to their relevant EU authority for 2011, which Walsh described as a significant development and of great concern.
“We’re talking about the potential for this to seriously impact trade between the EU and other countries,” he said. “India and China are two of the fastest-growing economies in the world, which Europe is looking to in terms of jobs and wealth creation. We think it is crazy to risk a trade war.
“We recognise climate change is an issue that must be addressed but this is a global issue and requires a global solution. The application of the EU ETS on a global basis will not do anything to benefit the environment and risks creating a trade war that undermines the economic development of Europe.”
On the sidelines, Walsh told reporters he believed there was great potential for a global agreement at ICAO and time should be allowed for the UN agency to pursue it. “It would be positive both for environmental reasons as well as the reputation of ICAO,” he said. “They’ve done it before, they can do it again.”
Walsh called on the Commission “to put aside its posturing and show true leadership and negotiate a global solution to this problem.”
AEA Chairman Bernard Gustin said Europe had decided to teach the rest of the world a lesson about the environment but instead had invited retaliation.
“But the fact is that aviation is a global industry,” he said. “We understand the environmental challenge and are ready to contribute on a global basis but what we cannot accept is the creation of a distortion in competition. We believe a solution could be found in ICAO today – it’s just a question of dialogue.”
Asked about the lengthy political and legislative process that had led to the implementation of the scheme in the EU institutions and 27 member states, Gustin responded: “Even if it takes a lot of time and a lot of people to do something wrong, that is no reason not to undo it. Every day we suffer a competitive disadvantage, and it’s not our problem that it took a lot of time. What we see is that after four months of its introduction, the opposition is as strong as it has ever been. Do we need to wait another five years to find out it was a mistake?”
IAG’s Walsh told GreenAir that the cost of the EU ETS to British Airways and Iberia - €15 million in the first quarter of 2012 – would be passed on to passengers within the fuel surcharge structure but he wouldn’t be drawn on when this would take place and indicated it would not be announced. He said airlines would apply the ETS cost in different ways but “ultimately, the consumer pays for it – there’s no free ride.”
Also speaking at the press event, Virgin Atlantic CEO Steve Ridgway said as the world’s largest trading bloc, it was critical for Europe that there was strong international aviation connectivity with the major economies.
As aviation now had an ability to contain its emissions and noise footprint, he suggested, major European airports such as Heathrow had earned the right to grow their infrastructure. Heathrow’s lack of capacity, he said, was throttling the UK economy. “We want vision and understanding of the role aviation plays in helping economies to grow. Yes, by all means challenge us about noise and emissions but our plea is: understand the debate, take decisions and enable progress.”
Despite current opposition from the UK’s main political parties to a third runway at Heathrow, Ridgway told GreenAir the UK aviation industry had not given up. “The government had hoped the question would go away but it hasn’t – it’s come back onto the agenda even more strongly than ever.”
He said the noise footprint around Heathrow had “shrunk massively” over the past 25 years and new aircraft like the Boeing 787 would bring noise levels down even further.
“If you were starting again, you wouldn’t of course build an airport west of your city but London has to have a hub that works,” he said, adding that even if a new hub was built in the Thames estuary it would take 25 years to complete, “and we can’t wait that long”.
Meanwhile, India’s civil aviation minister said last week that if the EU imposed penalties on the country’s two airlines for non-compliance with the EU ETS then it may ban European airlines from its airspace. “Travelling is always a two-way traffic – if they can impose sanctions, so can other countries,” CNN quotes the minister, Ajit Singh. He said sanctions would be counterproductive for both the EU and India at a time when the eurozone debt crisis and slowing consumer demand were strangling economic growth.
At a civil aviation conference last week in Beijing, the head of the Civil Aviation Administration of China, Li Jiaxiang, confirmed China’s airlines have not provided emissions data to the EU authorities and said they would not do so despite being warned by the EU of “punitive measures”.
According to China’s government website, Li told reporters air transport was a global industry. “Any regional policy should not stand in the way of global economic development,” he said.
LI added that discussions with the EU would take place on the issue and believed that the negotiations would help solve the problem.
Also speaking at the conference, the European Commission’s Director of Aviation, Matthew Baldwin, said the EU also wanted the aviation emissions issue tackled through a global solution and did not want a trade war. He said that in the event of a global solution at the ICAO Assembly next year, the EU was ready to review and amend the scheme.
Association of European Airlines - slide presentation from press conference (pdf)
Video recording of press conference by Air Transport News
India CNN article
China conference article
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