24th June 2011
The move to clamp down on airlines' CO2 emissions is seen as very challenging for the industry. Airlines face new limits and are included in the EU's emissions trading scheme as this Standard & Poor's note from earlier in the year shows.
The note says: "We estimate that in 2012-2013 alone – the first year of carbon trading for airlines under the EU's Emission Trading Scheme – the industry will likely incur and additional cost of approximately Euro 1.125 billion, based on the current carbon price of about Euro 15 per tonne of carbon dioxide."
"It will add further cost pressure to a cyclical, capital intensive, and highly competitive industry already subject to volatile fuel prices and may further differentiate aircraft operators. We believe that EU operators may be more severely affected than non-EU based carriers and could create a competitive mismatch."
Here website Green Air Online reports on how the trading scheme has been attacked first by the Chinese, and then by Europe's domestic airlines including the company formed by the merger of British Airways and Iberia, International Airlines chief executive Willie Walsh.
Walsh wants the scheme to cover intra-European flights only until an overarching international agreement is reached. Because the EU is trying to include all international flights, China is now threatening to retaliate against European carriers.
As the website reports: "Major airlines like British Airways and Virgin Atlantic have up till now supported the general principles of the European flagship system to reduce carbon emissions. Now faced with threats from China of action against the European aviation industry, there has been a change of thinking."