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IATA Director General asks Obama to make aviation policy a priority & shout loudly against EU ETS
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He doesn’t like the tightened restriction on alliances and antitrust immunity in the House-passed FAA Reauthorization Bill. As its Director General, he complements the International Air Transport Association (IATA) on developing the best practices in fuel efficiency and states that since 2005 this has resulted in saving 34 million tons of CO2. He states that the IATA has worked with governments to optimize flight routes, which has saved another 34 million tons of CO2 since 2004. Speaking at the International Aviation Club of Washington this week, IATA’s Director General, Giovanni Bisignani, also called on the Obama administration to renew its role as a leader in the global aviation industry and make aviation policy a priority.
He wants the Obama administration to put NextGen on a fast track to reduce delays at airports by 40% and save nearly 10 million tons of CO2 annually and introduce new technological innovations. NextGen would transform the entire national air transportation system to help avoid gridlock in the sky and at airports by allowing more aircraft to fly closer together on more direct routes. It calls for new satellite-based systems and procedures to replace ground-based surveillance and navigation.
According to a FAA simulation, without some of the NextGen improvements, delays will cause gridlock in the skies. The FAA estimates that by 2022, the lost economic activity that would result would cost the U.S. economy $22 billion annually.
During his speech, Bisignani presented policy recommendations to help in the recovery of the US aviation industry in the areas of safety, security, environment and commercial freedoms. The IATA consists of 93% of scheduled international air traffic and represents approximately 230 airlines.
“We must cooperate with government to liberalize this crazy industry. It has been three decades since the US started the process of domestic deregulation. This crisis highlights that we must finish the job. The US has always been a bastion for free markets. Your open skies vision changed the industry market by market. The US-EU agreement on open skies is a great example. It did not go as far as we wanted and outdated ownership restrictions remain. But it is an important step in the right direction creating new opportunities in the world’s largest aviation market. Now we need a strong signal on liberalization by addressing ownership in the second stage,” he said.
He called some of the proposals protectionist and said that these are symptoms of lost leadership. He questioned the wisdom of restricting consolidations within political borders and asked that aviation should not be treated differently than other strategic industries like automobiles, telecoms and pharmaceuticals.
In 1978, Senator Kennedy led the successful effort to deregulate the airline industry, which allowed the airlines to set competitive rates and reduce consumer costs.
Emissions
With respect to the environment, he affirms that putting NextGen on the fast track would save nearly 10 million tons of CO2 annually and challenges the administration to support sustainable biofuels with the right fiscal and legal framework. He suggests that fuel from biomass such as camelina, jatropha and algae could reduce the airline industry’s carbon footprint by up to 80%. He stressed that the aviation industry is the first industry to make the challenging commitment of carbon neutral growth from 2020, which was endorsed by the Air Transport Association (ATA).
Bisignani does not believe that the aviation industry should be treated the same as power plants in terms of pollution and recommends that the industry be exempted from the cap-and-trade legislation to give the International Civil Aviation Organization (ICAO) an opportunity to develop a global sectoral approach.
In February, Nancy LoBue, the US Federal Aviation Administration’s deputy assistant administrator for the environment as well as the USA formal representative to the Group on International Aviation and Climate Change (GIACC), said that she is concerned by efforts to fold aviation into the United Nations Framework Convention on Climate Change (UNFCCC) and out of ICAO control. “The ICAO process predates the issue of climate change and there is a lot of goodwill at ICAO to resolve the issue. I would hate to see it undermined," she said. According to LoBue, the US sees the UNFCCC and the ICAO as two different legal frameworks.
Supporting increased public-private partnerships, Bisignani called on governments to align on economic measures through ICAO, in particular stressing that the US must be among one of the loudest countries shouting against the EU’s Emission Trading System (ETS).
“The way that we are heading now, a flight from New York to London could be tripled taxed considering the 2012 inclusion of aviation in the European ETS; the UK Air Passenger Duty which will collect GBP 2.7 billion by 2011; and US cap-and-trade proposals in the Waxman-Markey Bill. This is nonsense. The EU-ETS is unilateral, extra-territorial and illegal.”
Taxing fuel used on international flights would violate ICAO rules. The EU ETS is focused on CO2 output of aircrafts, which could mean a second tax in 2012. Then there’s a UK passenger duty.
According to Bisignani, a global solution through ICAO is the best way to reduce emissions and would be a strong signal for Copenhagen to maintain a global sectoral approach with a strong policy vision from ICAO and the full support of industry through IATA. The original Kyoto Protocol commitments did not include emissions from international aviation. David Kennedy, the U.K. government panel Climate Change Committee (CCC)’s chief executive, recently said that, "It is vital that an agreement capping global aviation emissions is part of a Copenhagen deal."
Transport Weekly reported last month that the deadline for airlines to submit their tonne-km. monitoring plan and emissions monitoring plan is August 31st or September 30/October 15 for operators whose states postponed the deadline. Those states that postponed the deadline are the UK, Sweden, Germany and Italy. While IATA is advising its carriers to comply with the current ETS submission requirements to avoid penalties that would follow based on noncompliance, it has also advised them to submit the information ‘under protest.’ On what basis? The IATA sees the ETS as extra-territorial and a violation of the Chicago Convention of 1944.
Article 15 of the Chicago Convention provides “No fees, dues or other charges shall be imposed by any contracting State in respect solely of the right of transit over or entry into or exit from its territory of any aircraft of a contracting State or persons or property thereon.”
During the fourth meeting of the GIACC in Montreal, between May 25th to 27th, the ICAO Secretariat presented a paper that concluded that emission related charges were in principle compatible with the Chicago Convention and ICAO, and that taxes were not.
Back in 2003, the Committee on Aviation Environmental Protection (CAEP) asked a consortium of consultants for recommendations on an open trading system for international aviation emissions. They proposed three options: (1) an aviation specific system based on a new ICAO legal instrument voluntarily joined through international agreement; (2) an ETS integrated with the existing Kyoto Protocol cap and trade system where international aviation emissions would be merged with domestic emission systems; and (3) a voluntary emission trading system managed by ICAO where design issues and targets would be developed by participants. In 2004, the ICAO endorsed the further development of an open emissions trading system for international aviation using two approaches. The first approach was the development of a voluntary trading system between States and international organizations. The second approach is similar to option #2 suggested by the consortium in 2003 and would be consistent with the UNFCCC process.
This year, in April, according to Aviation Week, a group of European and Asian airlines put forward the Aviation Global Deal which would treat aviation as a separate sector, rather than having airline emissions fall under national CO2 allocations. The Aviation Global Deal (AGD) Group includes British Airways, Cathay Pacific, Virgin Atlantic, Qatar Airways, Finnair, Air France-KLM, BAA and the Climate Group. As of today, LOT Poland has joined the AGD. The AGD proposal is intended to support the work of the IATA and the ICAO. The proposal suggests that rather than divide the sector's emissions among individual countries and collect fees like taxes for emissions, they would be collected and administered by a United Nations administrative body (UNAB). It also recognizes that although a global sectoral approach can avoid the problems of country-by-country treatment, it can also lead to competitive advantages to non-EU airlines that experience a lessened impact from the ETS. Any global sectoral approach, according to the AGD, must avoid competitive distortion as an unintended consequence and should replace any national or regional policy mechanisms.
Ready to enact a carbon tax, Britain, in trying to reach its goal of cutting 80% of its emission by 2050, is considering placing a cap on aviation industry emissions ahead of the December Copenhagen conference.
The CCC plans to publish a full report on how the aviation industry can meet the 2050 target of cutting emissions to 2005 levels on December 8th to coincide with the UN climate change talks in Copenhagen.
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