<Bt-5z58>EU greenhouse gas rules would wipe out our profits say airlines
BRUSSELS, Belgium (AP) — European airlines claimed yesterday that the European Union's plan to make them join a greenhouse gas cap-and-trade system would cripple them with extra costs of [EURO]4 billion ($5.4 billion) a year, wiping out potential future profits and growth.Citing a report they ordered from global accounting group Ernst & Young and air transport consultants York Aviation, groups representing low-cost airlines such as Ryanair Holdings PLC and major carriers like British Airways PLC and Lufthansa AG said the current plan would kill off Europe's mobility, hurting the overall economy and cutting off remote areas from tourist traffic.
Forcing them to buy enough carbon permits to fly all the passengers they expect from 2011 to 2022 would cost more than $61 billion, the airlines said. This figure does not include extra costs if more permits were auctioned instead of given to companies for free as they are currently.
"Airline profits would be reduced by over [EURO]40 billion ($54 billion) over the period to 2022," the report said. "The introduction of the EU emissions trading scheme will result in a reduction in consumer choice in terms of the range and frequency of air services. We expect that regions and regional airports would be particularly affected."
The European airlines said they still were committed to a trading system as the least-bad system to cut emissions. However, they said they would ask EU lawmakers and governments to consider a higher basic limit for the carbon trading cap, as the current level — based on 2004-2006 emissions — does not take into account fast growth in the industry before the programme would start in 2011.
They are fiercely opposed to extra taxes, the other main policy tool that forces companies and consumers to cut their contribution to global warming.
Tougher competition within the sector meant they would not be able to pass on more than a third of costs to customers, airlines said, meaning that companies would have to absorb most of the costs themselves.
They said this would prevent them investing in new routes and technology and would stop them hiring up to 42,000 people in new jobs they expect to create as the sector booms.
Europeans have been taking to the skies in greater numbers in recent years as the rise of low-fare short-haul airlines caused ticket prices to crash, encouraging people to travel more to new vacation spots and second homes in parts of the bloc far away from major city hubs.
But more travel means releasing more of the carbon dioxide that causes climate change. The European Union has committed itself to cutting overall levels by 20 percent by 2020, claiming that a cap-and-trade programme would help this happen without damaging the economy.
The trading programme gives airlines a financial incentive to reduce emissions because they can sell allowances that they don't use. But if they fail to turn to low-carbon technology or increase their flights, they will be forced to buy additional allowances to release more carbon dioxide.
While electricity generators can turn to wind or solar and lightbulbs can become more efficient, aircraft have few alternatives to high-quality gasoline.
Although it only contributes 1.5 percent of all EU greenhouse gas emissions, aviation is growing rapidly — by 5 percent a year by turnover. Its emissions may also be worse for climate change because they are released high into the atmosphere where they may cause more damage.
The EU executive wants the program to cover all airlines that fly within or to Europe. US officials have warned that applying the system to non-EU airlines may be against international aviation rules.