RAA 2007: Europeans call for clarity on emissions trading

 - April 30, 2007, 10:48 AM

Higher numbers of regional airline travelers in Europe have not meant greater environmental impact, according to European Regions Airline Association (ERA) director-general Mike Ambrose. Rather, the industry is flying bigger aircraft at record passenger load factors (PLFs)–the highest in 20 years of ERA data collection.

Last year intra-European airlines carried 8.2 percent more passengers than in the previous year on 1.3 percent more sectors (down from a 3-percent growth rate from 2005 to 2006). Meanwhile, load factors reached 63.9 percent, up almost 2.5 percentage points, as average capacity reached 70 seats.

Still, Ambrose cites environmental and regulatory matters as European regionals’ biggest challenges. “[We take] the issue of climate change seriously,” said Ambrose, who regards emissions as a “bright blip on the radar constituting a new problem for the whole air-transport industry.”

ERA acknowledges that the inclusion of aviation “as soon as possible” in an emissions trading scheme (ETS) proposed by the European Commission (EC) last December could represent a key “tool” in helping reduce greenhouse gases. But the ERA stands among seven air-transport lobby groups resisting such a move absent a related business-impact assessment.

Ambrose points out that the environmental issue differs from previous developments that airlines have learned to accom- modate. “In the past, the industry has always had a base of experience when new challenges or technologies–such as widebodies or turboprop engines–have been introduced. But it is very hard to form a policy to protect industry and to help meet environmental objectives because market forces and behavior cannot be predicted,” he said.

A major concern centers on the possibility that legislators could restrict airlines from trading carbon emission credits with other industries. According to the ERA director-general, having to trade emissions permits only with other air-transport sectors would be “a dreadful scenario [in which] the biggest [airline] pockets will win.”

In fact, Ambrose said he wants neither industry nor geographic limits: “We don’t want to see European carriers disadvantaged competitively.” Accordingly, the scope for emissions trading should not be restricted to intra-Europe arrangements, but “ideally should be global, or there must be doubts about [its] effectiveness.”

ERA continues to express concern that European parliamentarians will view emissions trading as a potential source of income: “We are very wary of the temptation [to use it] to provide an additional revenue stream for government.”
European industry officials also fear that the situation may be misunderstood in other regions, such as North America. “U.S. operators do not have anywhere near the same political scenario,” said one association source.

On a positive note, ERA has expressed satisfaction with the development progress of the Single European Sky air-navigation services (ANSs) infrastructure. “Eurocontrol states are proceeding much more energetically than we ever dared hope,” said Ambrose. “There is a preparedness to change and an opportunity for industry to spell out what we want.”

Ambrose welcomes “a willingness among leading states to accept separation of regulations from service provision,” but he underscores the need to commercially motivate ANS providers to improve their economic and operating performance.

Ambrose also calls for better management of individual ANS projects “so that the deliverable incentive exceeds the cost of implementation–or they should not even be started.”

The ERA director-general believes that stakeholders take every opportunity to “pick the lowest-lying fruit” first, rather than seek expensive solutions.

For example, he would like to eradicate unnecessary duplication: “It is absurd that individual European ATC systems have their own meteorological services, when 90 percent of air transport needs could be served by Web links to obtain weather information. About 5 percent of Eurocontrol charges cover [just] weather service.”

Apart from infrastructure and ATC issues, one of the biggest worries European regionals face involves possible EC action to require passenger compensation for technical delays. Under recent legislation, airlines must pay passengers up to $800 for canceled flights, and reimburse fares or provide flight transfers, unless cancellation results from “unexpected flight safety shortcomings” in unavoidable extraordinary circumstances.

Fears that carriers use the safety-related provision to cover minor technical problems– that could be prevented by, say, better maintenance–could generate additional EC regulation. According to Ambrose, that could in turn tempt operators to fly unsafely.

“It’s absurd that the Commission [is] contemplating a situation where regulations generate enormous economic pressure to operate when otherwise a flight would be grounded for safety reasons,” he said. “If it goes ahead, then the EC has to be held accountable for every accident or injury because of stupid, short-sighted regulation.”

Ambrose pointed out that marginal weather, a minimum equipment list discrepancy or unavailable navigation aids might prevent a perfectly legal aircraft from departing.
If technical-delay compensation legislation were introduced, ERA worries that normally prudent captains might otherwise take off to avoid “the prospect of an enormous [passenger-compensation] bill” under possible new rules.

Ambrose said politicians must recognize the danger of implying that airlines hide behind current safety provisions: “If you’ve ever had an in-flight emergency it convinces you to sort things out on the ground–or not to depart.”

He said it remains unclear whether the recent U.S.-European Union “Open Skies” agreement (permitting scheduled service by any airline between any pair of cities in the two political areas) will create opportunities for regional operators in Europe.

“If it had happened before the advent of the three major global airline alliances the opportunities would be clear,” he said. “Now, a majority of regional operators are associated with alliance members.” Speaking before member-airline presidents discussing the issue at last month’s ERA conference in Lisbon, the director-general pointed out that the “whole of regional-airline history has seen swift recognition and reaction to commercial opportunities.”

Ambrose emphasized the continuing need for industry vigilance over the costs of industry rulemaking. The move from European Joint Aviation Authorities oversight, which did not have to be reflected in individual states’ national aviation authority (NAA) regulations, to the legally enforceable European Aviation Safety Agency (EASA) rules is taking time.

“What we’ve always feared has come to pass,” said the ERA director. “The aggregate cost of regulation has increased because we have to pay for EASA as well as existing NAAs.” He concludes that the development is “a political compromise gone wrong.”

Accordingly, Ambrose calls for greater consultation in an effort to reduce aggregate costs to operators, which would result if NAAs were to assume a role equivalent to U.S. FAA field offices.