March 12th, 2012
08:11 PM GMT
Share this on:

London (CNN) – The letter from the seven airlines complaining about the European Emissions Trading system made me smile. Not that there is anything funny about the prospect of a full-blown trade war between Europe and inter alia, China, the fastest-growing super economy in the world.

Rather because it smacked of too little, too late. Where were these airlines writing their letters when the scheme was being initiated, promulgated and ultimately brought into force?

No doubt they made protests behind the scenes and lobbied like fury - which got them precisely nowhere! The Commission was impervious to the threats of trade wars. They barrelled on regardless of the damage that was being threatened.

I know this because the EU commissioner responsible, Connie Hedegaard, was on Quest Means Business defending the scheme. To her credit, she hasn't wavered. The view in Brussels was, if the ICAO process was going to be delayed and drawn out then the EU would go its own way - and that is exactly what they have done.

I am guessing the Europeans figured the rest of the world would start a similar scheme of their own, or just go along with it. They probably figured there would be a lot of hot air such as a 'basket of countermeasures' suggested at the meeting in Moscow attended by 23 countries including the US, Russia and China.

The Russian deputy minister could not have been clearer saying they wanted the EU scheme "cancelled or postponed." They got neither.

Louis Gallois the CEO of EADS, owners of Airbus, has gone even further - actually saying that the scheme is delaying orders from China for 45 Airbus planes, costing business and eventually jobs. That has washed over too.

So please tell me what good this letter will do? Why the bleating of six large airlines and Airbus will hit home? It won't. It never does.

The British government has ignored all entreaties from aviation about the cost of its ill-conceived and expensive APD tax on tickets. It has rejected the calls for a rethink of its refusal to consider building a third runway at Heathrow.

Aviation bleats. No-one listens.

The Europeans have embarked on a course of unilateral action that ultimately will have consequences for trade unless they reverse course - which they seems singularly unprepared to do.

soundoff (11 Responses)
  1. Jeff Gazzard

    There's something very, very wrong with the claim being made by Airbus, along with 6 airlines and 2 engine manufacturers, that some A330 orders from Chinese airlines are "not being finalised" because of fears that the EU ETS will have an adverse impact on ticket prices.

    Firstly, in January this year, Cathay Pacific's CEO estimated that a one-way ticket from Hong Kong to Europe could go up by HK$50 or £4.11 pence. This will have absolutely zero impact on traffic and will be passed on to passengers in any event. A return ticket would therefore face an £8.22 pence surcharge – EU ETS costs will clearly not mean the end of air travel between Europe and China.

    Secondly, there are 854 A330's currently in service, with a 335 production backlog – they are built at a rate of 9 per month. Just like Boeing, Airbus requires a 5% deposit, often with further staged payments, as aircraft are built. Airlines order new aircraft to fit their acquisition/fleet commonality and replacement plans, alongside route development and growth forecasts. Production line slots will not easily be given up on a whim, particularly when switching to a rival manufacturer could be hugely problematic and very costly.

    More importantly, the 5% deposits are also non-refundable. An A330 has a variant-dependent list price between US$200 to 225 million. Are we seriously meant to believe that Chinese airlines are prepared to throw away millions of dollars in forfeited deposits over a few pounds per ticket ETS surcharge? I don't think so.

    So what's going on? It's simple really: airlines and aerospace manufacturers despise the EU ETS and will go to any lengths to collapse the scheme, hence this kind of PR-inspired political pressure. It seems Airbus do not only make aircraft – they can also manufacture stories.

    Jeffrey Gazzard
    Board Member
    Aviation Environment Federation

    March 12, 2012 at 8:38 pm |
  2. William

    What is with this complicated carbon tax? Why not just raise the tax on aviation fuel at airports in the EU. That will encourage savings by all airlines and will not discriminate based on carrier origin.

    March 12, 2012 at 11:10 pm |
  3. James Coleman

    I'm curious about wheather the EU will allow Voluntary Carbon credits to be bought by Air Canada in Canada from farmers and applied to the Carbon Taxs levied in the EU. Should it matter where they are bought ? There are Companies that have not only performed the calculations for carbon sequestration but have registered millions of acres of hay and grain crops with exacting standards for just this situation. Why Corps are forced to buy CO2 projects in the 3rd world seems unfair. The calculations on crops in Canada is probably more exact than many of the third world projects.

    March 12, 2012 at 11:22 pm |
  4. jakson

    The most powerful and Meals Desserts 2012

    March 13, 2012 at 1:24 am |
  5. jakson

    See the elephant is dying and die a very sad situation

    March 13, 2012 at 1:24 am |
  6. Felix Masunga

    Despite the fact that matter was discussed on african soils ,africa remains the most silent aviator I have ever seen if not docile.Typical african mentality that we dont manufacture aircrafts and aircraft engines so it is not our war come on african wake you been sitting for too long get up , stand up and rebuild reproduce the future.What is africa going to manufacture ?( ).

    March 13, 2012 at 7:43 am |
  7. Floyd Burgoz

    It has already started a trade war.

    March 13, 2012 at 11:06 am |
  8. ana

    ´Aviation bleats but no-one listens´...You said all in a good,concise article on your´s own such a witty way Sir Richard... the certain act really may produce only a smile...thx

    March 13, 2012 at 5:15 pm |
  9. ana

    & btw, obviously, only you are capable for make a such good connection/estimation,put the things in the right/appropriate context...but all that in a witty way uncroyable Sir Richard!

    March 13, 2012 at 6:46 pm |
  10. HankLion

    I can only support Mr. Gazzards assertion. A return ticket on KLM from Amsterdam to Hong Kong, economy, ranges between 805.- and 1413.- euros before this new 10.- euro charge on a return flight. On business class it would be between 2956.- and 3629.- euros plus 10.- Ever changing fuel sur-charges have a larger impact on ticket prices.

    March 13, 2012 at 7:01 pm |
  11. Baldazar

    So the giants bleat. Will any government listen? Perhaps they should be strung up by their naughty bits....oh wait that's been done. Sorry.. carry on!!

    March 13, 2012 at 7:40 pm |

Post a comment


CNN welcomes a lively and courteous discussion as long as you follow the Rules of Conduct set forth in our Terms of Service. Comments are not pre-screened before they post. You agree that anything you post may be used, along with your name and profile picture, in accordance with our Privacy Policy and the license you have granted pursuant to our Terms of Service.

About Business 360

CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.

Powered by VIP