Passengers will pay for airline emissions trading in higher fares or reduced services, leading carriers have warned.
Senior executives at merged US airline United Continental and Dubai-based giant Emirates told the World Travel and Tourism Council summit in Las Vegas that the European Emissions Trading Scheme (ETS), due to begin in January, would increase costs without stimulating fuel efficiency.
United Continental vice-president and chief revenue officer Jim Compton said: “Ultimately the cost will be passed on to consumers. The question is how? Prices cannot go up unless consumers will pay. So the industry may get smaller.
Compton said: “The industry reacted to the 2008 fuel rise by shrinking growth or cutting capacity.” Emirates group services president and chief executive Gary Chapman said: “We are signed up to European emissions trading and will participate. But emissions trading will add a cost for airlines and inevitably it will be passed on to passengers.”
Chapman said: “Economics will be the biggest driver of efficiency. Fuel is around 40% of our operating costs. We don’t need another incentive to improve efficiency.”
Earlier, Virgin Atlantic chief executive Steve Ridgway told the summit: “We have to make ETS work as envisaged and quickly make it global under the stewardship of the International Civil Aviation Organisation (ICAO). We cannot take a Luddite approach.”
All agreed airlines have been unfairly criticised for their contribution to global warming. Ridgway said: “Aviation has been seen as frivolous – about dashing away for a stag weekend – it is not. It is an industry crucial to economic growth.” Chapman said: “Aviation has been demonised.”
Boeing marketing vice-president Randy Tinseth said: “If we are really to see a carbon reduction from aviation we need biofuels. We have a plan to reduce our footprint 50%, but there is a lot we need to do.”