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Airlines will face constraints on growth and increased costs for carbon emissions if the aviation industry fails to agree plans for a global scheme for trading emissions this September.

Tony Tyler, director general of airline association Iata, issued a warning at the Centre for Aviation (Capa) conference on Airlines in Transition, in Dublin, on Friday.

Tyler said: “The industry favours a properly run, global offsetting scheme so that, if we can’t cut carbon use [ourselves], we can [reduce emissions] somewhere else.

He said: “There will be a cost to that. But we’re in a pretty good place as an industry because we are not being told we can have no growth.”

Tyler warned: “It’s vital we don’t bicker about how we pay for the growth in emissions. If we can’t agree, we will have to pay more because every region will come up with its own system. Let’s not have a punch up.”

The International Civil Aviation Organisation (ICAO) will meet in September to try to agree a market-based mechanism for capping and trading CO2 emissions by aircraft.

A majority of airlines and most states outside Europe have previously opposed the European Union’s efforts to impose an emissions trading scheme.

Tyler said: “It is so important that member states of ICAO come together in September and crack this.  If we don’t, we won’t be allowed to grow. We will be regulated out of the opportunity to grow.”

Christian Haenen, European government affairs and aviation policy leader for GE Global Growth, part of engine manufacturer General Electric, said: “What the aviation industry has achieved in pollution and noise reduction is pretty impressive.

“It requires huge investment when developing a new engine takes two years and $2 billion.”

But he dismissed the idea that ‘big data’ analysis could make a decisive difference in cutting emissions, saying: “An engine creates a lot of data and if you analyse all the data you can make the engine more efficient, but only by 2%.

“To cut emissions 50% by 2050 [as promised by Iata], when aviation is growing, will need biofuels.”

Air China vice-president and general manager for North America Zhihang Chi said: “If there is a failure at ICAO there will be another acrimonious squabble as when the EU came with its own [emissions trading] system.”

Geoffrey Lipman, founder of Strong Universal Network and a former senior figure at the World Travel and Tourism Council, UN World Tourism Organisation and Iata, called for an emissions surcharge on air fares. 

He told the Capa conference: “Passengers should pay. It should be a surcharge. We don’t hesitate to put on a fuel surcharge when fuel costs rise.”