If the British government and environmental watchdogs have their way, the aviation industry will be compelled to join the European Union’s emissions trading scheme in 2008, a move that could lead to higher airline prices. Under the scheme, the airlines would be assigned a carbon-dioxide emissions limit based on their existing routes and aircraft fleet. Carriers would have to purchase the right to emit more carbon dioxide from the market if they wanted to exceed that limit, a likely scenario if an airline wanted to change or expand its network or fleet. Airlines that exceeded their maximum carbon outlay also would incur a fine upwards of £65 per tonne and would be required to purchase the deficit at the current market price. At press time, carbon was trading at £13 per tonne, three times the amount it was trading when the scheme began in January.
“I don’t think there is any doubt the airlines will pass the added cost on to the customer,” says Jay Mariyappan, principal projects manager for the Department of Trade & Industry. Mariyappan notes that the cost of carbon is a bit of wild card since it is determined by a number of factors, including the prices of oil and gas. For example, carbon peaked at £19 per tonne this summer when power plants, which are currently included in the scheme, switched to higher carbon-emitting coal as gas prices rose.
As business travellers usually bear the brunt of any change that affects airfares, the scheme has raised the hackles of price-sensitive corporations, which favour voluntary pay-to-pollute programmes. “Most business travellers don’t think about the environment. They think about price and whether they will get caviar and champagne onboard so it is unlikely that any mandatory green surcharge would be acceptable,” says John Melchior, a hospitality consultant who racks up about 150 flights per year.
Bruce McIntyre, director of mergers & acquisitions for CIBC World Markets, agrees that business travellers’ main concerns are price and schedule, not environmental friendliness. “It should be up to the individual corporation to decide on an environmental programme or fee to offset carbon emissions.”
Since September British Airways’ customers have had the option of paying a fee designed to offset the damage planes have on the environment. The initiative is part of a broader climate change campaign, which, among other aspects, aims to reduce per passenger waste by 2 per cent per year, according to Andrew Sentence, BA’s chief economist and head of environmental affairs. Still, Sentence says corporations and individual business travellers must take a more proactive approach to monitoring greenhouse gases. “While we’re happy to help, if you are relying on the airline community to do it all it’s not a particularly good way forward.”
Visitors to BA’s website will find a link to Climate Care, an organisation which invests in sustainable energy projects and helps travellers calculate the CO2 emissions from their flight. For instance, the Climate Care calculator (www.co2.org) estimates a return flight from London to Singapore uses 3.04 tonnes of carbon dioxide and suggests a £19.79 donation to offset the pollution. The problem is that the calculator is based on the carbon output of older, less fuel efficient Boeing 747s and Airbus A340s so is not reflective of the emissions output by newer aircraft currently in operation or those coming soon, such as the 787 Dreamliner, which is 20 per cent more fuel efficient than older generation aircraft.
Next year Virgin Atlantic will give its passengers the option to make their flight carbon neutral, according to Sir Richard Branson, the company’s chairman. Unfortunately, he says he’s not sure how many people will actually put their hands in their pockets. Branson, who criss-crosses the globe about three times per week, admits that even he wouldn’t have considered offsetting emissions if he hadn’t become personally involved in environmental sustainability programmes.
Unlike BA, which has publicly backed the EU emissions trading scheme, Branson says Virgin is taking a wait-and-see approach. “There’s no question the government should encourage the airlines to do everything we can to be more fuel efficient and if the legislation is sensible then that’s great but I think it needs to be directive [rather than mandatory].”
“It’s up to the airline owners to do something about the environment. We can’t afford to charge more [for tickets]. Any environmental surcharge would have to be done on a voluntary basis because cost is still travellers’ number one concern, not the environment,” says Branson.
For its part, Virgin is investing in more fuel efficient aircraft, and trying to persuade airport operator BAA to find a way to tow in the planes quickly so aircraft are not unnecessarily burning tonnes of fuel on the ground. Virgin is also lobbying IATA to better coordinate air traffic control centres to route planes more efficiently.
Virgin’s biggest environmental endeavour is the development of an alternative energy source, called cellulosic ethanol fuel, which is partly derived from corn. The biggest drawback is that the fuel cannot be used to power aircraft. Still, Branson says there could be an indirect impact which could lower airfares. Branson is currently scouting a cellulosic ethanol fuel production location in the US, with an eye on Iowa.
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