EU’s new emissions rules will harm Europe’s airlines, warns British Airways

28 May, 2008: Airlines in Europe will be put at a major disadvantage competition-wise when the European Union implements its regulations restricting carbon emissions in 2011, British Airways has warned.

Willie Walsh, chief executive of British Airways – the national airline and flag carrier of the United Kingdom and one of the largest airlines in Europe – has written to European Commission environment commissioner Stavros Dimas protesting against the proposed regulations.

A copy of the letter has been sent to Britain’s Environment Secretary Hilary Benn and Transport Secretary Ruth Kelly.

British newspaper the Daily Telegraph quoted Willie Walsh as writing to European Commission’s environment commissioner Stavros Dimas: “These legislative proposals will all place a disproportionate burden on European airlines, with a consequent loss of competitiveness, and therefore jobs. We cannot take our aviation industry, and the economic benefit it brings, for granted.”

Analysts at the Association of European Airlines, the organisation of 33 major European airlines, have estimated that the European Union’s proposals on carbon emissions will increase the cost to airlines within the European Union from £36 billion to £91 billion over 11 years covered by the proposals.

The European Union’s original scheme, proposed to be introduced by 2011, would require airlines to buy credits for any emissions above a pre-set cap, broadly based on their 2005 emission rates.

In the case of British Airways, the proposals, when implemented, would involve buying credits for emissions above 16.1 million tonnes of carbon dioxide a year, the Daily Telegraph reported.

At present, planes of the British Airways emit 16.6 million to 16.8 million tonnes of carbon dioxide a year.

Amendments proposed by members of the European Parliament are intended to lower the emissions cap and to make airlines pay for 100% of their emissions.

In his letter to European Commission’s environment commissioner Stavros Dimas, British Airways chief executive officer Willie Walsh explained: “British Airways is willing to account for its environmental impacts. However, in the face of increasing competition and a global economic downturn, we will not be able to accept or withstand a continued series of uncoordinated fiscal penalties, some of which bring little or no environmental benefit.”

Willie Walsh continued in his letter: “Traffic may go through other hubs such as the Middle East, where such emissions restrictions won’t apply, rather than Europe.”

Meanwhile, despite making record profits in 2007, British Airways is expected to suffer losses over the next 2 years as, according to Walsh, “the airline’s bottom line is wiped out by the oil price.”

In a statement, he confirmed that, British Airways will, besides raising its fares, cut thousands of flights in the winter of 2008 as the carrier drops its least profitable routes and grounds its oldest, most fuel-guzzling planes.

The chief executive of British Airways also hinted that the airline is likely to raise further fuel surcharges, which are levied on customers to cover the rising cost of oil.