Tuesday, June 19, 2007

Aviation CO2 Emissions - Buildup To Fall ICAO Meeting and Other News

EU Presses Ahead With Plan To Include Aviation In ETS

Following the recent Transport Council meeting, the EU announced that it was pressing forward with its plan to include aviation in its emissions trading scheme.  Tiefensee comments.  This sets up a showdown at the upcoming ICAO Assembly this fall over whether or not third countries should be required to participate in this scheme without their consent.  Despite President Tiefensee's comments suggesting that improvements in technology and efficiency will not solve the aviation carbon emissions problem, the U.S. and EU announced a new initiative to cut aircraft noise and pollution.  The U.S. and EU will pool research funds and work to ensure compatibility of air traffic control systems.  FT article.  The AEA and other European airline trade associations also recently released a study critical of the EU's plans to include aviation in the ETS.  Press release, executive summary.  Finally, the AEA took issue with a Dutch plan to levy a 25 euro tax on all airline passengers from the Netherlands and the purported environmental benefit justification for this tax.  AEA press release.

Southwest Eyeing International Service From BWI?

In a speech yesterday to the BWI Business Partnership, Southwest Airlines CEO Gary Kelly announced that any international expansion by Southwest would first entail service to Canada, Mexico and the Caribbean by its partner ATA.  However, Kelly suggested that the airline plans to eventually take advantage of the new opportunities created by the U.S.-EU open skies deal, and that BWI may become a base for international service.  Baltimore Biz Journal article.

Mergers and Privatizations

United's CFO Jake Brace sparked new speculation in the industry about potential merger partners for United after he announced at a recent Merrill Lynch conference that United was looking for a partner with a strong northeast presence and a southern-tier hub (for service to Latin America and the Caribbean).  Pittsburgh Post Gazette article.  Continental, Delta and US Airways all potentially fit the criteria laid out by Brace.  Also, Alitalia's privatization effort appears to be stalling after reports surfaced that Aeroflot may consider pulling out of the auction.  Reuters article.  This would leave Alitalia's much smaller rival Air One as the only viable bidder for the carrier. 

Follow-Ups From Previous Postings

The U.S. Department of State has posted the full text of the May 22 U.S.-China aviation liberalization agreement on its website.  One overlooked potential benefit from the agreement may be new service between China and Guam and the Northern Marinas.  Pacific Magazine article.  Continental and Northwest, carriers that already serve the islands, are the most likely to initiate new service.

Also, the U.S. DOT finalized its decision in the LAX user fees proceeding.  In a turnabout from the administrative law judge opinion discussed in an earlier posting (entirely favoring the airlines), the agency ruled that the airport was justified in increasing some of its fees that it charges airlines.  Daily Breeze articleFull DOT decision.

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