Wednesday, November 23, 2011
Tuesday, November 22, 2011
The latest idea in domestic aviation regulation comes courtesy of Senator Mary Landrieu (D-La.) who has introduced legislation intended to prevent airlines from charging for checked bags. See Chris Isidore, Bill Would Scrap Checked Baggage Fee, CNN Money, Nov. 22, 2011 (available here). Landrieu put forth two alternative proposals, one that would completely prohibit airlines from charging passengers for the first checked bag, and a second that would tax airlines for baggage fees, ostensibly to help offset TSA expenses resulting from the increased volume of carry-on bags since bag-check fees were introduced. It is unclear at this point whether the bill is simply pre-holiday pandering, or if concerns about TSA costs and support from consumer and travel advocacy groups will give it a legitimate chance of passage. Restricting the use of baggage fees and forcing airlines to distribute costs more widely through the less-targeted mechanism of higher ticket prices hardly seems like a good idea. U.S. carriers are estimated to have collected $3.4 billion in baggage fees last year, revenue the airlines cannot afford to lose. To put the cost of the proposal in perspective, the Air Transport Association estimated that participation in the EU ETS would cost U.S. carriers $3.1 billion in total from 2012-2020. Thus, were this bill to receive serious support, it would seemingly undermine any claims by the U.S. government that its objections to participation in the EU ETS are motivated by concern for the industry's ability to bear the costs of emissions regulations.
Monday, November 21, 2011
For yet another take on the ETS issue, blog readers may be interested in Lorand Bartels' The Inclusion of Aviation in the EU ETS: WTO Law Considerations (Nov. 15, 2011) (available from SSRN here). From the abstract:
The aviation industry will be included in the EU’s emissions trading system (ETS) from 1 January 2012. Airlines will have to acquire and ‘surrender’ allowances for the carbon emissions produced by their flights. The scheme is comprehensive: it applies to EU and non-EU airlines (subject to a potential exemption), to passenger and cargo flights, and to flights between EU airports and between EU and non-EU airports. An airline that fails to surrender allowances is fined €100 per allowance and must make up the shortfall the following year.
The EU’s scheme has already given rise to legal action in connection with the EU’s international civil aviation obligations. But, due to its impacts on trade in goods and services, the scheme also has implications for the EU’s obligations under the WTO law: specifically, under the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS). In particular, this raises the question of the scope of application of the GATS Annex on Air Transport Services. As this article shows, it is challenging to design a carbon scheme that is both administratively feasible and justifiable under WTO law.