Friday, June 8, 2012

Southwest's International Aspirations

Yesterday's Financial Times included this interesting article on Southwest Airlines' plans for increasing its international business. The ambitious strategy represents a significant change for one of the most successful U.S. carriers. It also reflects the realities of the mature U.S. domestic market, which offers limited potential for growth in the coming decade.

June 8, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, June 7, 2012

Schulte-Strathaus Steps Down from AEA Post

The Association of European Airlines (AEA) has announced that Ulrich Schulte-Strathaus will be ending his term as AEA Secretary General, an office he has held for the past ten years. Athar Husain Khan will take over as acting Secretary General until a replacement is chosen.  Mr. Schulte-Strathaus is a member of the International Aviation Law Institute's advisory board and has been a strong supporter of the Institute and its projects since his prior affiliation with Lufthansa. 

June 7, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 6, 2012

Could a Different ETS Regime Have Avoided Legal Controversy?

Last month's DePaul-Beihang workshop generated an interesting question, whether the ETS could have been applied to aviation in a way that circumvented the current criticisms of the scheme's extraterritorial reach. Professor Alberto Coll of DePaul inquired about the legality of a scheme that only measured an aircraft's emissions over the portion of the flight occurring within EU airspace, rather than the duration of the flight. He suggested that to get the same deterrent effect the EU significantly increase the allowances charged for what would inevitably be a much lower total of emissions measured. While on its face, this addresses the extraterritoriality complaint, this proposed solution raises practicability issues.  Such a scheme would undoubtedly harm service to cities within the interior of the contiguous airspace belonging to EU Member States, which would become substantially more expensive for foreign carriers than flights to cities on the European periphery. EU carriers that fly domestic routes would be certain to object to the resulting competitive disadvantage. It was also speculated that there could simply be a flat amount surrendered for all emissions, regardless of flight duration or landing point within the EU. Such a change would counteract a central purpose of the cap-and-trade scheme, providing operators with an incentive to limit their emissions. A flat charge would sever the connection between emissions and costs, removing that incentive. Additionally, a set fee (even one determined in allowances rather than dollars) would only increase the legal questions about the scheme's resemblance to an illicit tax, rather than a permissible regulation. The end result of this thought experiment is a further illustration of how international law almost requires that aviation emissions be regulated by international agreement, rather than a more cleverly devised unilateral scheme.

June 6, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 5, 2012

Dedicating ETS Revenue to Climate Change Mitigation

At the recent Beihang-DePaul workshop there was some discussion about what happens to revenue generated by the scheme. A recent Reuters article reported that EU climate officials want to see the funds used for climate change mitigation efforts, but States are not required to do so and to this point, only Germany has pledged its revenue specifically for that purpose. This has fueled criticism that the ETS violates Chicago Convention prohibitions against fuel taxes or charges unrelated to the provision of services, despite the CJEU's judgment to the contrary. EU Climate Commissioner Connie Hedegaard is quoted in the article acknowledging this criticism. Defining what is and isn't a tax is a murky issue, that may not be entirely resolved even if the funds are set aside to combat climate change. However, if the EU States can assure their detractors that ETS revenues won't go to States' general treasuries, it would significantly weaken one  of the strongest legal complaints levied against the measure. Unfortunately, getting all of the EU States to commit to earmark the funds for climate change does not yet appear close to happening.

June 5, 2012 | Permalink | Comments (0) | TrackBack (0)