Thursday, September 27, 2012

EU Asks WTO for $12 Billion in Sanctions Over Boeing Subsidies

Reuters has the latest details from the ongoing Boeing-Airbus subsidy dispute.

September 27, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 25, 2012

US Senate Passes ETS Opposition Bill

Over the weekend, the United States Senate unanimously passed a bill opposing the EU's inclusion of foreign carriers in its emissions trading scheme. The issue is starting to draw increased media attention, and a few good recent summaries of the issues at stake can be found here and here. We won't repeat the substance of those summaries, but will discuss how most of the reports on the legislation are less dismissive of the bill's potential impacts than our post from when it first became clear that passage was likely. For those that have written about the bill, their primary emphasis has been on the provisions that prohibit U.S. operators from participating in the program and hold operators harmless for that non-participation. The latter is an issue we have not yet discussed, but it raises the possibility that if U.S. operators are fined for non-participation, the Secretary of Transportation would have to hold the operators "harmless" by either paying the fines with U.S. tax dollars or levying offsetting fines on EU operators and sparking a trade war.

Our skepticism about the consequence of these provisions was largely based on the discretionary language used in both provisions, instructing the Secretary of Transportation to prohibit U.S. participation and hold operators harmless only after determining that such a prohibition "may be in the public interest." Thus, while the legislative branch will have expressed its hostility to the EU scheme, the participation of U.S. carriers will ultimately be determined by the executive branch. It is important to note that such discretionary language was not included in the House version of the bill passed last summer, so our analysis could change if the House does not approve the more flexible language included in the Senate bill. Additionally, given the politics involved, we probably overstated in our earlier analysis the actual amount of discretion afforded the Secretary of Transportation. If the President were to sign the bill it would make little sense for a cabinet official within the same administration to then determine a prohibition was not in the public interest and essentially render meaningless the majority of the bill's contents. This suggests that the discretionary language may be unimportant, because the policy decision will be made when the President signs the bill. 

However, it is equally possible that the discretionary language affords the Obama administration flexibility that will be helpful to its negotiations toward an ICAO solution. If the law is passed and signed with that flexibility intact, the administration can negotiate with the EU and within ICAO while holding the law in its back pocket as an implied threat should international negotiations fail.  Without the discretionary language, the administration may be forced to negotiate with a trade war already unleashed. 


September 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, September 24, 2012

Arik Air Resumes Domestic Flights

The Nigerian government and the State's largest carrier have, at least for now, resolved whatever disagreements led to the grounding of aircraft last week.

September 24, 2012 | Permalink | Comments (0) | TrackBack (0)

Friday, September 21, 2012

Irish Aviation Authority Finds Ryanair in Compliance with Minimum Fuel Standards

There's been recent controversy over complaints by Spanish authorities that Ryanair planes might be carrying less than the minimum amount of fuel required to safely reach their destinations. Ryanair has attempted to reduce fuel costs and improve fuel efficiency by limiting the excess fuel carried on its flights. The initial investigation by Irish authorities appears to have found Ryanair in accord with its legal requirements.

September 21, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, September 20, 2012

Arik Air Suspends Domestic Flights

Arik Air, Nigeria's largest carrier, has halted all domestic flights indefinitely after its offices were raided Thursday, allegedly by government officials. The airline and government aviation authorities offer differing accounts of the incident. The airline is heavily in debt to the government and is supposedly behind on payments to its employees as well. This incident marks the latest misfortune for Nigeria's struggling aviation sector.


September 20, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 18, 2012

Foreign Carriers Already Contemplating Moves in Indian Market

Etihad has emerged as a leading candidate to become the first foreign carrier to take advantage of India's newly relaxed FDI rules. Etihad is in discussions to acquire a minority stake in Jet Airways. In related news, a number of LCCs, notably AirAsia, are said to be contemplating investing in Indian startups.

September 18, 2012 | Permalink | Comments (0) | TrackBack (0)

Monday, September 17, 2012

Tepid Interest in TAP

The Wall Street Journal has the details. Neither IAG nor Lufthansa submitted a bid for the Portuguese flag carrier. The government needs to sell the airline by the end of the year.

September 17, 2012 | Permalink | Comments (0) | TrackBack (0)

Friday, September 14, 2012

India FDI Reform Finally Goes Through

After close to a year of debate, the Indian government appears to have finally secured a change that will permit foreign carriers to own up to a 49 percent stake in Indian airlines. 

September 14, 2012 | Permalink | Comments (1) | TrackBack (0)

Thursday, September 13, 2012

EU Members Deny Reports of Surrender on ETS

Yesterday's story that the EC might be willing to back down from including aviation in its ETS has now received push back from EU Climate Commissioner Connie Hedegaard and representatives of France, Germany, Spain and the U.K. There is clearly some dissent among politicians and industry actors within the EU over how to proceed in regard to this highly fraught international standoff. Current law includes international aviation in the EU ETS and today's comments make clear that there does not yet exist a consensus in support of a legal change.

September 13, 2012 | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 12, 2012

EU Officials Ready to Fold on ETS?

News reports today suggest at least some EU officals, following a meeting with Airbus, are concerned enough about the prospect of a trade war that they're now willing to consider suspending the application of the ETS until a solution is reached through ICAO. 

September 12, 2012 | Permalink | Comments (0) | TrackBack (0)