BUSINESS

Time running out on reaching single global emissions scheme, says IATA

09/23/2013 09:46 EDT | Updated 11/23/2013 05:12 EST
MONTREAL - The global airline industry says time is running out for Canada and other countries to come to a single agreement on cutting aircraft emissions of greenhouse gases if they want to avoid a piecemeal regional approach that raised threats of a trade war last year.

The International Air Transport Association, which represents 240 airlines, is proposing that countries gathered for the ICAO's general assembly opening on Tuesday accept its proposal for a single, mandatory global mechanism to offset carbon emissions.

"If we miss this opportunity, there's a real risk we won't achieve what we set out to achieve," IATA chief executive Tony Tyler said in a news conference on Monday.

Tyler said there was "a degree of optimism" ahead of the conference that the 191 members states of the International Civil Aviation Organization can reach a political agreement that would avoid a collection of regional plans, including the Emissions Trading Scheme proposed last year by the European Union. The EU put its proposal on hold following threats of trade wars from unhappy governments.

"Everybody I spoke to on all sides of the debate believe very strongly that it's very important that this assembly does deliver a resolution. What the content will be of course will be a matter of serious negotiation, but everybody is aware this is a historic opportunity to take a big step forward."

Global aviation accounts for around two per cent of global man-made carbon dioxide emissions. In 2009, the global aviation industry agreed to cap its net emissions from 2020 through "carbon-neutral growth'" and halve its net CO2 emissions by 2050, based on 2005 levels.

Although details of IATA's plan, including costs to airlines, still need to be developed, the industry and its partners are confident.

"Aviation is a global industry. Managing emissions is a global challenge. The solution must therefore be global...that means avoiding being sidetracked by regional discussions," said Tyler.

Failure to agree would likely prompt the Europeans to restart the clock on its proposal, he said, noting that waiting until the next ICAO general assembly in three years would give little time to reach a deal before 2020.

It also could lead to overlapping regional schemes that may force airlines to pay more than the true costs of the emissions.

IATA on Monday unveiled its lower industry profit forecasts for 2013, trimming it by nearly eight per cent or by about US$1 billion from the June due to an oil spike associated with the Syrian crisis and slower growth in some markets. The latest forecast is for the industry's global profit to be US$11.7 billion this year with US$708 billion of revenues.

Earlier, IATA said its reduced profit forecast for this year still represents growth from the US$7.4 billion earned by the industry in 2012.

For next year, IATA expects the industry's global profit will rise to US$16.4 billion, which would make 2014 the best year since airlines posted a profit of US$19.2 billion in 2010. Revenues are forecast to reach US$743 billion as the industry benefits from rising business and consumer confidence and a 2.7 per cent forecasted GDP growth.

"Overall, the story is largely positive. Profitability continues on an improving trajectory but we have run into a few speed bumps," Tyler stated.

Cargo growth hasn't materialized and revenues are expected to decrease by US$8 billion to US$59 billion.

Passenger growth is expected to be five per cent this year with the total numbers of travellers forecast to reach 3.12 billion, the first time they would top the three billion mark.

North America is expected to post the strongest performance, with profits more than doubling to US$4.9 billion this year, up from US$2.3 billion in 2012, and increasing to US$6.3 billion in 2014.