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16 Jul 2008
Cathay Pacific Chief Executive Says European Emissions Trading Scheme Will Lead to Unfair Distortions

Cathay Pacific Chief Executive Tony Tyler today warned that the competitive distortion resulting from the decision by the European Parliament to unilaterally and extra-territorially bring all flights into and out of Europe into the European Emissions Trading Scheme (ETS) would be "significant" for airlines in Asia.

Speaking at a media briefing on sustainable aviation at the Farnborough International Air Show in England, Mr Tyler said Cathay Pacific lends its backing to the "chorus of disapproval" over the EU proposals.

"Once the system comes into effect, our Cathay Pacific non-stop flights to Europe - London, for example - will attract an emissions charge from the moment of pushback in Hong Kong to touchdown at Heathrow and vice versa. On the other hand, a Middle East carrier making the same journey on a two sector basis - stopping off at their Middle East home, where the passenger from Hong Kong would change planes and flight number - will be charged only for the final sector from the Middle East on to Europe," Mr Tyler said.

"The market has naturally created a difference in price for a non-stop and a one-stop journey to Europe. Yet the European proposal will add a much greater cost to the non-stop product than the one-stop product - distorting the market to the detriment of the non-stop carrier. How can that be considered fair?

"And how does it help the environment, when one carrier flies an efficient great circle route non-stop while the other flies a longer distance? Of course, it doesn't. If anything it just makes matters worse.

Mr Tyler said the right answer is develop a global scheme which includes all flights and so does away with any competitive distortion within the market. As well as being fairer, this would also be legal and more politically acceptable to airlines from outside the EU.

"We wholeheartedly support the IATA position that an ETS is the best market-based way of addressing the impact of aviation's emissions on climate change - but, vitally, it must be a global ETS. And the body which is best placed to address this is ICAO - an agency of the United Nations set up specifically to address international aviation issues."

Mr Tyler emphasised that it is "absolutely critical" for the aviation industry to speak as one voice to refute some of the distortions and misrepresentations that have grown up around the industry's role in global warming. At the same time, "I am firmly in the camp of those who believe that our industry must get its act together and demonstrate that it wants to be, that it is, and is seen to be, at the forefront of the solution to the problem."

He said one measure that would have significant positive benefits was the proposal for a Single European Sky for air traffic management. "Put this in place and you save up to 12 per cent flying time in Europe for all the carriers involved - a 12 per cent fuel burn saving and the collateral reduction in associated emissions. All through improving air traffic infrastructure by straightening routes and implementing new, more efficient procedures."

In Asia, the IATA-led introduction or modification of two air routes between China and Europe had led to significant fuel savings, with more in the pipeline. Mr Tyler said there were plenty of good business reasons for greater efficiency, too, especially today as "our industry is held hostage by high oil prices and other costs".

"In Hong Kong, our growth in traffic is such that our magnificent airport, opened only 10 years ago, is already under severe capacity constraints. As a result, we are now talking about the need for a third runway. And in tiny, cramped Hong Kong, that will require quite a debate to get the balance right between economic sustainability and environmental protection.

"But I expect that it will be a more balanced and rational debate than the one taking place here in London. At least I hope so, for I'm afraid that without a third runway the Hong Kong aviation hub will be under threat. This is very frustrating after we have worked so assiduously to develop and grow it."

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