Proposals to curb CO2 after 2013 carry a high price

The aviation industry could be hit with billions of euros of extra costs from new proposals aimed at curbing carbon dioxide after 2013 and will struggle to cope, airlines said on Wednesday.

Under proposals being drawn up in Brussels to fight climate change, all airlines using airports in the 27 nation European Union would be included in the Emission Trading Scheme (ETS) from 2012, with a cap on their emissions of greenhouse gases.

The European Parliament’s environment committee voted on Tuesday to make the sector pay for 25 percent of its permits to produce carbon dioxide in the first year, rather than the 10 percent suggested by EU ministers.

The panel rejected a proposal that airlines pay for 100 percent of their permits to pollute from 2012, but it approved a proposal that from 2013 the percentage of permits be raised in line with the maximum level in other sectors.

“This text actually means that aviation is likely to be brought in line with the electricity sector, and this sector is expected to face 100 percent auctioning from 2013,” said a spokeswoman for the International Air Carrier Association (IACA).

The vote by the environment committee was not the parliament’s final say, but the panel is viewed as the most influential one to look at the proposals.

The cost of the package for EU carriers is estimated at more than EUR175 billion euros (US$275 billion) in the first 12 years of the ETS, a British Airways spokesman said.

IACA, which represents 38 airlines, estimates that if 100 percent auctioning were introduced in 2013, it would mean EUR15 billion a year in additional costs for airlines touching down in the EU.

The parliament panel voted for aviation to mirror other sectors under the ETS to avoid the problem of “windfall profits,” which occur when sectors pass on to customers the cost of carbon permits they have been given for free.

But aviation could not reap windfall profits, said the European Low Fares Airline Association (ELFAA), which represents 12 airlines including Ryanair and easyJet.

“While the windfall gains of the power generation industry cannot go unaddressed, the aviation industry cannot simply add the costs incurred by ETS to ticket prices,” ELFAA Secretary General John Hanlon said.

Source: airwise.com

A new era in air travel has been launched by the International Air Transport Association (IATA) as the industry bids farewell to the paper ticket on the eve of the conversion to 100% electronic ticketing.

“Today we say goodbye to an industry icon,� said Giovanni Bisignani, IATA’s Director General and CEO. “The paper ticket has served us well, but its time is over. After four years of hard work by airlines around the world, tomorrow marks the beginning of a new, more convenient and more efficient era for air travel.�

The paper ticket dates back to the 1920s a time when each airline used a different form with varying rules.

Airlines soon recognised the need for standardisation of traffic documents, regulations and procedures to support the growth of an industry that spanned the world.

In 1930, the IATA Traffic Committee developed the first standard hand-written ticket for multiple trips. These same standards served the industry into the early 1970s.

The first ticketing revolution occurred with automation in 1972. The IATA Billing and Settlement Plan (BSP) for travel agents began in Tokyo that year.

This led to the birth of the IATA neutral paper ticket which saw the IATA logo appear on the cover of tickets that could be used by any travel agent to ticket journeys on almost any airline in the world.

The next revolution took place in 1983 when the system was further automated with a magnetic stripe on the ticket back. This allowed all of the ticket information to be stored electronically on the ticket itself and it could be used as the boarding pass as well.

At its peak, 285 million of IATA neutral paper tickets were printed in 2005. The first e-ticket was issued in 1994. By 1997 IATA had adopted global standards for e-ticketing. But the evolution was slow and by May 2004, only 19% of global tickets were electronic.

At the 2004 Annual General Meeting in Singapore, the successive crises of war, terrorism and SARS were still being felt, the price of oil was approaching US$40 per barrel and the imperative for cost efficiencies was critical. IATA presented a plan for Simplifying the Business, the highlight of which was to achieve 100% e-ticketing.

Over four years, IATA deployed a global team of 150 people to work with airlines and system providers around the world to facilitate implementation.

“In four years we achieved what many thought was impossible. We made 100% ET a reality everywhere – from our largest hubs to small remote island airports with no electricity. It is an incredible industry achievement,� said Bisignani.

“The benefits to the business are real,� said Bisignani. A paper ticket costs an average of US$10 to process versus US$1 for an electronic ticket. With over 400 million tickets issued through IATA’s settlement systems annually, the industry will save over US$3 billion each year.

100% ET eliminates the hassle and expense of lost tickets and makes travel in an electronic world much simpler. ETs can easily be changed and reissued without necessitating a trip to a travel agency or airline ticket office. And they enable a wide array of self-service options such as online and mobile check in.

“With ET a reality we can now enter the next phase of Simplifying the Business,� said Bisignani. “We are moving ahead with a further revolution - Fast Travel that will provide convenient self-service options from check-in to baggage tracing and re-booking.�

While IATA will no longer issue paper ticket stock, IATA neutral paper tickets issued by travel agents before June 1 remain valid for travel under the conditions they were purchased. Paper tickets may still be provided by an airline from its own offices or from a travel agent in the USA, although it is anticipated the volumes will be very low.

To complete the conversion IATA has contacted 60,000 travel agents in more than 200 countries to collect the remaining unused paper tickets in the system – some 32 million worldwide- which will be securely reclaimed, destroyed and recycled.

“An era has ended. If you have a paper ticket, it’s time to donate it to a museum,� said Bisignani.

Traditional airlines such as British Airways and Australia’s Qantas could join their low-cost rivals in charging passengers for baggage check-in and food amid soaring oil prices, a leading industry executive warned today.

The head of one of the world’s biggest airline alliances, oneworld, whose members include BA and Qantas, said the group will consider changing membership rules in order to allow budget airline-style charges.

“If the industry moves to a standard of charging for an apple juice in economy, the alliance will move in that direction,” said John McCulloch, oneworld’s managing partner. Asked if bag check-in charges are also on the horizon, he added: “Airlines would argue that it’s the right way to do it. It’s £20 a bag, £10 for a meal. We are going to see much more of that.”

Add-on fees for stowing bags and refreshments are a staple of the budget carrier industry, but long-established airlines have refused to levy such charges in case they lose out to competitors.

Echoing the comments of BA boss Willie Walsh last month, he said fares will also have to rise if carriers are going to stay in business. With oil trading at $130 a barrel, the vast majority of airlines including BA are technically unprofitable. BA and Virgin Atlantic have hiked fuel surcharges over the past week in a bid to cover their costs.

“It is unsustainable. Airlines are going to have to find some way of combating this fuel price, whether it’s increasing fares or cutting costs, because the business is unsustainable today.” He added: “People have realise that it’s going to get more expensive to travel.”

Silverjet, the Luton-based transatlantic carrier, became the latest airline to enter administration due to financial problems last week, joining eight US airlines and two carriers that operated flights from the UK: Nationwide Airlines and Oasis Hong Kong Airlines. BA, Qantas and Air France-KLM have all warned in recent weeks that fares will have to rise, but McCulloch warned that consumers might refuse to travel, and plunge carriers into further trouble, if ticket prices rise too far.

“Fares have to rise to a realistic level to reflect the fuel price. Whether that can happen without the industry breaking up is the key question.”

McCulloch, apeaking at the annual general meeting of the International Air Transport Association in Istanbul, added that the 10 oneworld airlines, which include Hong Kong-based Cathay Pacific, Spain’s Iberia and the world’s largest carrier, American Airlines, will have to cooperate more closely on buying fuel. Fuel accounts for around a third of airline budgets and that proportion is rising, with the price of jet fuel rising by 50% since January alone. McCulloch admitted that regulatory authorities in Australia, the US and Europe will watch the talks closely, but the industry has no choice other than to work harder on reducing costs together.

“We have got a procurement group and we have got to be a little more aggressive. With fuel at its current price, it’s not acceptable that we cannot work together to make some savings. The irony is that the people selling it [the Opec group] are allowed to sell together. But we will be looking at making sure we don’t go to jail,” he said.

McCulloch added that ownership laws, which restrict foreign carriers to 25% of the shares in US airlines and in the European Union to 49%, will have to change as airline industry focuses on mere survival over the next year. Unions will also have to give concessions, he said. Two major US carriers, United Airlines and Delta, have dropped merger talks due to union concerns and American Airlines and close rival Continental have also cooled discussions.

“We are structured in a way that, one could argue, adds unnecessary cost. There are attitudes towards ownership and labour that are historical and unsustainable,” he said, adding that setting up an airline at Heathrow airport now faces significant obstacles due to trade union contracts.

The hassles of the $25 international departure fee imposed upon passengers leaving Auckland Airport has finally been eliminated, as CEO Don Huse announced Wednesday morning, at a media breakfast in Rotorua, at Trenz 2008.
The anticipated transition to a new departure fee collection process has commenced, and on or after July 1, 2008, Auckland Airport will levy the necessary fees upon airlines, rather than travellers.

The new Passenger Services Charge (PSC) will bring the practices of Auckland Airport in line with other major gateways in the world. Huse discussed the importance of this, as he claimed “Auckland arguably is the gateway to all of New Zealand.�

He explained that “Airport and airline customers have been telling us for some time that the old departure fee process was a genuine hassle.�

“We are now looking to taking the old collection process link out of the chain from July and simplifying travel for everyone.�

Huse continued, noting that the improved services ought to allow airline passengers to “have a much easier and more streamlined departure experience.�

However, Huse did not mention the fact that the new system, where the PSC charge of $13 for departing and incoming passengers, will actually cost $26 instead of $25.
The airlines will not be absorbing these fees, which is understandable given the current climate.

Norm Thompson, deputy CEO of Air New Zealand, said in an interview with eTravel Blackboard that the change would have “no increase in costs to consumers.�
He did note that the difference would be that passengers would no longer be aware that their payment was going towards the airports, as the cost would be lumped into their fares.

There are other changes occurring at Auckland Airport, such as anticipation regarding the new international arrivals Pier B at Auckland Airport in October 2008, which will also “greatly increase capacity and access for aircraft handling at Auckland,� George Hickton, the CEO of Tourism New Zealand claimed.

The combination of the PSC and the new Pier B continues the “longstanding and deep commitment to continually improving the New Zealand arrival experience,� according to Hickton.

Projections have indicated that Auckland Airport ought to prepare for 24 million passengers annually by 2025, which for Huse means “a never ending programme of activity that includes a major international departure area redevelopment, the already completed domestic terminal extreme makeover, an airport hotel development, and significant progress on a new northern runway and north airport services complex, to name but a few.�

The airport also has a new Smart Gate system on trial, which ought to smoothen the aircraft handling process further.
As a platinum sponsor of Trenz 2008, Huse commented that “Auckland Airport and our tourism partners are all working hard to bring more people to New Zealand and to give them some special, exciting memories to take home.�