Airlines and the Emissions Trading Scheme – How can we all do better?

Posted on July 13, 2012

The airline industry is expected to total billions in losses this year. It’s no wonder that airlines are protesting at the additional ‘tax’ imposed on them by the EU’s Emissions Trading Scheme – a scheme that makes them pay for carbon emissions and will cost them significant $$$. But their protests are misplaced and they have the opportunity to take a much more positive stance.

The airlines’ protests are based on two pillars: (i) they are an important contributor to shaky economies and should not be damaged by unnecessary regulation (ii) the EU has no right to impose conditions on airlines that are properly regulated by other countries (i.e. non-European airlines). It doesn’t take much close examination to show that these two pillars will not stand up to challenge.

We’re all special

Yes, airlines contribute to economic activity. But so do thousands of other industries. All industries are ‘special’ and none should be stifled by unnecessary regulation. There is no reason why the airline industry is any more special than any other.

As for the EU ‘exporting regulation’, this is in no way unusual. Many of the security checks we are submitted to today in airports worldwide and many of the security precautions that airlines follow are dictated by the national security requirements of the United States. The US specifies that if you wish to fly into its airspace, then you must comply with its requirements – wherever you come from. The EU is not doing anything different.

Regulation is necessary

Neither can we argue that the regulation is unnecessary. While many, including me, would argue against unnecessary regulation, the unfolding financial, economic, social and human crisis that we face today in Europe and, to a lesser extent, in the US, shows us in vivid color the consequences of inadequate regulation of the financial services industry. As regards carbon emissions, the principle of ‘polluter pays’ is widely accepted and arguments that carbon emissions are not pollutants have had their day.

But airlines have alternatives

Airlines are, however, almost unique among industries in having alternatives if only they would choose a constructive rather than the complaining route of special pleading. So far, their approach to selling carbon offsets to the traveling public has been pathetic. In a previous post I argued why I don’t buy such offsets. But, with commitment and the use of their extensive marketing savvy, such offset schemes can be turned around and made appealing to customers. Imagine how different the airlines’ negotiating position with the EU could have been had they been in a position to show that they were already offsetting their emissions by selling hundreds of millions of dollars in offset schemes and investing that money directly in environmental projects.

It is not too late to start down this road. Such offset schemes can be incorporated into airlines’ marketing and customer loyalty programs in such a way that they provide a direct, tangible bottom line benefit.

By taking a positive, pro-active approach, airlines have the opportunity to get out of the complaining, special pleading mindset and initiate programs that benefit their business while reducing their net environmental impact. Then they will be in a position to have a different sort of conversation with regulators.

A fuller version of this article was first published on APEX Editor’s Blog (Airline Passenger Experience Association)