In this article TWC Aviation’s Carter Stewart examines some of the recent news on EU ETS (European Union Emissions Trading Scheme) and offers his perspective on some of the prominent stories of the past few weeks, and examines what may be next for the EU ETS controversy.
I feel compelled in each conversation that I have with clients, the public, or news outlets to say at the very start that I personally believe that the inclusion of Commercial Aviation into the EU ETS framework was not in the best interest of airlines, passengers, or the industry. What is important to remember, however, is that this is now law both in the European Union and in each of its member states- including the United Kingdom.
While much noise has been made in the world media over the past few weeks about the formal introduction of aviation within the EU ETS, there appears also to be a great deal of media spin on the stories that are coming out.
Take for instance the reports that many U.S. airlines began collecting a $3.00 surcharge per passenger travelling to/from the European Union to offset the carriers EU ETS obligations. I do not believe that this is necessarily true. Some airlines have called this additional charge simply miscellaneous. I believe that some carriers may well be using the revenue for the EU ETS obligations, while some others may well be using it as a form of fuel surcharge. Spikes in Jet-A fuel prices in Q4, as well as unusually heavy west-bound Atlantic winds, have been slowly eating away at revenues. There is also some considerable uncertainty over fuel prices and Iranian politics that are likely also influencing the various revenue teams around the world.
While it is reasonable to assume that carriers would want to offset their obligations, it is also important to point out that all carriers who had flight operations over a certain threshold have also received certain allotments of Aviation ETS credits from the E.U. nation who host the majority of their movements. In effect, for this first year, both E.U. and foreign air carriers have been given an allotment of free credits that run into millions of Euros. This is a fact that many trade groups, news outlets, and even foreign governments appear to leave out of their press statements.
While the time for EU ETS political advocacy on behalf of the industry has long since passed us by, the rest of the world has seemingly only awoken up to the reality of these new laws. While many trade groups and individual carriers had filed for hearings in the European Court of Justice, the court has made their position clear that their view is that EU ETS is not only legal, but does not violate international law. It is at this point where I believe commercial aviation trade groups will turn their attention away from European Capital, and instead spend their valuable time and money lobbying their own legislators for a diplomatic solution.
Many other jurisdictions such the United States, China, and India take an opposite view and have begun exercising their diplomatic and legal powers in search of a remedy to this situation.
I do believe that the future of EU ETS is likely to place pressure on E.U. relations with some countries. The United States Congress has introduced draft legislation in both the House of Representative and The Senate to propose making it illegal for a U.S. air carrier to acquire and spend E.U. ETS Credits. India has hinted that they are to re-examine several bi-lateral agreements with E.U. nations, carefully only alluding to E.U. ETS as a primary driver.
I personally believe that no country can afford an aviation trade war at this moment in time. While it would appear that the European Union had not learned from British History that occasionally “taxation without representation” can create political difficulties, it does not yet appear to have successfully created a credible legal argument against the new laws that each individual member-state has passed in their own jurisdiction that make up E.U. ETS. There is even some debate regarding which existing body is fit and proper to hear any new legal or treaty challenge.
Having said that, U.S. Lawmakers may do well to also remember the post 9/11 TSA security fees and demands for APIS (Advanced Passenger Information) often flew in the face of other nations’ sovereignty as well. While I am not comparing these items directly, what I would compare is the unilateral action taken by one party against another while exercising their treaty rights (i.e. operating international commercial airline flights).
Whatever the lofty arguments for or against E.U. ETS may be, the real challenge is what individual member states will do with individual carriers who do not comply with the new emissions framework. That is where I predict we will see the next credible legal set of arguments.
-EU ETS will include Aviation from 01 JAN 2012
-The UK Deadline for filing your benchmarking and emissions plans is 31 March 2011
-Are you included on the latest list of operators issued by EUROCONTROL in early February 2011?
-Do you know if you are covered by EU ETS?
-Do you know what flights are exempt from EU ETS, and are your included?
-If you are not sure what to do in regard to EU ETS, or even are unsure if you are covered by the new regulations please feel free to get in touch. We can help!
The EU Emissions Trading Scheme (EU ETS) is set to include aviation from 01 JAN 2012. EU ETS brings with it a whole new level of new dynamic market pricing that aircraft operators will need to factor into their formulas, and if initial estimates are correct we could be talking about anywhere from €5-18 per passenger (depending on the route) if prices for EUAs stay at today’s levels.
Before we get to that point, however, there are many foreign carriers and aircraft operators who may not be aware that they have been listed on the latest version of EUROCONTROL’s ANNEX I. Are you? If you are not sure you can refer http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:039:0001:0120:EN:PDF
While many of the US carriers have filed suit to contest this EU Directive (and the individual EU Member State Laws related to it) and that the has not yet been ruled on by the European Court of Justice. The US airlines involved are still, as we understand it, voluntarily complying with the requirements of the scheme. For other carriers this means those who are not exempt from the scheme have hopefully already applied for the “allocation of free credits” as well as submitted benchmarking plans, obtained certifying bodies, and put in place monitoring plans that are acceptable to their respective EU State they have been allocated to by 31 MAR. Carriers are due to hear in September of this year from their regulatory EU Member State as to what their share of the “special reserve” or other “free credits” are to be.
Last Monday the EU made the formal announcement about the final CO2 caps, and the simple math says that while approximately 80% of the carbon credits needed by the industry will be part of the free allocations, that leaves 20% subject to market forces. With an EUA trading at around €15-16 at the moment, there is some level of exposure to the several thousand of the world’s carriers operating into the EUROCONTROL zone.
Some analysts are looking for a price correction with the introduction of AAs to the ETS marketplace, with some projections taking them up to €18-20 per credit. I believe the number will be somewhere between €19-22 when AAs are introduced to the market, based on the projected shortfalls, and also a number of non-EU carriers who did not meet the criteria for a “free allocation” scramble to cover their exposure not fully understanding that the first point of surrender of these credits is not until MAR-APR 2013. So airlines, and other air carriers, have time to play the market a bit and participate in EU Member State auctions to make up their shortfalls. Though we would not want to be in the market for significant AAs or EUAs in early 2013!
Many of our foreign carrier aircraft operators have required some assistance with the regulations, compliance, and even just the overall processes involved in the scheme. If you are need of assistance or support, we would be happy to help! Please feel free to contact us today at +44 208 588 0602 for an initial consultation.
The ever-increasing number of individuals around the globe who are over-sized for the average airline seat will have a major impact on aircraft interior design. Two separate trends in body types, the larger passenger and the taller passenger, will require that airlines revisit their design approach and focus on people centred innovation to provide solutions.
Obesity, as measured by medical professionals in terms of BMI (Body Mass Index) and the prevalence of taller people are an undeniable part of our future. Trends also show that this very BMI may have a flaw in the future, due to the fact that some people are now growing taller than their ancestors. In some cultures, primarily Asian and South American, there have been dramatic changes that are beginning to be seen by medical professionals.
While there is a lot of discussion around the core reason for these changes, that is not as important to the commercial airline industry as what to do with the changing size and shapes of passengers. Some carriers already have a policy about “obese” passengers, but they are defined by a set of inconsistent factors. One of the more common measurements (and one that got a certain amount of notoriety from actor Kevin Smith while attempting to fly Southwest Airlines) is if a passenger “can comfortably lower the armrest”. I am relatively confident that this will be an issue in years to come.
Airlines and Obese Passengers
Another common policy that airlines follow is to have larger passengers purchase two seats on a flight, or to pay to upgrade their travel to another cabin. As capacity reduction continues to put some pressure on the ability of airlines to deliver these seats on short notice, there will also be a need to identify passengers ahead of the flight. This has some potential legal and social implications that may be unpalatable to most carriers.
Often lost in this discussion is the comfort of other passengers who are sharing the space with the obese passenger. There is a potential customer service issue for airlines as other passengers potentially complain about the loss of personal space already at a premium.
There are potential issues around aircraft safety, as passengers changing shape and sizes may cause some to question if some aircraft emergency exits are even accessible to these individuals.
What can airlines do for Super-size Passengers?
What new innovations are available to carriers to deal with this evolving need in all classes of service? There are some changes with so called “sliding seats” that may allow for airlines to offer slight adaptations to seat size. However, these represent safety challenges with the size of the aisle being potentially reduced.
I believe that there are not commercially available economy seats to deal with this issue, as airlines do not fell that they need or want to invest in this area of development. I believe that a more proactive approach is called for, and developing adjustable seating or even select seating that is truly wider will offer both passengers and airlines a better solution to addressing this emerging “mega-trend”.
At the same time, there are premium seating solutions in forward cabins that do make flying more comfortable for people of all sizes. However, these may be economically unfeasible for many passengers. In this case, I do see a day where additional potential legal challenges may be faced by air carriers in places like the USA by an obese person who may claim that their size is due to a disability and is therefore protected by law. Carriers will need to proactively examine the potential range of solutions that could be available.
Airlines and the Taller Passenger
In a completely separate issue, there is obviously better news for taller passengers and travel on some airlines. Some airlines have a gate control policy that allows them to “gate control” the seats with more legroom for passengers they feel could benefit from the additional space.
There are also a number of carriers offering “extra legroom” or “premium seats” in the economy cabin. That said, some carriers also charge for these seats, which some taller passengers may feel is unfair. In addition, with the increase in Low Cost Carriers (LCCs) over the last decade, there has also been ever so slight erosion in seat pitch (the distance between one row and the next). This presents the taller passenger with comfort challenges, but may give some carriers an advantage with this segment of the traveling public.
What can airlines do for taller passengers?
For this particular trend, most carriers have a product that is already available in their economy class, including on some smaller regional jet services. Overall, while there may be an increase in demand for more legroom in economy class, I do not foresee airline economics allowing for what American Airlines used to refer to as “More Room throughout Coach”- a product that offered the entire cabin more space.
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If you are you interested in knowing more about this subject, here are a few links that talk about the core of the issue and offer additional insight on the causes and social impacts in a broader sense:
Inside Government Workshop on Obesity
US National Institute (NIH) of Health on Obesity
Air Travel and Our Ageing Population
One of the most intriguing social and economic topics that will have a major impact on the future of most nations, regardless of geography, is the issue of an increasingly ageing population.
What is significant about this trend is that in the next twenty years the population over the age of 65 will at least double in most industrialised nations. These numbers are unprecedented in all of human history, and the demands and needs of this market segment will likely impact airport and airline operations.
While the population is ageing, it does not necessarily mean that they are doing so in quite the same way as previous generations. Medical advances and social and financial drivers are keeping people fitter longer, extending their overall health and mobility well past that of previous generations. In many nations, the average retirement age for both men and women is rising and this can occasionally be linked to a change in the social contract between individuals, their company’s retirement plan, and structured national social support for the aged.
One of the most likely impacts to airlines may be those who currently classify themselves in the “Low Cost Carrier” (LCC) category. With a focus on quick turnaround times and often utilising second-tier airports from forward and aft exits on a hard stand, they stand to lose the most from a changing passenger demographic. This is particularly true in the European sector of the airline business, as in the United States the prevalence of jet-bridges is more widespread.
Onboard the aircraft there may be a number of design changes that need to be considered to accommodate this new passenger demographic.
These could include:
- The installation of new or additional moveable aisle armrests to facilitate access to seats, particularly in economy class
- The installation of new or additional power outlets on long haul aircraft to accommodate the use of a growing number of medically necessary devices (such as respiratory support devices, etc.)
- The addition of larger, more accessible lavatories on the aircraft. With ongoing current security restrictions on passenger cabin movement, there may be a requirement for both forward and aft accommodation.
- The study of one-touch, or motorised, retractable tray tables and IFE devices in bulkhead seating. Often these can be challenging for some passengers to deploy.
In addition to cabin changes, there may also be a number of changes recommended for In-Flight Entertainment (IFE) devices. These may include updates such as:
- The ability for the passenger to manipulate the font size of a subtitle on a safety video or entertainment programme
- The opportunity for a passenger to use their blue-tooth enabled hearing aid devices to interface with the IFE without the potentially invasive insertion of ear buds
Operationally, there are also a number of challenging issues for the industry in regards to a mobile ageing population.
These could include:
- Safe accommodation and gate check delivery of a growing number of sophisticated mobility devices (such as “scooters”) to enable passenger the maximum of personal mobility without additional assistance. In association with this change, there may need to be an overall review of “checked luggage liability” associated with these high-value devices.
- For those who do not have access to personal mobility devices, there could be an increased demand of airline staff on the ground and in the air to support and assist customers through all aspects of their journey.
These are just a few of our thoughts on how this particular segment of the travelling public may influence the future of aircraft interiors, airport procedures and carrier policies.
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We can also recommend this link for The European Union Statistical Office
According to Eurostat, the EU’s statistical analysis unit, in the year 2060 over 30% of the entire population of the European Union will be over the age 65. In 2008, Eurostat reported the same population was at 17.1%
Human Factors in Ultra-Long Haul Air Travel
It is generally agreed that non-stop flights to places like London – Sydney are well within the range of technical possibility, but the economics still prove elusive. As the industry and passengers work through the practical issues to make such “ultra-long haul” travel possible, what are the human factors and ergonomics that will be required to make passengers more comfortable without sacrificing yield?
The latest generation of airliners already goes a long way to addressing some of these issues. For instance, with the new generation of Boeing airpcraft, two of the most important issues related to passenger and crew comfort have been addressed in new and innovative ways.
The question of relative humidity and air quality on the new Dreamliner series of aircraft show a great deal of potential for increasing passenger comfort on any flight segment. While most commercial aircraft in operation today can give passengers a perfectly acceptable level of atmospheric conditions (equivalent to those at approximately 2,700 meters (9,000 feet) above sea level) there are some bio-dynamic stresses that such altitudes place on the body.*
The new Dreamliner claims to be able to deliver a cabin atmosphere of approximately 1,800 meters (6,000 feet) above sea level, which would represent a major increase in overall cabin air quality when measured in terms of relative humidity and constant oxygen content. Boeing claims that there is almost no difference between 1, 800 metres and sea level, although some of us who ski or hike may beg to differ just a little. Either way, this could mean a significant reduction in overall passenger comfort as well as lessen flight fatigue, making these ultra-long haul sectors more appealing.
In addition, there are a number of new cabin LOPAs (Layout of Passenger Accomodation) that in my opinion represent innovative moves forward for passenger comfort. Some of my personal favourites across all cabins include:
· The new “Sky Couch” being rolled out by Air New Zealand, and designed by Altitude Interiors. I am intrigued by the overall concept of offering this new product in the economy cabin, and believe that it represents a step change in cabin interior innovation for families, couples, and even individual passengers. I look forward to seeing how the economics of this new product play out in the marketplace.
· I am also truly impressed with the new British Airways First product. This collaboration between BA, B/E Aerospace, and Tangerine Design. While the aesthetic is pleasing, what I appreciate most about the new product is the increase in the shoulder width available to the passenger when reclined fully into the flat-bed. This detail alone sets this new seat and LOPA apart from other competing herring-bone products which I feel do not offer the same shoulder comfort for those passengers who might have a slightly different build from your average European passenger.
· I would also be remiss if I did not mention the existing and just emerging LOPAs for the A380 aircraft. From Singapore Airlines, Air France, and Emirates each new delivery seems to bring us something new and game changing in each of the cabins.
· I also believe that the new SWISS First and Business product built in collaboration with Sicma Aero offers trans-continental passengers a new and very comfortable experience in both cabins. From the very Swiss design incorporating the lightly coloured woods and whites, to the luxurious First Class suites, I feel there is potential here for these designs in ultra long haul aircraft as well.
On feature of particular value to the passenger in the know is the Business Class product: Row K. A lone Business Class Seat on the left of the aircraft, with generous personal space to your right, it exceeded all expectations.
Overall, I think that the major issue with ultra-long haul will be with the new aircraft and the emerging balance of new LOPAs and the unique yield opportunities that some of these innovations represent. It is my sincere belief that “fortune favours the brave” and that we continue to see cabin innovations of this quality for a long time to come.
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Other links worth visiting:
Air New Zealand and their stand-alone firm Altitude Interiors Skycouch
Tangerine Product Designers and the New British Airways First Class Seat
B/E Aerospace and British Airways New First Class Suites
* These levels are perfectly acceptable, and do not
represent any compromise to passenger or crew member safety.