Emirates airlines is expected to make a loss of $1 billion (Dh3.67 billion) in the first eight to ten years of the new European Union Carbon Emission Scheme.
The new scheme requires airlines to pay fees for all inbound and outbound flights from Europe, which will have a major impact on the airlines that covers different routes across Europe.
Andrew Parker, senior vice-president of Public, Industry, International and Environmental Affairs estimates the losses to be around $500 million to $1 billion range over the first eight years or first decade of the scheme.
Emirate?s European dependence
According to Parker, 24 per cent of Emirate’s global operations are in Europe and the scheme will have a significant impact on their revenues. Starting from January next year, flights to and from Europe are required to buy permits from the EU’s Emissions Trading Scheme (ETS) for 15 per cent of the carbon emissions they produce during the flight. Airlines also need to pay fines up to ?100 (Dh520.6) for every tonne of carbon dioxide they emit above the limit.
The ETS, part of the EU’s climate plan, was first implemented in 2005 and includes more than 11,000 utilities and manufacturers. All participating companies have to pay a fine or pay for a permit if they exceed their carbon dioxide emissions quota.
Mixed responses on ETS
International airlines have argued against this scheme since it was announced. U.S. airlines have stepped up their campaign against the policy last month, challenging them in its highest court over the right to regulate their greenhouse gas emissions. The Arab Air Carriers Organization (AACO) has also asked Europe not to include the aviation sector in the ETS scheme.
Parker stated that in protest against the scheme, the airlines have taken legal requirements as there is less choice left. “Many airlines and many countries around the world had a strong disagreement with the European commission with the unilateral nature of this emission trading scheme,” he added.
The biggest concern about the scheme, according to Parker, is that the money raised from the scheme will go to the governments for local infrastructure projects.
Emirates, however, said will watch closely the multiple lawsuits filed by other airlines against the EU.
Emirates? carbon reduction plan
Emirates launched a new plan to minimise their carbon emission known as the Indian Ocean Strategic Partnership to Reduce Emissions (Inspire). The aim of the strategy is to fly direct optimum routes based on existing meteorological and airspace conditions instead of the designated air routes, so that it will save flight time and improve fuel efficiency.
Captain Alan Stealey, division senior vice president of Flight Operations at Emirates said, “We started this in 2003 and we realised we could gain operational advantage by routing over the Indian Ocean where there’s not much traffic. It’s a gradual process and we are also one of two carriers working on an Iflex project with IATA over Africa.”
Emirates did two test flights, one from Dubai to Brisbane and the second from Perth to Dubai. These two test flights together saved over 6,250 litres of fuel and more than 16,000kg of carbon dioxide emissions.
The airline has not yet entered the carbon trading markets, but its finance department is assessing the best time to do so given the current market volatility. Given the high cost of oil in the market and the fact jet fuel is the airline’s biggest cost, the airline is looking at strategies to save both flight time and fuel.
The Environmental Report of Emirates reported a fuel efficiency of 4.12 litres per 100 passenger-kilometres (PK), 25 per cent better than the IATA industry average. The overall carbon dioxide efficiency rate was 0.75kg CO2 per tonne-kilometre (TK), which is 26 per cent better than the IATA industry average of 1.02kg CO2 per TK.
Emirates has also started to look at different but quicker flight routes around the world, which includes routes between the UAE, Australia and South America.
It is yet to watch how much of the additional burden will be passed on to the air travelers.
Sources: Reuters, the National, Gulf News