Political Regulations of Aviation's Climate Impact and Cost Impacts on Air Freight

Abstract

Aviation’s impact on climate change is a substantial: Airplanes emit carbon dioxide (CO2) and short-lived species such as nitrogen oxide (NOX) or contrails, all of which are influencing climate change. In addition, the aviation sector is expected to grow significantly in the medium and long term. According to Airbus (2012), global air freight traffic is expected to grow at 4.9 per cent annually in the timeframe 2011-2031. Meanwhile, aviation’s carbon dioxide emissions have been regulated in Europe, Australia and New Zealand by emissions trading schemes. Charges on local NOX emissions have been applied at a number of European airports. This paper investigates the current political regulations on aviation’s climate relevant emissions in the world and their impacts on air freight costs. Results indicate that cost impacts on freight induced by political measures are small. This is true for both local NOX charges and the European emissions trading scheme. For instance, for an A330-200 total airport charges are raised by the NOX emission charge by 3.97 per cent respectively €216.66 in absolute terms per landing at the maximum. If a 50:50 cost allocation between passengers and bellyhold cargo is assumed, the cargo costs are increased by €0.0054 per kg.