Responsiveness of European Airline Business Stakeholders regarding the inclusion of Aviation in the ETS

Abstract

Carbon emissions produced by aviation have been spared from any regulatory frameworks until recently. As of April 2014, the European Emission Trading System (ETS) which has already been in effect for some major industrial sectors since 2005 now also covers aviation. Nonetheless it will remain limited to intra- EU flight legs at least until 2016. A variety of extensive studies reflecting upon the effect of the ETS have been conducted. However due to numerous modifications of the aviation ETS over the past years many results cannot be applied to the current state of the framework. Furthermore more recent developments, research and technology forecasts have shown that ambitious goals such as reducing the carbon emissions of aviation and an eventual shift towards carbon neutral growth can only be achieved by introducing significant innovations and a widespread use of biofuels. Studies have shown that due to their different economic and operative constraints, legacy or flag carriers and low-cost carriers are affected differently by an introduction of the ETS. This paper aims for an increased understanding of the future strains on the various airline business stakeholders operating in the EU. By providing a model incorporating the latest information on the European aircraft fleet and its development, travel forecasts and growth rates, an assessment of the resulting effectiveness of the ETS in curbing carbon emissions is delivered.