What are the stakes of Aviation ETS?
Aviation ETS raises numerous financial, administrative, legal, commercial and technological challenges for airlines.
Finance: It is estimated that ETS will cost 4-5 billion € per year to airlines between 2012 and 2020. Aviation ETS is a cost burden and is likely to have a significant impact on the airline’s bottom-line.
Carbon trading: It is expected that airlines will face fairly limited abatement options, especially over the short-term, so that carbon trading will have to become an integral part of an airline’s financial strategy.
Administration: Airlines must set up an administrative function to oversee Aviation ETS according to regulatory requirements.
Legal: Aviation ETS may require amendments of contracts with your commercial partners (code-share, franchise, wet-lease) and with lessors.
Competition: It is expected that in some cases aviation ETS will create competitive distortion between EU and non-EU airlines. The right Pricing and Network decisions will be the key.
Technology: Airlines will have to strive to reduce fuel consumption in order to cut their emissions.
Processes/IT: Airlines will need to enhance their processes and systems in order to accurately report emissions and TKs. Airlines may for instance need to implement IT systems linked to the on-board measurement systems to report on fuel consumption.
Accounting: Emission rights must be accounted on the balance sheet according to the selected or required accounting approach. This will raise accounting concerns. Accounting systems must be in place when allowances are allocated, transferred internally, surrended or purchased. Back to all F.A.Q.