Term Paper on "NAFTA European Union Mercosur ASEAN Jacik"

Term Paper 5 pages (1640 words) Sources: 1+

[EXCERPT] . . . .

European Union -- Making the skies not so friendly to fly for the American airline industry

Who could possibly dispute the benefits of reducing greenhouse gas emissions, correct? However, according to Fortune Magazine's May 25, 2006 article entitled "The not-so-friendly skies of Europe: The EU's proposed greenhouse emissions cap could add billions of extra costs to the already-fragile airline industry," the European Union's decision to add additional environmental regulations to the airline industry comes at just the wrong time for America, given the American airlines industry's already fragile recovery in the aftermath of strikes, terrorist threats, and additional costs to the industry. Dissatisfaction with the airline industry overall is growing worldwide, as the number of customer complaints rose by 17%, just this past year. Now, "the European Union is moving ahead with a plan to cap the greenhouse-gas emissions of airlines -- including U.S. carriers that fly to Europe -- a move that could add billions of dollars in extra costs to an already fragile industry." This decision, environmentally well-intentioned as it may be, will impact American industry, even though American industry will have little voice in the matter, and may simply have to grit its teeth and weather the proposed changes.

Although the EU in the popular and academic press is often debated in terms of its negative or positive effect as a homogenizing influence upon its member states, which has resulted in the banning of once popular regional products like French raw milk cheese, the alternation of traditional schedules such as the elimination of the customary siesta taken in Greece and Spain, and the capping of state aid to what the EU believes should be privately run industries like airlines, such new emissions regulations indicate how the behemoth economic entity known as the EU can also affect American industries at home, through its regulatory influence and its sheer size. The EU is not simply posing a competing threat for American industry, but its different views on regulation will have an impact upon America economic health, whether Americans like this or not.

Even European airlines initially chafed at the proposed regulations. The actual measures will cap CO2 emissions and allow airlines to trade emissions if they are in excess or deficit, for loss or profit. The regulations will not come into full force until 2008. But already, parts of the United States airline industry are becoming concerned. They believe the issue of who controls the regulation of CO2 emissions in the skies must not be allowed to slip under the radar until it is too late and the damage has been done. "The plan would require all airlines operating in Europe to submit to the European Union Emissions Trading Scheme, which went into effect last year. Airlines are currently exempt from the scheme, which mandates that industrial plants either stay under a cap or buy credits to allow higher emissions. But in December, Europe's environment ministers said the scheme should apply to all flights departing from EU airports." This includes American aircrafts, even if America is not formally part of the EU.

Of course, European travel is a huge part of the American airline's business, for both commercial and pleasure travel. Even if American crafts could take off in America under current standards, to return to America they would have to meet EU standards. and, as many aircrafts are used for different locations around the world, even American airlines that did not derive a substantial part of their commerce from international travel might be harmed. These airlines would have to make sure that many of their aircrafts met the new standards, just so they could continue to have some flights that landed and departed from Europe. Essentially, now, because of regulatory unity, when Europe sneezes, America must at least worry about catching the same 'virus' as the nations across the Atlantic. When Europe's environment ministers made the recommendation for the higher standards, a senior U.S. Federal Aviation Administration official, was immediately dispatched to make the case as to why American airlines not be covered by the emissions-trading policy of the EU, for (presumably more persuasive) scientific as well as economic and legal reasons.

One legal contention made by the United States airline industry representatives is that there are better and fairer regulatory bodies to make changes in standards. For example, the International Civil Aviation Organization, based in Montreal, is not an entirely EU-filled body, but contains representation of nations from around the world, as well as the United States. The United States is alleging that there should be no regulation without representation, and that the proper forum for setting standards that affect airlines on a global basis is in a more representative forum. "But EU officials say getting anything through the Montreal organization would take years. And they're not keen on disadvantaging their own carriers." Significantly, the International Air Transport Association has announced that although, because of threats from terrorism, oil prices and labor issues, the worldwide airline industry had a projected collective loss of 7.4 billion dollars, the associations "projections for Europe were less bleak with companies there expected to break even." This may be another reason why, "although fought off by most companies, the proposal won support from part of the European airline industry and seems to be the option attracting the least hostility."

Environmentally, the United States is on shaky ground. Emissions from aircrafts, scientists say "are the fastest-growing source of greenhouse gases," and these emissions "rose 73% from 1990 to 2003...With air traffic growing 5% a year, aviation will account for the EU's entire "carbon budget" by 2045." With anti-American sentiment rising, Europe may be willing to fight America on this issue, especially since America is perceived as dragging its feet upon environmental issues that affect the developing and the developed world.

Also, there is great dispute as to the actual cost of the regulation, even though no one disputes that emissions from aircrafts are rising (although the United States denies that global warming is a proven fact, according to its official press releases). "Most studies project relatively modest additional costs to airlines if they are included in the emissions-trading scheme. One consultancy, C.E. Delft in the Netherlands, calculated it would cost European carriers an extra $1.1 billion a year to achieve its target under the Kyoto agreement [the international environmental conference that the United States did not attend] and add up to $3.10 to the price of a round trip ticket. But an analysis by the International Civil Aviation Organization put the extra cost to the industry if a trading scheme is applied globally at between $17 billion and $60 billion a year." The Civil Aviation Organization argues that this will economically damage a fragile industry, disproportionately affect poorer travelers, and eventually damage the world economy as a whole, given the additional impact it will have upon the costs of conducting international business travel.

Another allegation made in support of further regulation is that the airline industry is continuing to feel the brunt of criticism because service has declined. Meals are less frequently available, there has been a decline in on-time performance, flyers are more frequently denied the right to board their designated flights, and there are more mishandled baggage and consumer complaints. "Over the past year, the number of mishandled bags rose by 25%." But the airlines point out that fears of terrorism and the need for increased security checks have caused the added delays, required airlines to institute more rigorous regulations and bag checks, such as prohibiting liquids for passenger safety, and questionable passengers are better denied boarding than to be admitted at a risk to the other passengers on the plane. Even if there must be more regulation regarding emissions later on, why now -- shouldn't this issue be debated by… READ MORE

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