IATA praises Chinese airlines' stance against ETS

The head of the International Air Transport Association on June 6 praised the Chinese airlines'stance against the European Emissions Trading Scheme.

"I think it's a good thing that China's response to the ETS has been strong, mandating its carriers not to be a part (of the scheme)," said IATA CEO Tony Tyler.

The solution to the carbon emissions issue must be globally coordinated through his organization, he said.

"We can look forward to some lively discussions on how the solution might be achieved," Tyler said.

Only eight Chinese airlines, along with two Indian carriers, have not submitted their 2011 carbon emissions data to the EU yet, while 1,200 carriers already handed over their reports, the EU climate chief said on May 15.

The Civil Aviation Administration of China (CAAC) released an order to all Chinese airlines in February, forbidding Chinese airlines to participate in the ETS without the government's permission.

The global aviation industry already has an agreement on carbon emissions and set three targets to cut carbon emissions gradually, including cutting carbon emissions by 50 percent from 2005 to 2050 through improving technology and infrastructure.

The global aviation industry will see some very challenging times on the second half of the year due to rising fuel costs and the global economic weakness, Tyler said.

But the IATA is still confident that China's airlines will be able to weather the tough conditions, as China's economic growth is still healthy compared with the rest of the world and the Chinese government is investing significantly in air traffic infrastructures, he added.

However, Chinese airlines may also be affected by the challenges of the whole aviation industry, including low margins.

Statistics from the Civil Aviation Administration of China show that the total income of Chinese airlines increased by 17.9 percent year-on-year in 2011, but the net profit decreased by 17.7 percent during the same period.

The industry's net margin will be only 0.5 percent in 2012, with profits of $3 billion on revenues of $633 billion, the IATA forecasted in March.

"The high price of fuel is the main reason for the low margins, which is also one of the toughest issues the we face," Tyler said.

Fuel represents about 34 percent of airlines' average costs now, while it was 14 percent a decade ago, he added.

Unexpected political events could still push fuel prices up very quickly, although Brent crude dropped to below $100 per barrel recently from about $118 during the first five months of the year, Tyler said.

The revised outlook for the global aviation industry - taking into consideration the risks of oil prices and the Eurozone crisis - will be announced on June 11.

The 68th IATA Annual General Meeting will be held in Beijing between June 11 and 12.