Aircraft Manufacturers, Regulators Fight Over the Environment

(MoneyWatch)  As part of the panel discussion on modernizing the fleet at the Phoenix Aviation Symposium, the conversation veered off into the world of environmental impact, and I thought it was worth a separate post. There's no question about it. This part of the panel was incredibly . . . boring. But for those of us who made it through, there were some interesting discussions to ponder.

Michael Rossell, the UK's representative to the ICAO, was the first to bring up the question of the environment. "There is a tradeoff between what you can do physically as well as what you can do to regulate your environment." The ICAO, he noted, didn't "have teeth" to force airlines to do anything, but it is working to set those standards.

Kostya Zolotusky from Boeing Capital, with the scrutiny airlines receive on the environment in mind, likened the airline industry to a quarterback on a football team. "We get more glory and more pain than we deserve." Kostya seemed upbeat about the ability to cater to the environment. Biofuels are in good shape, and things are moving, but he cautioned, "we need to figure out how to work together to be more effective at creating a rational regulatory environment."

It got uglier from there as we jumped into the regulatory world. The discussion turned toward the European Union's Emission Trading Scheme (ETS) in which airlines will have to participate beginning in 2012. The program will take airline flights in 2010 and use that as a baseline to dole out credits for airlines to use. If an airline wants to fly more, that airline will have to buy more credits from someone else on the open market. Oh, and it doesn't matter what type of plane you're flying in 2010, so the less efficient aircraft aren't even penalized. How odd.

I kept thinking to myself . . . why not seriously increase your flying in 2010 so that you can get a large number of credits for 2012? The losses of having too much capacity might be made up in the end when you could sell your credits. Michael noted that "the enforcement system will be civil penalties," at which point Kostya snapped back, "actually, it is criminal," referring to his belief that this is a terrible idea. I tend to agree that there are some very serious problems with this scheme.

But Kostya didn't stop there. He continued by accusing the UK of engaging in environmental zealotry, and that didn't sit well with Michael. He tried to argue that the UK was much more balanced and used the recent approval of Heathrow's third runway as an example. Kostya didn't seem convinced.

Mary Prettyman from Airbus tried to break things up and ask which was more important - noise or emissions. Michael's answer? I probably don't even need to say it, but I will . . . "both."

In the end, Kostya summed it up well. "We've spent the first 40 years of the jet age going farther, higher, faster . . . no longer is faster acceptable because speed is on the wrong side of the equation in terms of improving fuel burn with economics . . . . ICAO so far has failed to seize the initiative but it's up to all of us to make sure they're successful."

Without question, this is an incredibly complicated issue that will never find everyone on the same page. But there's no doubt that the environment is a key concern and it will have to be dealt with sooner rather than later.