The Association of European Airlines has come up with what it thinks is a workable global carbon trading scheme for international aviation.

The AEA, which represents 34 European airlines, has called on the European Summit of Heads of State and Government, which met on March 19 and 20, to agree on a global solution to address aviation's carbon dioxide emissions.

AEA secretary general Ulrich Schulte-Strathaus has come up with a way in which he believes a global solution can be achieved, arguing that it is time to think outside the box.

"Individual countries or regions acting in isolation cannot resolve what essentially is a global phenomenon," says Schulte-Strathaus, referring to Europe's decision to launch its own regional scheme in 2012, which it estimates will cost the industry an additional $5 billion a year. "We believe we have a proposal which is pragmatic and practical, and hopefully acceptable to all stakeholders.

"We, as airlines, care about the environment and want to make sure that the forthcoming Copenhagen process succeeds for our sector."

The AEA has therefore developed a concept that moves away from individual states to a global sector-wide approach. The concept adheres to the Kyoto principle of common but differentiated responsibility and allows for different levels of environmental stringency, depending on the stage of economic development, without causing competitive distortions.

The AEA has urged the European Summit of Heads of State and Government to take into consideration the specificities of aviation, and to use the AEA concept as a basis for ongoing discussions within ICAO, so that aviation can be included in a post-Kyoto framework based on a carbon cap and trade system.

"A global emissions trading scheme and technology are not contradictory, but complementary," argues Schulte-Strathaus. "In our industry, we believe we have the innovative skills to reduce aviation's dependency on fossil fuels. Such a pragmatic global scheme would be an additional incentive to encourage innovation."

The idea comes as Schulte-Strathaus, speaking to the European Aviation Club in Brussels, admitted that he had no idea where the European airline industry would be a year from now.

"We have to change this crisis into an opportunity and deep structural changes are needed," he says, commending the recent decision by the European Commission to allow airlines which choose not to use their slots this summer as part of a capacity reduction programme to hold on to those slots for next summer.

The current rule states that an airline can only keep its slots from one season to the next provided that 80% of them were taken up in the previous season.

"This is the worst crisis for many decades, a crisis which is unprecedented because of its dimensions," says Schulte-Strathaus. "Traffic has been in freefall since mid-2008, both in passenger and freight. 2009 will bring the lowest growth in 30 years of passenger air transport and we expect freight, which is an effective forward predictor of economic performance, in 2010 to be even worse than 2009, with the deterioration accelerating."

The AEA expects a significant loss of between €1.5 billion ($2.05 billion) and €2.5 billion this year as opposed to a €200 million profit for 2008.