While including non-European Union flights within the EU emissions trading remains controversial, the scheme also came under friendly fire earlier this year by a group representing a broad cross-section of Europe's own airline industry.

Branding it as costly and unworkable, six European air transport associations are calling on the Council of Ministers and the European Parliament to revisit the "unrealistic" assumptions on which the European Commis­sion's original proposal was based.

In their own independent assessment conducted by consultancy firms Ernst & Young and York Aviation for the Association of European Airlines (AEA), European Business Aviation Association (EBAA), European Cargo Alliance (ECA), European Low Fares Airline Association (ELFAA), European Regions Airline Association (ERA) and International Air Carrier Association (IACA), the six concluded current proposals "dangerously underestimate" the wide-ranging repercussions on European aviation.

They level that only a third of the costs of the scheme will be recoverable from passengers and shippers in the case of cargo operators rather than the majority claimed by the EC, adding that the industry is far more price-sensitive than the EC acknowledges.

Noting aviation will have to purchase carbon credits to cover up to 45% of its emissions by 2022, they insist that makes it the only sector in the ETS to pay for its growth, preventing the sector's ability to invest in crucial environmentally-friendly technologies.

Purchasing allowances will also be a costly €45 billion ($61 billion) over the period 2011-22 - or an extra annual €4 billion a year. "This is approximately equivalent per annum to twice the cumulative profit of Europe's airlines over the last decade," say the associations.

Aircraft operators' overall profitability will further be cut by more than €40 billion over that time, while the complexity and costs of administering the scheme will disproportionately hit smaller players such as business aviation and helicopter operators.

They say that in its current form the EC's plans threatens the long-term viability of the European industry, setting operators at a competitive disadvantage against non-European rivals.

"EU aircraft operators will bear emissions-related financial costs for their entire network while only a small part of operations of non-EU carriers will be affected," the associations say. Further, they fear the EC's proposal to include only intra-EU flights at its 2011 launch will have an uneven impact on European operators, depending on network. Most importantly, this 12-month half-way house - until the scheme embraces all arrivals and departures from Com­munity airports in 2012 - risks failing to produce any significant environmental benefit.

The six air transport associations are now negotiating their way through Europe's political labyrinth with this document, together with half a dozen of common amendments they would collectively like to see in the final legislation, such as determining the baseline cap or "the pot" beyond which growth has to be bought on a series of years much closer to the 2011 actual scheme introduction.

Although this was a collective response unprecedented in its collaborative approach, there remain many key points which make some of the collaborators uneasy bedfellows.

Leisure airlines association IACA's Amy Spenlove-Brown says the two ETS issues that are particularly relevant to its members' business model include price sensitivity and allocation methods. While price sensitive issues surround an Ernst & Young estimate that a 10% increase in the price of a ticket will result in a concomitant 15% fall in the demand for air travel which could hit leisure carriers harder than most airlines, its take on allocation methods makes for interesting reading.

Spenlove-Brown says that IACA carriers make optimal use of scarce capacity. Therefore they should be credited for their high - capacity efficient - load factors that reduce the environmental impact per passenger, when discussing how the carbon credits are to be allocated.

"The EC has proposed a benchmarking method whereby allocations to airlines will be based on their output (in terms of transported payload) versus their input (fuel consumption and carbon dioxide emissions)," she says.

No surprise then that IACA supports the EC's benchmarking method based on revenue tonne per kilometre. Europe's low cost carriers would no doubt agree but not so the members of the European Regions Airline Association.

ERA's Simon McNamara says his association's preference is for ATK or alternative tonne kilometres: "The basis of the EC proposed benchmark is that the higher the load factor, the higher the allowance you receive," he says.

"You cannot compare route networks like for like. Our members would say you have to take into account the essential social and economic service they provide to Europe's remote regions where sometimes there are no land alternatives. Regional airlines should not be unduly penalised."

Source: Flight International