AAPA

1
Regional perspective from the AAPA
Martin Eran-Tasker Technical Director Association
of Asia Pacific Airlines 2nd APEC TPT-WG Aviation
Emissions Taskforce Singapore 15-16 September
2009
2
Overview

• Introduction
• Current challenges
• Industry trends
• GIAC - Regulatory patchwork
• Industry efforts
• Looking Ahead
• Summary

3
AAPA Association of Asia Pacific Airlines

• Regional trade association
• Current members include 17 major international
  airlines based in Asia Pacific
• Open to all scheduled international airlines
  based in Asia Pacific region
• Committed to promoting sustainable growth of the
  aviation industry serving both passenger and
  freight needs
• Permanent secretariat headquartered in Kuala
  Lumpur, Malaysia
• Representation in Washington and Brussels

always open to new members
4
Global traffic share by operator region
Cargo Freight Tonne Kilometres Scheduled
Systemwide
Passenger Revenue Passenger Kilometres Scheduled
Systemwide
AACO 4
AACO 6
ALTA 4
AEA 19
AEA 22
ALTA 2
AFRAA 2
AFRAA 1
ATA 22
Others 9
Others 19
ATA 27
PR China 6
AAPA 32
AAPA 18
PR China 7
Data 2008

Source IATA, AAPA and various
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Asia Pacific Aviation
US 151 billion revenue 600 million
passengers 407 million domestic 193 million
international 16 million tonnes of cargo 3,900
aircraft
Asia Pacific overall market share 27 of global
passenger traffic 40 of global cargo traffic
Data 2008 Source Combined AAPA non-AAPA
airlines GMT5 to GMT12
6

• Current Challenges
• Sharp slowdown in the global economy
• Slump in international trade
• Weak passenger demand
• Oil and currency volatility
• Higher cost of capital
• World GDP 2009 projected to shrink by 1

7
Global airline industry trends

• Net loss of USD 11 billion forecast for 2009
• Airline losses will vary by region and relative
  strength of individual airlines
• Weak passenger and cargo demand
• Trimmed route networks and capacity in response
  to lower demand
• Reduced utilization, grounded surplus aircraft,
  seeking deferral of new deliveries
• Tough times, conserve cash, strengthen balance
  sheet, preserving the ability to respond to any
  upturn

Economic recovery has begun but there is so far
minimal airline revenue benefit due to low yields
8
Future growth postponed
Prolonged downturn may mean no growth 2008-2010
Source IATA
9
Long term growth prospects still bright
Source Boeing
Asia Pacifics share of world traffic projected
to grow
10
GIACC

• GIACC report recommendation
• Global aspirational goals of 2 p.a.in fuel
  efficiency
• No specific obligations to States
• Basket of emissions reduction measures, from
  which States may select.
• GIACC failed to agree on more substantive policy
  measures on climate change
• Chicago Convention v CBDR
• Result encourage the proliferation of
  uncoordinated regulatory initiatives by
  individual States, leading to a patchwork of
  overlapping and inconsistent schemes
• Next Step High Level Meeting 7-9 Oct 2009

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Regulatory Patchwork

• Economic Measures targeting aviation
• EU, Australia, New Zealand, USA, Japan
• Environmental Taxes
• Questionable environmental objectives - APD

12
Regulatory Patchwork

• Proposals
• Maldives - International Air Passenger Adaptation
  Levy (IAPAL),levy on passengers, cost the
  maritime and aviation sectors USD 10 billion per
  year.
• UK - USD100 billion fund to assist developing
  countries with climate change. Funding sources,
  suggested by UK, maritime and aviations sectors

13
Regulatory Patchwork

• Multiplicity of government response
• National initiatives have international
  consequences with the risk of overlapping and
  excessive levels of charges
• No assurance that funds raised will be used to
  address genuine environmental objectives
• No meaningful progress will be made in addressing
  environmental objectives.

Absence of global solution results in conflicting
regimes, double counting, additional cost and
complexity
14
Industry efforts

• Good progress being made to manage aviations
  carbon footprint through the industry four-pillar
  approach
• On-going investment in technology, infrastructure
  and operational improvements are delivering 2
  year-on-year gains in fuel efficiency
• Biofuels encouraging progress proving technical
  feasibility. Next challenge to reach commercial
  viability and scale.
• Economics of biofuels complex
• Sensitive to feedstock supply
• Oil price
• Government fiscal policies
• Carbon market conditions

15
Industry efforts

• Industry has recognized the benefits of proactive
  commitment to action, the value of establishing
  shared goals
• IATA AGM committed to
• 1.5 p.a. improvement in fuel efficiency to 2020
• Carbon-Neutral Growth (CNG) from 2020 onwards
• 50 reduction in net emissions by 2050, relative
  to 2005
• In addition
• 10 Usage of alternative fuels by 2017

16
Looking ahead

• Key meetings
• ICAO High Level Meeting of stakeholders 7-9
  October
• COP/ 15, December 2009
• 37th Triennial ICAO General Assembly, September
  2010
• To early to judge outcome of talks
• Governments have been making preliminary
  statements on initial negotiating positions
• Aviation will not be a major focus in the overall
  political negotiations, we still need to be
  prepared
• Key for aviation the reconciliation the Chicago
  Convention principles of non-discrimination
  versus Common But Differentiated
  Responsibilities (CBDR)

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Negotiation Outcome

• Reaffirmation that aviation requires a global
  sectoral approach
• Reaffirmation that ICAO is the appropriate UN
  forum to address aviation emissions
• Explore amendments to the wording of Kyoto
  Protocol Article 2.2
• Guidance on interpretation of CBDR in a way that
  would be consistent with the Chicago Convention
  principle of non-discrimination
• Oppose imposition of arbitrary levies or taxes on
  aviation

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Summary

• Good progress is being made to manage aviations
  carbon footprint through the industrys
  four-pillar strategy.
• We need to reaffirm the role of ICAO 
• Aviation requires a global sectoral approach
• The aviation sector requires globally harmonized
  policies. A messy patchwork of arbitrary taxes
  on air travel will not save the environment.
•  Fresh thinking and a way forward is needed if we
  are to reconcile the conflicting demands the
  Chicago Convention and CBDR
• Even in the current economic downturn, AAPA
  carriers are committed to playing a full part in
  efforts to address environmental challenges

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www.aapairlines.org
Martin Eran-Tasker Technical Director Association
of Asia Pacific Airlines 9/F Kompleks
Antarabangsa Jalan Sultan Ismail Kuala Lumpur
50250 MALAYSIA Tel [phone] Fax 60 3
2145 2500