SIA chief warns of 'green tax' risk to travel

Aviation industry not out of the woods yet
Karamjit Kaur, Straits Times 21 Nov 09;

TRAVELLERS from Singapore to London will have to pay as much as £100 (S$229) more per round trip compared to someone flying a shorter distance if Britain increases its departure tax next year as planned.

The charge, which currently ranges from £11 to £110, is set based on class of travel and distance flown, with premium long-haul passengers paying the highest.

Such a system is 'clearly unfair and discriminatory' against long-haul travellers, said Singapore Airlines' chief executive officer Chew Choon Seng at the annual meeting of the Association of Asia Pacific Airlines (AAPA), held at the Conrad Centennial Singapore yesterday.

Urging the 17 member carriers to unite against such injustice, he said: 'We should not acquiesce meekly...Let us support the AAPA in shouting loudly, if not impolitely, against rule-making that discriminates.'

The British tax is touted as a green initiative, designed to reduce the aviation industry's greenhouse gas emissions by deterring travel.

Several other countries, including Australia, are considering introducing similar charges.

Departure and other taxes imposed by governments already make up about 15 per cent of the average ticket price, said the AAPA.

And there are new waves of taxation in the pipeline, often deceptively packaged as green initiatives, said the association.

One which has got the industry up in arms is the European Union's plan to include the aviation industry in its emission trading scheme in 2012.

Again a distance-based scheme that penalises long-haul travellers, all carriers that fly to Europe will have to keep to a stipulated amount of carbon emissions based on a set schedule, or pay extra.

Conference delegates are arguing that a global approach led by the United Nations' International Civil Aviation Organisation (Icao) over piecemeal measures is needed if environmental issues are to be tackled effectively.

With the next international conference on climate change taking place in Copenhagen, Denmark, next month, the AAPA urged governments to resolve the differences that exist between developed and developing nations, to overcome political obstacles, and to accelerate their decision-making processes within Icao.

The European Union is prepared to accept a global solution too if there is one, said Mr Olivier Onidi, the body's head of unit for air transport, who also attended the meeting.

Apart from green issues, airline representatives also discussed other challenges facing the industry.

While the current business downturn seems to have bottomed out, with demand for air travel returning and airlines filling more seats, yields are still down more than 20 per cent compared to a year earlier.

Last month, Asian carriers carried 11.1 million international passengers, a slight improvement over the previous month but still 3 per cent below levels seen a year ago.

On yields picking up, Cathay Pacific expects a long and slow recovery, said its chief executive officer, Mr Tony Tyler.

'It is very unlikely things will be as good as they were in 2007 for some time to come.' Then, the airline enjoyed profits of HK$7 billion (S$1.2 billion).

But while there is recovery, the question is whether it will be a sustained resumption of growth or a false dawn, said Mr Chew.

Other issues on his mind: Will the global economy continue to mend as the first wave of government stimulus packages runs out? Will oil and fuel prices continue to rise? Will the H1N1 flu virus disrupt travel plans over winter?

According to AAPA director-general Andrew Herdman, airlines will continue to face an 'extremely challenging operating environment'.

'AAPA leaders have to steer a difficult course over the next year, both tightly managing costs and closely monitoring what may well be a fragile economic recovery,' he said. 'It will take time to nurse battered balance sheets back to full health.'