Region V: Europe

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In the EU, Industry Confronts Numerous Challenges in 2012

January 9, 2012

Listen to a podcast interview with EBAA leadership.

The European Business Aviation Association’s new CEO, Fabio Gamba, is matter-of-fact about it when he says there’s no denying that “2012 will be a pivotal year” for business aircraft operators in the European theater.

They face a myriad of complex, high-stakes issues that range from the new European Union Emissions Trading Scheme (EU-ETS) for aviation to a new passenger duty tax, and an onerous slot-reallocation program confronting operators from one end of Europe to the other.

EU-ETS

In spite of ongoing threats of retaliation from countries all over the world, the European Union moved forward with its controversial EU-ETS on New Year’s Day. Beginning with the 2012 annual emissions report (submitted by March 31, 2013), operators will be required to purchase or apply carbon credits to retroactively offset all CO2 emissions. The EU ETS not only covers flights inside European airspace, but entire legs beginning or ending within Europe.

“We are very concerned about this plethora of taxes and additional costs. We see a complete insensitivity by regulators to the impact of these additional costs,” said EBAA President Brian Humphries in an interview for the NBAA Flight Plan podcast.

While most airlines get a major break in the amount of carbon taxes they pay under EU-ETS, Humphries said the same is not true for business operators.

“We’re now paying 80- or 90-percent of our emissions, whereas the airlines will only pay five or ten percent. It’s the toughest business operating environment we’ve ever seen,” Humphries stated.

Slot Allocation

Gamba pointed out that 2012 is not only the year when EU-ETS is implemented, but is also an important year as far as slot allocations are concerned.

The legislative package for slot allocation is predicated on a so-called “Steer Davies Gleave” study, which concludes slots at airports should be determined solely by the number of passengers carried by each aircraft. 

“The impact is going to be incalculable for business and regional aviation,” Gamba said. He pointed out that it is already difficult for business aviation operators to gain operational slots at Europe’s key airports. Now, by proposing to base take-off and landing slots on the number of passengers each plane carries, Gamba worries that business operators would be locked out of those major airports.

The slot-allocation scheme was scheduled to be implemented in April, 2012. But as controversy continues to surround the proposed rule, that has been delayed for one year.

Passenger Duty TaxThe European Business Aviation Association’s new CEO, Fabio Gamba, is matter-of-fact about it when he says there’s no denying that “2012 will be a pivotal year” for business aircraft operators in the European theater.

They face a myriad of complex, high-stakes issues that range from the new European Union Emissions Trading Scheme (EU-ETS) for aviation to a new passenger duty tax, and an onerous slot-reallocation program confronting operators from one end of Europe to the other.

Passenger Duty Tax

As if all that weren’t enough, Britain will begin enforcing its Air Passenger Duty (APD) on business aviation in April 2013, adding six-percent to the cost of each seat.

“It’s been an increasing bone of contention for the airlines that they paid it and we didn’t,” Humphries said. The issue was initially raised three years ago, he continued, only to be defeated. But just like the user fee issue in the US, the APD continues to plague business operators in Europe, Humphries said.

Once EBAA leaders brought the issue up with government officials in Britain, however, Humphries said there was a positive turn in talks between the two sides.

“As a result of all that, we haven’t got all that we sought, but we got a great deal of it,” Humphries added. While the APD has by no means gone away, Humphries said EBAA and a coalition of European aviation groups was able to negotiate factors that mitigated costs of the duty incurred by a majority of business operators.

“2012 will be a rough year,” Gamba concluded. “We were expecting more comprehension by decision-makers and lawmakers. Instead, we feel we’re being targeted.”

As if all that weren’t enough, Britain will begin enforcing its Air Passenger Duty (APD) on business aviation in April 2013, adding six-percent to the cost of each seat.

“It’s been an increasing bone of contention for the airlines that they paid it and we didn’t,” Humphries said. The issue was initially raised three years ago, he continued, only to be defeated. But just like the user fee issue in the US, the APD continues to plague business operators in Europe, Humphries said.

Once EBAA leaders brought the issue up with government officials in Britain, however, Humphries said there was a positive turn in talks between the two sides.

“As a result of all that, we haven’t got all that we sought, but we got a great deal of it,” Humphries added. While the APD has by no means gone away, Humphries said EBAA and a coalition of European aviation groups was able to negotiate factors that mitigated costs of the duty incurred by a majority of business operators.

“2012 will be a rough year,” Gamba concluded. “We were expecting more comprehension by decision-makers and lawmakers. Instead, we feel we’re being targeted.”