* Companies say order cancellation threat growing
* European Commission, airlines both say want global scheme
* Issue of sovereignty as well as cost
By James Regan and Barbara Lewis
PARIS/BRUSSELS, March 12 European aviation
bosses have urged political leaders to stop an escalating global
row over an EU carbon levy, warning it is seriously threatening
Airbus CEO Tom Enders said that China -- at the
forefront of opposition to the EU Emissions Trading Scheme (ETS)
- had suspended orders for aircraft worth $12 billion, putting
at least 2,000 positions at risk.
Alongside Enders, eight chief executives of airlines and
engine makers wrote to the leaders of Britain, France, Spain and
Germany saying they expected "suspensions, cancellations and
punitive actions to grow as other important markets continue to
"The aim must be to find a compromise solution and to have
these punitive trade measures stopped before it is too late,"
the CEOs wrote in the letter, seen by Reuters. "We have always
believed that only a global solution would be adequate to
resolve the problem of global aviation emissions."
All airlines using EU airports must pay to offset their
carbon emissions under a new law that took effect in January.
The carbon cost for a flight from China to Europe is around 2
euros per passenger but as the scheme is being phased in
gradually, airlines will not face a bill until April next year.
In addition to Airbus, the signatories included the heads of
airlines British Airways and Iberia, owned by International
Airlines Group, Air Berlin, Air France
, Lufthansa and Virgin Atlantic.
The heads of French and German aircraft engine makers Safran
and MTU Aero also signed the letter.
In a separate letter to European Commission President Jose
Manuel Barroso, Enders deplored the "very serious situation"
caused by the threat of reprisals from China and other nations.
"It seems that these threats are now becoming very real and
are being translated into concrete action, which is starting to
have serious consequences on the European aviation business," he
wrote in his letter, also obtained by Reuters.
The European Commission said it was forced to act alone
after the United Nations' International Civil Aviation
Organization failed to come up with a viable global scheme. It
has said it will modify its law if the ICAO, which has stepped
up work on its own system, comes up with a scheme.
On Friday a meeting of environment ministers from all 27 EU
nations reiterated they were fully behind the EU scheme.
European Climate Commission Connie Hedegaard said "nobody
would be happier than the European Union" if ICAO could deliver
a solution that was at least as good as the EU one.
"We have been fighting for that since 1997," she told
Reuters last week. "We are working very hard internally with
China, the world's fastest-growing airline market, is a
major purchaser of both Airbus and Boeing jets.
It tends to buy in large quantities, through a central
purchasing entity, before the jets are allocated to individual
airlines, but final Beijing government approval is needed before
the aircraft can be delivered.
China is developing its own medium-haul passenger jet, the
C919, but aviation analysts say the country will need more
imported planes than either Boeing or Airbus can deliver for the
Non-governmental organisations accuse the companies of
making empty threats.
"Just days ago, Airbus reported booming profits for last
year so it's hard to see this so-called threat playing out in
reality," said Bill Hemmings, programme manager at environmental
"As Airbus are in the business of making more efficient
planes, they should be smart enough to see that this policy will
drive the market in a direction that helps them sell more
planes, not less."
Critics of the EU's plans say they do not just affect
profitability, but touch on national sovereignty, making the
risk of a trade war that could disrupt air traffic more serious.
The aviation industry has been touched by a number of thorny
disputes between China and the West, particularly whenever arms
are sold by the United States or Europe to Taiwan.