* Airlines body says impasse over EU scheme intolerable
* Urges global emissions deal at UN's aviation agency
* EU official says open to multilateral ICAO discussion
* Emissions row overshadows key China-EU summit
By Tim Hepher and Harry Suhartono
SINGAPORE, Feb 12 Global airlines called
on Sunday for a U.N.-brokered deal to prevent a row over
aviation emissions between China and the European Union spilling
into a damaging trade war.
The call by the head of the International Air Transport
Association (IATA) comes amid signs that the EU may be willing
to soften a unilateral stance that also risks souring efforts to
resolve Europe's sovereign debt crisis with Chinese support.
In an interview, IATA Director General Tony Tyler said
airlines had become wedged between conflicting domestic laws
after China ordered its airlines not to join the EU's compulsory
market-based system for regulating airline emissions.
"The Chinese move to prevent its airlines from taking part
in the Emissions Trading Scheme is a very bold move and it
pushes the Chinese carriers very much into the front line of
this particular dispute," Tyler told Reuters.
"This is an intolerable situation which clearly has to be
resolved; it cannot go on like this. I very much hope of course
that we are not seeing the beginning of a trade war on this
issue and eventually wiser counsels will prevail," he said.
China was an early opponent of the EU's cap-and-trade
scheme, which has also drawn protests from the United States and
India, and the escalating row threatens to hamper efforts to
work out an international solution to Europe's sovereign debt
By banning its airlines last week from co-operating, China
hardened its stance just ahead of a Feb. 14 Beijing summit at
which the EU will seek Chinese help to ease its debt crisis.
The EU says its scheme to charge airlines for emissions on
flights into or out of Europe, which took effect on Jan. 1, is
needed as part of the fight against global climate change.
It maintains it was driven to act after more than a decade
of inaction at the United Nations' aviation standards agency,
the International Civil Aviation Organization (ICAO), which has
yet to find a global solution to tackling airline emissions.
Tyler said ICAO's chambers were the only forum for resolving
the row and he and other airline industry officials noted that
the EU had indicated willingness to avoid further isolation.
"The European Commission is now much more open to an ICAO
solution," he said. "I very much hope that the EU and all its
member states will work hard with ICAO to come up with a global
solution. It is not going to be easy."
Tyler was speaking on the eve of the Singapore Airshow.
MORE AIRLINE BANKRUPTCIES POSSIBLE
Last week the senior EU civil servant responsible for
climate action said Brussels preferred multilateral discussion.
"We have been clear that we are willing to review our
legislation in the light of agreement on market-based measures
being agreed in ICAO," Jos Delbeke told a conference.
A relative backwater of the United Nations responsible for
industry standards, the Montreal-based ICAO has emerged as the
potential bulwark against the first serious carbon trade war.
It is widely seen as a challenging task for an agency
created to oversee neatly bordered airspace, but which must now
try to find an urgently needed formula for tackling aircraft
fumes that criss-cross international frontiers.
ICAO has already served as a back-channel for issues deemed
too difficult to handle elsewhere, for example providing
opportunities for contacts between Washington and Cuba, but has
rarely found itself in the diplomatic foreground.
The row comes at a difficult time for airlines as the
industry struggles to escape the fallout from high oil prices
and the economic uncertainty surrounding Europe's debt crisis.
Tyler said airlines faced a tough year in 2012 and warned of
further bankruptcies in Europe or elsewhere if the region failed
to resolve its credit problems. The current quarter is
traditionally the leanest time for aircraft revenues.
IATA has predicted the global airline industry will make a
profit of $3.5 billion in 2012, but says this could flip to a
loss of $8.3 billion in the event of deep recession in Europe.
Cargo traffic which acts as a barometer for global trade
ticked 0.2 percent higher in December, but Tyler said it was too
early to tell whether this signalled a turnaround.
The head of a sister organization responsible for Asian
carriers said airlines risked being hurt by any trade conflict.
"The risk for airlines is that if this does degenerate into
tit-for-tat trade war, then airlines will be caught in the
crossfire from both sides," Andrew Herdman, director general of
the Association of Asia-Pacific Airlines, told Reuters.