US TRAVEL INDUSTRY and politicians are stepping up their campaign against the introduction of the European Union’s emissions trading scheme (ETS). The US Senate’s Commerce Committee approved a bill allowing the country’s transport secretary, Raymond LaHood, to bar US airlines from taking part in ETS, which was introduced for airlines flying to and from the EU in January. Airlines for America (A4A), which represents US-
based carriers, welcomed the Senate’s move, which follows the passing of a similar bill by the US House of Representatives last year. A4A chief Nicholas Calio said: “The committee’s approval sends a strong message to the administration and the EU that Congress objects to this unilateral taxation scheme that will not benefit the environment, and A4A urges the full Senate to take immediate action. Diplomacy is not working, and we encourage the administration to file a legal challenge, forcing the EU to work toward a global sectoral approach through the ICAO [International Civil Aviation Organisation].” India and China have already banned their airlines
from participating in ETS and did not file details of their emissions data to the EU earlier this year. A4A is also one of 18 organisations to write to US Secretary of State Hillary Clinton and Raymond LaHood to urge the US administration to file an action under the Chicago Convention, which governs international air travel, to overturn ETS.
The issue is expected to reach boiling point in
April 2013, when airlines will have to start paying for emissions that are not covered by the free allowances given to them by the EU.
STATISTICS
Business travel outperforms leisure market
18 1
FIGURES RELEASED BY the Office for National Statistics (ONS) reveal the number of international business trips made by UK residents increased by 5 per cent over the 12 months to the end of June this year. The ONS statistics show there were 6.98 million
overseas business trips made by UK residents during the period, up from 6.62 million for the previous year. This compares to a 2 per cent decline in the number of holidays being taken by UK residents over the same period to 36.5 million. Overall overseas business trips rose by 5 per cent to 1.8 million over the three months to the end of June compared to the same period in 2011.
Willie Walsh
BMI INTEGRATION “It is making very good progress. We have started the transfer of Bmi. Two A330s in Bmi will not be transferred to BA and will leave the fleet. We completed the employee consultation on Bmibaby and have decided to close the business with effect from September 9 this year.”
IBERIA
RESTRUCTURING “The scale and timescale of restructuring is accelerating because of the weakening financial situation and environment in Spain. Iberia’s short and medium-haul did not make money and the long-haul profits are still not sufficient to make up for this. Iberia’s cost base and conditions are out of line with the market. Both short- and long-haul need fundamental structural change. We do not have that plan finalised yet.”
POSSIBLE SPANISH EXIT FROM THE EURO “We have a small team working with external advisors on this. Clearly this is what you would expect any company to do in terms of risk management. We will continue to update the audit committee and board on a regular basis.”
FINANCIAL OUTLOOK “A number of factors have improved in the last three months – BA’s business remains firm and the Bmi integration remains on track. We were previously targeting break-even this year – however, in the light of Spain’s macro-economic headwinds we are now forecasting a small operating loss in 2012.”
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XXXXXXX IAG UPDATE Walsh on the state of play
IAG chief executive Willie Walsh recently updated city analysts about the company’s plans across a range of issues. Here’s a summary of the main points
CAPACITY “Most of the underlying growth is mainly in BA and that reflects what we believe is strong demand out of London. London is not like the rest of the UK which is suffering from weak economic conditions – London’s performance remains good. Premium travel growth has been stronger in BA. We will continue to look at our network – there will inevitably be reductions in Iberia but it’s too early to say when that will take effect.”
TAKING A STAKE IN AMERICAN AIRLINES... “We are open to that if there’s a strong strategic argument for investment. But it would be a small investment and not of any major significant scale. We have not looked at doing it at this stage. I would say it’s unlikely but we remain open.”
GATWICK “We are continuing to restructure the business, and believe Gatwick has an important role, both for BA and also potentially within the IAG group. Fleet replacement will be reviewed early next year and the management team at Gatwick have been tasked with coming up with a business plan looking at several options.”
LCY EXPANSION “The introduction of the Embraer aircraft has been really positive and we are pleased with the performance of London City as it’s ahead of its financial targets and well ahead of previous performance, although the short-haul premium side of the business continues to structurally decline. The competitive environment is changing – we have seen the main competitor Cityjet reduce its presence at London City. The future of Cityjet is very much uncertain given the review of Air France but I should make it clear that we have absolutely no interest in acquiring Cityjet. Clearly their retreat from London City has given us an opportunity because it has made flights available at peak slots. There’s some scope to increase our presence at London City but it will not be on any significant scale.”