Why One-Size-Fits-All Cap-and-Trade Legislation Does Not Fit Aviation

The U.S. airlines have a strong environmental track record – and it’s getting even stronger.

• Commercial aviation contributes just 2 percent of domestic GHG emissions – much less than the 25 percent produced by the balance of the transportation industry.
• Since 1978, the U.S. airlines' fuel efficiency improvements have resulted in over 3.3 billion metric tons of carbon dioxide (CO2) savings, roughly equivalent to taking 22 million cars off the road each year.
  

The airlines already are motivated by market forces to improve fuel and GHG efficiency.

• Even before the recent and sustained fuel price hikes, fuel was the airlines’ highest cost center.
• With jet fuel averaging between 30 and 50 percent of total airline operating expenses and accounting for well over a third of airline ticket prices, there is no need for any further “price signal” to reduce fuel burn and resulting emissions.
• The U.S. airlines’ fuel consumption and GHGs in 2010 were 10 percent below 2000 levels, though the airlines transported 15 percent more passengers and cargo (measured on a revenue ton mile basis).
• A4A member airlines have joined the world’s airlines in committing to an additional annual average 1.5 percent fuel efficiency improvement through 2020, and to making any growth emissions “carbon neutral” thereafter. To achieve this, A4A airlines must invest in new aircraft, equipment and other innovations to enable additional operational efficiencies.

Increasing the tax burden on an already highly taxed commercial aviation industry will undermine our ability to invest in the innovations required to protect the environment. This unnecessary financial burden will increase the cost of flying, leaving consumers to take alternative, less safe, higher GHG-emitting modes of transportation.

• The airlines’ ability to continue investing in environmental improvements is critical. The Federal Aviation Administration (FAA) estimates that 90 percent of the fuel and GHG efficiency improvements achieved within the industry has come from our continual reinvestment in the latest aircraft and technology upgrades.
• Yet airlines currently face significant burdens. In addition to traditional income and payroll taxes, commercial airlines already are subject to a patchwork of expanded aviation-specific taxes, including environmental protection, jet fuel, homeland security, overflight, arrival and departure taxes, and other fees subsidizing airports and operations. 
• Cap-and-trade legislation under consideration in the United States would apply a tax to transportation fuels – including jet fuel – increasing the costs of those fuels by billions of dollars each year. The Waxman-Markey bill approved in 2009, for example, would have increased the U.S. airlines’ fuel bill by more than $5 billion in 2012 alone.
• Every penny increase in the cost of a gallon of jet fuel costs the U.S. airlines $195 million in annual operating expenses.

Rather than covering the airlines’ fuel as proposed under what amounts to a cap-and-tax scheme, Congress should endorse a global, sectoral approach to aviation GHGs.

• In the negotiations for a new climate change treaty, we urge countries to agree to address all of aviation emissions under a global sectoral approach, to be overseen by the United Nations’ body charged with setting standards and recommended practices for international aviation, the International Civil Aviation Organization (ICAO).
• The A4A airlines have joined the world’s airlines in supporting an ambitious set of targets to mitigate GHG emissions from our industry under this approach, including collective industry commitments to:
• Continue industry fuel (and, hence, CO2) efficiency improvements, resulting in an average annual CO2 efficiency improvement of 1.5 percent per year on a revenue ton mile basis from 2009 to 2020 
• Cap industrywide CO2 emissions from 2020 (carbon-neutral growth) subject to critical aviation infrastructure and technology advances achieved by the industry and government 
• Contribute to an industrywide goal of reducing CO2 emissions by 50 percent by 2050, relative to 2005 levels
• This would not be a “carve out” of U.S. legislation but, rather, a “carve in” to further addressing the GHGs from this global industry as they should be, on a global basis.
• In reflecting a global, sectoral approach in U.S. legislation, the U.S. Congress should also adopt complementary government infrastructure policies. This must include legislation to accelerate and fund modernization of the air traffic control system, which would save an additional 10-15 percent in GHG emissions; reinstatement of NASA and FAA research and development funds for clean technology; and support for the development and deployment of alternative jet fuels.
• For more on how the global, sectoral approach will work to guide the airlines’ continuing efforts to limit aviation GHGs, see the A4A Commitment.