The global aviation industry is still scratching its head while digesting the contents of the latest bid by Brussels to curb greenhouse gas emissions. Starting from Jan. 1, the EU included the aviation industry in its CO2 Emission Trading System and started imposing extra taxes on airliners. Actual payments will not take place until 2013, but the system is now up and running.
A very laudable effort indeed, but here is the trick: This program of the EU applies to all foreign airlines as well, if their airplanes are heading to or leaving from airports in EU countries. And it has teeth: airline companies that ignore the law will be slapped with fines. So, Korean carriers shuttling between Incheon and all major European capitals will be required to pay the new extra taxes. According to an estimate, this means an extra payment of $3 for individual passenger per each flight. Nonetheless, the grand total of the payments for each airline may be sizable because all European airports are always bustling with travelers.
As one could imagine, many countries are concerned by this new measure. The United States, China and Russia are all against the latest EU attempt, making it a rare occasion in which Washington and Beijing are on the same side on economic issues. Just last week, Beijing even prohibited its carriers from complying with the EU regulation. The United States is also considering a similar action. So, the level of tension is certainly ratcheting up, and the prospects would be pretty scary if all countries adopt retaliatory measures, as they threaten to.
Perhaps nobody could question the good heart of the EU in coming up with this creative idea, to save the ailing earth from monstrous airplanes emitting tons of greenhouse gasses. Good intentions, however, do not always deliver.
The fundamental reason that other countries have gone berserk about the EU measure is because of its nature as an extraterritorial application of a domestic law. It applies to all foreign carriers even if most of the journey takes place outside the airspace of the EU. Imagine a flight from Incheon to Paris. Only roughly 1/5 of the flights actually takes place within the EU airspace, but the EU charges the extra taxes for the entire 12-hour journey from ICN to CDG, which then forces a question of why other countries should pay one country (i.e., EU) for an activity that takes place outside the one country’s jurisdiction.
A more practical drag for the measure is the fact that perhaps this noble attempt will not be as effective as it would seem. Most likely, this extra payment obligation would change no one’s behavior. It certainly cannot change the behavior of the carriers because they will instantly turn around and shift the burden to their customers by raising the price of the fare. Nor will it affect the behavior of the flying customers. It is hard to imagine that someone changes his or her slight plan because of the $3 increase in an airplane ticket. Everybody knows that the airfare is anyone’s guess. It is not uncommon to find out that the person sitting next to you paid just half what you paid. So, arguably, as far as carbon dioxide reduction goes, the aviation industry is different from, say, the automobile industry.
So, unlike other industries operating mainly in the domestic sphere, changing the behavior of airlines and their customers might not be achieved by this global application of the EU domestic law. Any tangible outcome would be that the money will be accumulated to be spent for some noble cause (i.e., saving the world) in the future. At this point, however, the same question comes back: How can one country claim itself to be the one?
Maybe the EU has decided to voluntarily assume the role of a caretaker having seen the slow-moving global community on this score. Some people, however, may find it difficult to enlist their sympathy for such a cause when they remember all the big airplanes that the European consortium has developed and marketed so eagerly these days. Some might even say that the level of chocking inflicted upon the global community flowing from the continuing EU financial crisis far much outweighs that caused by the emission of the greenhouse gasses.
The EU’s spearheading effort is laudable but its direction is misplaced. A global problem can only be properly addressed by a global solution. One country’s pursuit of a unilateral solution may further complicate and even undermine the efforts being made at the ICAO for this very issue.
By Jaemin Lee
Lee Jae-min is a professor of law at the School of Law, Hanyang University, in Seoul. Formerly he practiced law as an associate attorney with Willkie Farr & Gallagher LLP. -- Ed.
