Competitive Distortions in the Air Transport Markets as a Result of the Upcoming Worldwide Emissions Trading Systems?

by Janina Scheelhaase

Within the next 5 to 10 years, different national and supranational emissions trading schemes will be introduced globally to reduce aviation’s CO2 emissions: The European Union’s emissions trading scheme will directly limit the CO2 emissions of virtually all flights starting from or landing at any European airport from 2012 onwards. The upcoming US cap-and-trade-system for greenhouse gases as well as the New Zealand system will very likely choose the fuel sup-pliers as accountable entities of their systems (upstream approach): Aviation will be covered indirectly by the price impact on the fuel purchased. Detailed plans for mandatory national emissions trading systems have also been worked out by Australia, Canada, Norway, Iceland, Liechtenstein and Switzerland. This foreseeable heterogeneous global framework will have impacts on competition within the aviation sector. This paper analyses the economic and competitive impacts of the introduction of differently designed emissions trading systems on the international aviation sector.

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