In the past week, there have been several technical problems for the 787 Dreamliner. On 7th an electrical fire caused by a battery broke out after passengers had disembarked from a Japan Airlines Dreamliner in Boston, after flying from Tokyo. Then on 8th Japan Airlines cancelled a Boston to Tokyo flight after about 40 gallons of fuel spilled. Then on 9th Japan All Nippon Airways cancelled a domestic 787 flight because of a brake problem. A spokesman at Yamaguchi Ube airport said the flight was cancelled because brake parts from the rear left undercarriage needed to be replaced. Last year, a United Airlines 787 flight was forced to make an emergency landing because of an electrical problem. In December, Qatar Airways grounded one of its 787s after several manufacturing faults caused electrical problems similar to those that affected the United plane. In December the US FAA said it had identified errors in the assembly of fuel line couplings in the Dreamliner. There have also now been a windscreen crack and another oil leak on another plane. The FAA has now ordered a review of the 787.
There are about 49 Dreamliners in service across the world, with some 800 or so more ordered.
11th January update:
FAA Orders Review Of Boeing 787 Dreamliner
Saying that “we are confident about the safety of this aircraft, but we are concerned about these incidents,” Federal Aviation Administration Administrator Michael Huerta confirmed Friday morning that his agency has ordered a review of Boeing’s new 787 Dreamliner after a series of problems in recent days, including fuel leaks and an electrical fire.
The planes are not being grounded. Boeing says it welcomes the review and is confident in the aircraft’s safety. Click here to view full story ….
…. “another two incidents” aboard Dreamliners.USA Today writes that “on Friday … an All Nippon Airways aircraft suffered a crack to its windscreen during a flight in Japan and an oil leak was found coming from the engine of a separate plane after it landed at an airport in southern Japan.”
and Dreamliner list of problems so far ….
9 January 2013 (BBC)
Fresh faults with Boeing Dreamliner planes
This is the second incident in as many days involving Dreamliners run by Japan Airlines
Two fresh setbacks have hit Boeing’s 787 Dreamliner plane, days after an electrical fire broke out on board a Japan Airlines Dreamliner on Monday.
In the latest incident, Japan’s All Nippon Airways cancelled a domestic 787 flight from Yamaguchi to Tokyo on Wednesday 9th because of a brake problem.
On Tuesday, Japan Airlines cancelled a Boston to Tokyo flight after about 40 gallons (151 litres) of fuel spilled.
Passengers got off safely and no-one was hurt, an airport spokesman said.
A spokeswoman for Japan Airlines, Carol Anderson, said on Tuesday that the second Dreamliner had returned to the gate because of mechanical issues and details were not yet confirmed, Reuters reported.
Meanwhile, the US National Transportation Safety Board said that it would not investigate Tuesday’s incident, because there had not been an accident.
Commenting on the ANA flight, a spokesman at Yamaguchi Ube airport in western Japan said the flight was cancelled because brake parts from the rear left undercarriage needed to be replaced.
ANA was the first company to take delivery of a Dreamliner and started providing flights on the aircraft in October 2011.
On Monday, a fire broke out in a Dreamliner operated by Japan Airlines soon after it landed in Boston from Tokyo.
The fire started after a battery in the jet’s auxiliary power system overheated.
Nobody was hurt as passengers and crew had already disembarked.
The Dreamliner is one of the most advanced planes ever built. However, a spate of technical issues has hurt its image.
Last year, a United Airlines flight was forced to make an emergency landing because of an electrical problem.
In December, Qatar Airways grounded one of its 787 Dreamliners after several manufacturing faults caused electrical problems similar to those that affected the United plane.
To add to Boeing’s woes, the US Federal Aviation Administration said in December that it had identified errors in the assembly of fuel line couplings in the Dreamliner.
It warned that these errors could result in fuel leaking on to hot engine parts and start a fire, cause engine failure, or simply see the plane run out of fuel.
Analysts said the latest incident on the Japan Airlines flight was a blow to Boeing.
“Even though it happened on the ground, rest assured the FAA is asking, ‘What if it happened in the air?'” Carter Leake, an analyst at BB&T Capital Markets in Virginia.
8 January 2013 (BBC)
Boeing Dreamliner catches fire in Boston
The fire broke out after passengers and crew members had disembarked
Japan Airlines said that a fire broke out in one of its Boeing 787 Dreamliners, shortly after it landed in Boston, following a flight from Tokyo.
The fire started after a battery in the jet’s auxiliary power system overheated.
The airline said that no passengers or crew members were hurt as they had already disembarked.
This is the latest setback for the Dreamliner, after production delays and several technical problems.
“Smoke was initially discovered by maintenance staff in the rear end of the cabin, and confirmed by another maintenance staff who also detected smoke outside the aircraft,” Carol Anderson a spokeswoman for Japan Airlines said.
Meanwhile, Doug Alder, a spokesman for Boeing was quoted by the AFP news agency as saying that the planemaker was “aware of the situation” and that it was “working with the airline to understand more about it right now”.
The US National Transportation Safety Board said on Twitter than it had opened an investigation into the fire.
Boeing says it is assisting with that investigation and cannot comment further.
Professor Rigas Doganis, visiting professor at the UK’s College of Aeonautics at Cranfield University, said new aircraft types tended to experience teething problems.
But he said a fire was unusual, and that much would depend on whether the Boeing fire was a “one off” or was due to some design weakness.
Only the impending investigation will determine that, Prof Doganis added.
However. he said the incident “will not affect their  sales, as airlines do understand that problems occur with new aircraft”.
The former chief executive of Olympic Airways added: “The problem with the 787 was that it was long-delayed compared with the planned in-service date; early deliveries were very late and that did more damage to the company’s reputation than this incident may do.”
Prof Doganis said that Airbus had been also hit by similar delays surrounding the launch of its A380 aircraft.
The Dreamliner is one of the most advanced planes ever built. However, a spate of technical issues has hurt its image.
Last year, a United Airlines flight was forced to make an emergency landing due to an electrical problem.
In December, Qatar Airways grounded one of its 787 Dreamliners after several manufacturing faults caused electric problems similar to those that affected the United plane.
Chief executive Akbar Al Baker told the BBC at the time that he was “disappointed because we have an aircraft that has just been delivered to us and for the last five days we can’t fly it”.
To add to Boeing’s woes, the US Federal Aviation Administration (FAA) said in December that it had identified errors in the assembly of fuel line couplings, in the Dreamliner.
It warned that these errors could result in fuel leaking on to hot engine parts and start a fire, cause engine failure, or simply see the plane run out of fuel.
Analysts said the latest incident on the Japan Airlines flight was a major blow to Boeing.
“I don’t want to be an alarmist, but onboard fires on airplanes are as bad as it gets,” said Carter Leake, an analyst at BB&T Capital Markets in Virginia.
“Even though it happened on the ground, rest assured the FAA is asking ‘What if it happened in the air?”
13 December 2012 (BBC)
Dreamliner faults attacked by Qatar Airways chief
By Jorn Madslien, Business reporter, BBC News, Heathrow
Mr Baker wants Boeing to pay for its mistakes
The head of Qatar Airways has criticised Boeing over several manufacturing faults that have resulted in the grounding of one of its three 787 Dreamliner aircraft.
Qatar’s grounded 787 has electrical problems similar to those in a United flight that was recently forced to have an emergency landing.
Chief executive Akbar Al Baker said he was “disappointed” by the situation.
Boeing’s Sir Roger Bone said he understood Mr Baker’s “frustration”.
Qatar Airways has long been one of the fastest growing airlines in the world, having gone from operating just four aircraft to service a global flight network to more than 100 destinations in just 15 years.
Yet, to Mr Baker the expansion has not been fast enough. “We’re already falling behind on our expansion programme due to delayed deliveries of aircraft and technical problems with the aeroplanes.”
“I’m disappointed because we have an aircraft that has just been delivered to us and for the last five days we can’t fly it,” Mr Baker told the BBC.
Dreamliner deliveries are already several years behind schedule, so “I don’t think there’s any excuse for these problems anymore.”
Mr Baker was speaking at London’s Heathrow airport, having just arrived from Doha on the first-ever commercial long-haul flight in a Dreamliner to the UK.
“London is a very important destination for us in Europe,” he said. “We have other destinations in mind in the UK, but due to the shortage of aircraft we’ve not been able to realise these ambitions yet.”
Sir Roger, the president of Boeing UK, told the BBC: “Of course, I understand his frustration, and of anybody in that position, who is delayed in getting the aircraft they need.
“We work extremely hard to mitigate things like that and to put things right. It’s something we attach enormous importance to.”
The electrical problems that forced the United flight to land and resulted in the grounding of the Qatar Dreamliner were discovered on the same day as the discovery of a separate risk.
Mr Baker said the Dreamliner was a ‘fine machine’, in spite of the current problems
On Tuesday, the US Federal Aviation Administration said it had identified fuel-line assembly errors in the Dreamliner that could result in leaks onto hot engine parts and thus start a fire, cause engine failure, or simply see the plane run out of fuel.
Mr Baker said he was far from convinced that these were simply teething problems.
“Well, I don’t know – two aircraft having major problems so quickly?” he said, referring to the electrical faults in the United and the Qatar planes.
When asked by the BBC whether Boeing would be paying compensation to Qatar Airways, he responded: “They will have to if they deliver aeroplanes that can’t fly. We are not buying aircraft to put in museums, we’re buying them to fly.”
Sir Roger declined to respond to a question about how much this could cost Boeing. “That’s not something I would ever talk publicly about at all,” he said. “Those are contractual arrangements between Boeing and a customer.”
The Boeing 787 Dreamliner is one of the most advanced aeroplanes ever created. Much of it is made from very strong, light carbon-fibre composite material.
In spite of the current problems with the plane, Mr Baker said the Dreamliner was a “fine machine” and insisted that Qatar should have 10 787s in operation within a year.
Wall Street Journal
Boeing Tries to Defuse Fears About Dreamliner
9.1.2013 (Wall Street Journal)
As Boeing Co. continued to wrestle with new threats to the reputation of its prized 787 Dreamliner jet, the aircraft’s chief engineer defended the safety and reliability of the new plane and its innovative electrical system.
Mike Sinnett, a Boeing vice president, declined to comment specifically on the cause of a battery fire Monday aboard a parked Dreamliner operated by Japan Airlines Co.or the investigation into the incident being led by the National Transportation Safety Board.
But in the company’s first broad comments since the fire, he said the incident and other technical mishaps affecting the Dreamliner don’t indicate any broader safety problem with the jet. “I’m 100% convinced that the aircraft is safe to fly,” he said. “The real issues are the economic impact to customers, and all of our reputations, so we work very hard to resolve those” issues.
People familiar with the investigation, however, said high-level Federal Aviation Administration officials are increasingly concerned about the spate of electrical problems, highlighted by the smoldering battery aboard the JAL jet, that have dogged the aircraft since its introduction.
No additional mandatory safety fixes or government-ordered inspections of Dreamliners are expected for at least the next day or two, partly because FAA and NTSB experts still are trying to determine the specific cause of the battery fire. But perhaps as soon as early next week, according to one person familiar with the matter, regulators may call for some type of review or reassessment of design and manufacturing issues related to the Dreamliner’s electrical systems. The Dreamliner uses electricity for more functions than any previous jet developed by Boeing.
The FAA’s internal deliberations, according to another person familiar with them, also include other options and may take longer to conclude.
FAA officials reiterated that the investigation of the JAL incident is continuing. An NTSB spokesman said “it is very early in the investigation, and we are still gathering facts.” He said the safety board “will issue additional information as it becomes available.”
Monday’s fire came amid a series of other recent glitches on the Dreamliner, a plane that is essential to Boeing’s business strategy. United Airlines, a unit of United Continental Holdings Inc., found improperly installed wiring in one of its six Dreamliners on an inspection following Monday’s fire, according to a person familiar with the carrier’s actions. On Wednesday, Japan’s All Nippon Airways canceled a domestic flight because of a possible problem with the brakes on one of its Dreamliners. ANA said it is looking into the cause.
Separately Wednesday, JAL offered an explanation for another incident, in which a second of its Dreamliners on Tuesday delayed departure from Boston after discovering a fuel leak. The airline said that an open valve that connects fuel tanks caused the leak, and that it is investigating how and why the valve was open. JAL said it closed the valve once it located the problem and cleared the flight to depart shortly afterward.
The open valve appears to be unrelated to previous problems with fuel lines and engine attachments on the Dreamliner, which resulted from improper assembly in the factory. The FAA ordered mandatory inspections of those parts in early December.
Addressing the cause of Monday’s fire, which occurred in an auxiliary-power battery, is especially critical for Boeing in part because it affected the elaborate electrical system that is one of the Dreamliner’s signature innovations. The plane is also the first passenger aircraft built using mostly carbon-fiber materials, in addition to the more traditional materials.
The Dreamliner’s electrical system uses thousands of miles of wiring, and complex digital circuitry to replace heavier, but more proven, pneumatic systems—which move mechanical parts using hot, high-pressure air. That allows for fuel savings and weight reductions and lowers upkeep costs by eliminating hard-to-maintain parts. The new system generates more electricity than any jetliner in service today—requiring more powerful generators and higher-energy batteries like the one that caught fire on Monday.
Mr. Sinnett said the design of the Dreamliner’s electrical system still makes sense. He said restrictions by government investigators prohibited him from commenting directly on the probe into Monday’s fire, but that the type of auxiliary-power battery that caught fire in Boston was designed to protect itself in the event of over- or undercharging its lithium-ion components.
“Knowing what we know now, we would’ve made the same choice,” he said of the decision to use lithium ion, adding that Boeing has no plans to change the design or use of lithium ion in the Dreamliner’s auxiliary and main batteries.
One reason for the FAA’s concern appears to be Boeing’s insistence that the Dreamliner’s series of electrical glitches in recent months have been normal growing pains for a new model of aircraft. In some explanations to the FAA, Boeing officials have said the lithium battery that caused concern in the latest incident is designed to vent excess heat into the avionics compartment, according to industry and government officials.
Now, however, some safety experts are questioning the wisdom of a design that would allow such venting into a compartment filled with critical electric circuits and conduits.
Boeing spokesman Marc Birtel said in a statement that the plane maker’s discussions with the FAA are proprietary and it complies with all of the 787’s certification requirements.
Some industry executives and analysts voiced confidence that Boeing has the know-how—and the incentive—to fix the Dreamliner’s electrical problems expeditiously.
Boeing’s shares closed up 3.6% at $76.76 in 4 p.m. trading Wednesday on the New York Stock Exchange Wednesday, erasing much of their sharp losses earlier in the week.
Boeing “is scrambling, but they’re going to fix it,” said Gordon Bethune, the former CEO of Continental Airlines and a past Boeing executive. “They have so much invested in this” project. The Dreamliner problems “hurt now, but they will pass,” he said.
Other airlines so far are standing by the Dreamliner. Bjorn Kjos, CEO of Norwegian Air Shuttle said in an interview on Wednesday that the recent incidents are unlikely to affect its upcoming deliveries. The European low-cost carrier expects delivery in April of the first of eight 787s it has ordered.
“The task: Work out the glitches on a new, highly-computerized airplane, run by millions of lines of computer code.”
Some glitches are expected in a new aircraft. The complexity of the Dreamliner and the integration of all its systems help to give flight and maintenance crews an unprecedented level of detail about parts of the jet–but also create headaches in distinguishing what is and isn’t a problem. Boeing has issued regular reports to airline maintenance crews of “lessons learned” as the jet operates.
Mr. Sinnett, who has been with the Dreamliner program from its earliest days, says the 787’s reliability is on a par with the experience of the 777, Boeing’s last all-new jetliner, which entered service in 1995 and faced its own early troubles. In March 1996, less than a year after first delivery, United Airlines, in a letter reviewed by The Wall Street Journal, called the 777’s reliability “a major disappointment.” Today, the 777 is one of the most reliable jets in service.
The engineer said electrical glitches that prompted an emergency landing of a United Dreamliner in December, and the grounding of another Qatar Airways Dreamliner, were traced to a faulty batch of circuit boards inside power panels, supplied by United Technologies Corp. aerospace unit.
A spokesman for United Technologies said the company’s UTC Aerospace Systems unit is working closely with Boeing on the UAL and Qatar issues, referring questions to Boeing.
The Dreamliner’s systems are heavily integrated, each paired with millions of lines of software through a central computer. Boeing has taken great care to ensure that it can lock out a malfunctioning part of the aircraft and keep it from cascading across systems. Mr. Sinnett said this redundancy and protection built into the 787 helped protect the aircraft in the event of electrical issues that caused an emergency landing of a United 787 in December, and the grounding of another Qatar Airways Dreamliner.
Kyoto-based GS Yuasa Corp., 6674.TO 0.00% whose batteries are used for the Dreamliner, said it is ready to send personnel to the U.S., if requested, to participate in the investigation. The company said its batteries, which mainly power cars and airplanes, have never been involved in fires before.
The aircraft’s lithium-ion batteries have seen trouble before, however. During development in 2006, a three-alarm fire broke out at Securaplane Technologies Inc. which supplies the battery’s charger to Thales who in turn supplies it to Boeing. The cause was attributed to the setup of the testing equipment, according to Boeing and Securaplane, which supplies the 787’s battery charger.
Securaplane spokesman Steffen Spell says Securaplane hasn’t been contacted by Boeing or the NTSB regarding the investigation.
—Jack Nicas, Yoshio Takahashi and Kjetil Hovland contributed to this article.
Wikipedia says, of the Dreamliner:
Orders and deliveries
The 787 was first officially delivered to launch customer All Nippon Airways in September 2011. The top three customers for the 787 as of August 2012 are ILFC (International Lease Finance Corporation) with orders totaling 74 Boeing 787s (33 -8s and 41 -9s), All Nippon Airways with 66 orders (36 -8s and 30 -9s) and United Airlines with 50 orders (36 -8s and 14 -9s). Qantas also had 50 orders (15 -8s and 35 -9s) but converted the 787-9 orders to options because of delays and an effort to reduce near term costs after statutory losses of over US$250 million after taxes during the 2011-2012 fiscal year.
Net orders and deliveries (cumulative by year)
|Data through end of December 2012
Boeing 787 total firm orders
Orders and deliveries by year
Read more »
The US Senate unanimously passed a bill on Saturday 22nd September that would shield US airlines from paying the EU ETS. The Senate approved the bill in a scramble to complete business ahead of the Nov. 6 congressional and presidential elections. The message was that the EU “cannot impose taxes on the United States.” It is being spun that the ETS is a way of the EU “paying down European debt through this illegal tax” and the money should instead be”investing in creating jobs and stimulating our own economy.” There was backing from both parties. The House of Representatives has passed a similar measure, and could either work out differences with the Senate’s version or accept the Senate bill when Congress returns for a post-election session. The Senate bill gives the US transportation secretary authority to stop US airlines from complying with the ETS. The bill increases pressure on the ICAO to devise a global alternative to the EU ETS.
Senate votes to shield US airlines from EU’s carbon scheme
(Reuters) – The Senate unanimously passed a bill on Saturday that would shield U.S. airlines from paying for their carbon emissions on European flights, pressuring the European Union to back down from applying its emissions law to foreign carriers.
The European Commission has been enforcing its law since January to make all airlines take part in its Emissions Trading Scheme to combat global warming, prompting threats of a trade fight.
The Senate approved the bill shortly after midnight, as it scrambled to complete business to recess ahead of the Nov. 6 congressional and presidential elections.
Republican Senator John Thune, a sponsor of the measure, said it sent a “strong message” to the EU that it cannot impose taxes on the United States.
“The Senate’s action today will help ensure that U.S. air carriers and passengers will not be paying down European debt through this illegal tax and can instead be investing in creating jobs and stimulating our own economy,” Thune said in a statement.
Democratic Senator Claire McCaskill, the measure’s other chief sponsor, said, “It’s refreshing to see strong, bipartisan support for the commonsense notion that Americans shouldn’t be forced to pay a European tax when flying in U.S. airspace.”
The House of Representatives has passed a similar measure, and could either work out differences with the Senate’s version or accept the Senate bill when Congress returns for a post-election session.
Clark Stevens, a White House spokesman, said the administration is reviewing the bill. The State Department did not immediately respond to a request for comment.
So far, nearly all airlines have complied reluctantly with the EU law, but Chinese and Indian carriers missed an interim deadline to submit information required under it.
China earlier this year threatened retaliation – including impounding European aircraft – if the EU punishes Chinese airlines for not complying with its emissions trading scheme.
The dispute between China and the EU froze Airbus purchase deals worth up to $14 billion, though China signed an agreement with Germany for 50 Airbus planes worth over $4 billion during Chancellor Angela Merkel’s visit to Beijing last month.
The Senate bill gives the U.S. transportation secretary authority to stop U.S. airlines from complying with the EU law.
But a new amendment agreed to during negotiations among lawmakers said the secretary could reconsider the prohibition if the EU trading scheme is amended, an international alternative is agreed to, or the United States implements its own program to address aviation emissions.”
The bill increases pressure on the U.N. International Civil Aviation Organization (ICAO) to devise a global alternative to the EU law.
Connie Hedegaard, the European Climate Commissioner, said on Saturday that while the bill encourages the United States to work within the U.N. organization for a global deal on aviation emissions, she is skeptical that Washington will accept such a deal.
“It’s not enough to say you want it, you have to work hard to get it done,” she told Reuters on Saturday. “That means that the U.S. needs to change its approach in ICAO and show willingness to actually seal a meaningful global deal that will facilitate action.”
Annie Petsonk, a lawyer for the Environmental Defense Fund, said the bill will pile pressure on the U.N. body, which has been working on a global framework for years.
“Passage of the Thune bill amps up the pressure on ICAO to move swiftly to reach a global agreement on addressing aviation’s global warming pollution,” she said.
Tweet by Connie Hedegaard:
Interesting amendments to Thune bill:US to pursue global approach.Agreed.This means that a different US approach
@ICAOwld be most welcome!
ICAO ….is in the process of weighing three market-based approaches for its members to take to help them cut their greenhouse gas emissions.
It is expected that the ICAO will have a draft plan by March 2013, rather than the end of 2012 as had been previously thought.
The global system must approved by ICAO’s 191 members at its autumn 2013 assembly.
…. See more below or at link
Senate Passes Bill Against EU Airline-Emissions Plan
22.9.2012 (Wall Sreet Journal)
By DOUG CAMERON
The U.S. Senate on Saturday passed a bill that could see the country’s airlines snub the European Union’s controversial plan to charge carriers for aircraft emissions on flights to and from the region.
The passage of the bill sponsored by Sen. John Thune (R., S.D.) joins similar legislation passed by the House of Representatives last year, and raises the prospect of the U.S. following other countries in either withdrawing from the plan introduced in January or taking retaliatory action.
Opponents of the EU plan claim it distorts competition and should be ditched in favor of a global effort to reduce greenhouse-gas emissions from aircraft brokered through the International Civil Aviation Organization, a branch of the United Nations.
Congressional leaders have yet to decide how to reconcile the two bills, though a person familiar with the situation said House lawmakers are comfortable enough with the Senate version to use it as the basis for sending a bill to President Barack Obama to sign.
The Senate bill would allow the U.S. transportation secretary to prohibit the country’s carriers from complying with the EU plan. An amendment added to the Senate bill—which passed unanimously—would require that prohibition to be reconsidered if the EU amends its plan or the U.S. introduces its own measures—or if progress is made through ICAO.
The trade group representing the largest U.S. airlines on Saturday welcomed the Senate vote, having unsuccessfully tried to block the EU’s move in court and repeatedly called on the Obama administration to take legal action through ICAO.
“Congress has spoken—U.S. airlines should not be subjected to this illegal scheme that amounts to little more than a cash grab for the European Union as none of the funds collected are required to be used for environmental purposes,” said Nick Calio, president of Airlines for America.
U.S. and most other international airlines have complied with the EU plan by supplying flight information to European regulators that would be used to calculate carbon charges. Some have also bought tradable carbon credits.
More than 40 countries have banded together to lobby against the emission plan, and a few—notably China and Russia—have taken limited retaliatory action by, for example, slowing approvals for flights and aircraft orders.
The EU commissioner for climate action, Connie Hedegaard, wasn’t immediately available for comment. However, she said on her Twitter feed that the Senate bill had “interesting amendments” that pointed to greater U.S. willingness to work through ICAO, a position she welcomed.
U.S. airline industry urges Obama to block EU carbon scheme
By Valerie Volcovici
(Reuters) – The U.S. aviation industry urged President Barack Obama on Monday to file a U.N. action to stop the EU from forcing foreign aircraft to pay for their carbon emissions ahead of a U.N. meeting that will try to make progress on a multilateral solution to the ongoing aviation row.
Nineteen aviation industry groups called on the president to initiate an Article 84 proceeding in the U.N.’s International Civil Aviation Organization ICAO.L, whose governing council will convene from October 29 to November 6.
“An Article 84 action will prompt, rather than impede, agreement and implementation of a global framework for addressing aviation greenhouse gas emissions,” the groups, including the U.S. airline organization Airlines for America, wrote in their letter to Obama.
The letter said the body “has a proven track record of efficiently handling an Article 84 dispute while simultaneously advancing new environmental standards.”
An Article 84 proceeding is a dispute mechanism available to ICAO’s 191 member states, which would give ICAO’s governing council the authority to decide on disputes that cannot be resolved between states.
Environmental groups and ICAO’s Secretary General Raymond Benjamin have said they oppose the time-consuming action because it could undermine efforts by the body to devise a common plan.
ICAO has been under pressure to devise a global alternative to the European Union’s carbon cap-and-trade system due to strong opposition from the United States, China and other nations, but the process has been slow.
It is in the process of weighing three market-based approaches for its members to take to help them cut their greenhouse gas emissions.
Benjamin told Reuters earlier this month that he expected the council to have a draft plan by March 2013, rather than the end of 2012 as had been previously thought.
The global system must approved by ICAO’s 191 members at its autumn 2013 assembly.
The U.S. aviation groups, that also included the Aerospace Industries Association, warned that if left unchecked, the EU’s imposition of its carbon trading scheme could extend beyond just foreign airlines.
“If this EU breach of U.S. sovereignty … over our airspace and international waters – goes unanswered, it almost certainly will result in other such schemes affecting a variety of sectors of the U.S. economy,” the letter said.
Meanwhile, Congress may also put pressure on the Obama administration this week with the possible passage of a bill that would shield U.S. airlines from participating in the EU’s emissions trading scheme.
Last week, Republican Senator John Thune had been prepared to put get a unanimous consent vote on the Senate floor on the bill he co-authored with Democratic Senator Claire McCaskill.
The senator called off the vote because some objections were raised, a Senate aide told Reuters.
But supporters of the Thune-McCaskill bill are negotiating compromise language to address lingering concerns, said Jean Medina, spokesperson for Airlines for America.
She said the senators hope to secure enough votes for passage before Senate goes into recess ahead of the November elections. (Reporting By Valerie Volcovici; Editing by Tim Dobbyn)
Related Reuters News
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Airlines are laying the groundwork for the next big step in the increasingly automated airport experience: a trip from the curb to the plane without interacting with a single airline employee – so much less employment at airports. As well as automatic check in, and electronic boarding passes, airlines are now turning to technology that enables travelers to check their own bags and scan those boarding passes, with no staff. At the airport of the near future, “your first interaction could be with a flight attendant,” Airlines hope this will quicken the airport experience for seasoned travelers—shaving a minute or two from the checked-baggage process alone—while freeing airline employees to focus on fliers with questions. IATA is pushing for extending a complete self-service airport experience to 80% of the world’s fliers by 2020 in order to save the industry $2.1 billion a year.
The Self-Service Airport
Forget Kiosks, Now Airlines Want Fliers to Tag Luggage, Board on Their Own
27.8.2012 (Wall Street Journal, Business)
By JACK NICAS And DANIEL MICHAELS
Airlines are laying the groundwork for the next big step in the increasingly automated airport experience: a trip from the curb to the plane without interacting with a single airline employee.
For years, travelers have been checking in online or at airport kiosks, and more recently, airlines have converted paper boarding passes into electronic ones. Now carriers are turning to technology that enables travelers to check their own bags and scan those boarding passes—but not always without snags.
Airlines are laying the groundwork for the next big step in the airport experience: a trip from the curb to the plane without interacting with a single airline employee. Jack Nicas on The News Hub. Photo: Jack Nicas/The Wall Street Journal.
At the airport of the near future, “your first interaction could be with a flight attendant,” said Ben Minicucci, chief operating officer of Alaska Airlines, a unit of Alaska Air Group Inc. ALK 0.00% The carrier has been at the forefront of self-service in the U.S., recently introducing self-tagging of baggage in Seattle and San Diego with eight more airports planned this year.
After testing the technology in Austin, Texas, AMR Corp.’s AAMRQ +3.98% American Airlines is rolling out kiosks that direct travelers to tag their own checked bags in New York, Los Angeles, Chicago and other major airports over the next two years. And last month in Las Vegas, JetBlue AirwaysCorp. JBLU -0.81% became the first U.S. airline to officially implement self-boarding gates, where fliers scan their own tickets to board the plane.
Airlines say the advanced technology will quicken the airport experience for seasoned travelers—shaving a minute or two from the checked-baggage process alone—while freeing airline employees to focus on fliers with questions. “It’s more about throughput with the resources you have than getting rid of humans,” said Andrew O’Connor, director of airport solutions at Geneva-based airline IT provider SITA.
Airline-employee unions, however, say the machines are a way for carriers to cut staff by outsourcing preboarding tasks to fliers. “Clearly it’s not something passengers are clamoring for,” said Frank Larkin, spokesman for the International Association of Machinists and Aerospace Workers. “More technology, fewer people? I don’t think so.”
A recent SITA survey found self-boarding appeals to 70% of passengers and almost as many travelers want to tag their own bags. Self-tagging and self-boarding have each been implemented in 115 instances around the world, according to the International Air Transport Association.
That global airline trade group is pushing for extending a complete self-service airport experience to 80% of the world’s fliers by 2020 in order to save the industry $2.1 billion a year. Neither the IATA nor SITA offer estimates on the cost of implementation—something individual airlines also don’t disclose.
The Transportation Security Administration said it has monitored pilot programs for self-tagging and self-boarding and approves of the technologies.
U.S. airlines and airports are catching up to their counterparts in Europe, whereDeutsche Lufthansa AG LHA.XE -1.29% began testing self-boarding in the late 1990s. The airline officially implemented the technology last year in its three main hubs in Germany, where customers have readily adapted to it.
“A lot of our passengers are frequent fliers who really prefer not to talk with staff all the time,” said Lufthansa spokesman Aage Duenhaupt. “They check-in online, get a mobile boarding pass and then use it at an automated boarding gate.”
British Airways and Iberia, both units of International Consolidated Airlines Group SA, are also introducing a variety of self-service tools, including at Madrid’s Barajas Airport, where Iberia has 30 kiosks that print checked-bag tags. New ID readers have sped the process to less than an average of 30 seconds, the airline said.
Before long, travelers in many countries will be able to print baggage tags at home and insert the bar-coded paper in plastic cases distributed by airlines, similar to baggage tags that many already issue to their frequent fliers, SITA said. Qantas Airways Ltd.QAN.AU -2.56% of Australia already issues permanent electronic bag tags that store fliers’ information.
At the front lines of the self-service push in the U.S. is Las Vegas’s McCarran International Airport, long known for its 1,600 slot machines. A new terminal here features 150 kiosks and 14 gates equipped with self-tagging or self-boarding technology for the carriers operating there, including five U.S. airlines.
On a recent weekday , fliers of Canadian carrier WestJet Airlines Ltd. WJA.T +0.83%largely breezed through the check-in process with the help of kiosks that printed their bag tags. But the process was hardly fully automatic: While a handful of travelers handled the process themselves, WestJet employees tapped through the kiosk screens for most fliers and then applied their bag tags. More agents then scanned the tags and boarding passes before sending the luggage to the plane.
Past the security checkpoint, fliers waiting to board a JetBlue flight were generally positive about self-boarding after a gate agent explained the process to them over the public-address system.
“Isn’t that wonderful?” said Carl Milkie of San Marino, Calif. “It’ll probably save time if everything goes properly.” Minutes later, Mr. Milkie strolled through one of the two self-boarding gates—plastic doors that swing open when a correct boarding pass is scanned—but his wife, Leila, wasn’t so lucky.
The line came to a standstill after the system wouldn’t recognize her ticket’s bar code and the gates refused to open. A gate agent eventually had to escort Mrs. Milkie around the gates, and the machine continued to halt others, prompting agents to abandon the system and manually board the plane.
“We overloaded the system,” said JetBlue agent David Wicburg, adding that he normally prefers automated gates because they tend to ease congestion.
But JetBlue flier Shai Holi said airlines aren’t considering one crucial interpersonal detail: “The machine doesn’t say, ‘Have a nice flight.'”
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The European Court of Justice has ruled that the EU ETS is compatible with international law. The ETS does not infringe the sovereignty of other States and is compatible with the relevant international agreements. The ATA, some US airlines, supported by IATA and many others brought a case before a UK court, which had in turn asked the EU court whether this extension of the ETS is valid in light of a number of
international agreements.The opinion is not binding.
EU Court: Airline Carbon Law Is Legal
6.10.2011 (Wall Street Journal)
By ALESSANDRO TORELLO
BRUSSELS. A European Union law that forces airlines from all over the world
to hold permits to emit greenhouse gases in order to fly in and out of the EU
is compatible with international law, the European Court of Justice said in an
“EU legislation doesn’t infringe the sovereignty of other States or the freedom
of the high seas guaranteed under international law, and is compatible with the
relevant international agreements,” said the opinion prepared by Advocate General
Juliane Kokott, a legal adviser for the ECJ.
The Air Transport Association of America and the U.S. airlines American Airlines,
Continental and United Airlines, supported by the International Air Transport
Association and the National Airlines Council of Canada, have brought a case before
a U.K. court, which has in turn asked the EU court whether this extension of the
emissions trading scheme is valid in light of a number of international agreements.
China, Russia and other major nations, as well as airlines worldwide, have criticized
the project. Non-EU governments and airlines argue that the EU has no right to
regulate emissions outside its borders, and hasn’t set an objective standard for
The law “doesn’t contain any extraterritorial provision, nor does it infringe
the sovereign rights of third countries,” the opinion said.
Legal opinions are routinely prepared in ECJ cases by senior court advisors known
as Advocates General. The Advocate General’s proposed ruling isn’t binding on
the court, but is followed in the final ruling in the majority of cases.
Initial ECJ opinion on EU ETS legal challenge expected soon
28.9.2011 (Flight Global)
The European Court of Justice’s senior legal advisor is poised to put forward
an opinion on the challenge against the inclusion of aviation in the EU’s emissions
trading system (ETS), brought forward by the Air Transport Association of America
(ATA) and three of its members.
During a recent technical briefing to detail the amount of free allowances aircraft
operators will be entitled to when ETS takes effect on 1 January 2012, Jos Delbeke,
the European Commission’s director general for climate action, said the court’s
advocate general would issue a view on the challenge on 6 October.
This will be an “important moment”, said Delbeke, because the opinion expressed
will give “a strong indication of how the court will rule”.
Non-compliance with ETS will result in a penalty of €100 ($135) per tonne of
carbon dioxide emitted, warned Delbeke. The US House of Representatives’ transportation
and infrastructure committee recently approved a bill that would prevent US carriers
from taking part in ETS, and strong opposition to the scheme has also been voiced
by China and Russia.
Delbeke said the European Commission is “still having intensive discussions”
with various countries about ETS, and is “very open to taking those discussions
The Commission announced on 26 September that aircraft operators will receive
85% of their emissions allowances free of charge in the first year of ETS, before
dropping to 82% in the period from 1 January 2013 to 31 December 2020.
In the first year, airlines will have to purchase the remaining 15% of their
allowances through an auctioning process. However, the Commission has set aside
3% of remaining allowances in the 2013-2020 period as a “special reserve”, which
will be available to new entrants and fast-growing airlines.
“At current market prices, these free allowances represent more than €20 billion
($27 billion) over the decade,” said EU climate action commissioner Connie Hedegaard.
“With these potential revenues, airlines could invest in modernising their fleets,
improving fuel efficiency and using non-fossil aviation fuel.”
However, this suggestion has been slammed by the IATA, which is calling for EU
ETS to be scrapped. “If that were the reality, we wouldn’t be complaining. But
it’s not,” said IATA director general Tony Tyler. “The well-known fact is that
airlines will be net purchasers of carbon emissions permits for the foreseeable
future. The starting cost is $1.2 billion in 2012. To put that into perspective,
the industry’s projected 2012 profit is $4.9 billion.”
see also older news
Non EU countries and airlines continue to warn of retaliatory action against
Date Added: 4th October 2011
IATA says there is a risk that countries outside the EU could take retaliatory
action against the EU’s ETS. On 6th October an advocate general to the European
Court of Justice will issue an opinion on a request by US airlines for non-European
carriers to be excluded from the ETS. This should give a steer on the subsequent
ruling by the ECJ, which the EC is confident will side with the EU rather than
the US airlines. They want a scheme run through ICAO.Click here to view full story…
Cost for airlines of joining EU ETS €1.1bn in 2012, says Thomson Reuters Point
Date Added: 21st September 2011
The cost for airlines of joining the EU ETS in 2012 will be approximately €1.1
billion using a carbon price of €12/ tonne, or a total of €10.4 billion between
now and the end of 2020, according to Thomson Reuters Point Carbon and RDC Aviation.
The EC is expected to issue 176 million allowances to airlines for free for 2012,
and airlines are forecast to need to buy 88 million more. The 27 flag-carriers
in the EU will get, on average, 61% free. Those with substantial long-haul networks
fare better; Air France/KLM, BA, Lufthansa and Iberia on average will be allocated
81%.Click here to view full story…
Airlines inclusion in the EU ETS from January – FT article
Date Added: 12th September 2011
From 1st Jan 2012 airlines will have to account for the emissions produced on
flights to and from EU airports. In the first year of the scheme, airlines will
be given allowances matching 82% of their historic emissions, with 15% auctioned
and the remaining 3% held in a special reserve for new entrants. Interesting FT
article about the process, how little it will cost some airlines, and on the various
protest of airlines about inclusion in the ETS.Click here to view full story…
Environmental NGOs make a case for the EU ETS as US airlines finally near their
day in court over inclusion
Date Added: 2nd July 2011
Ahead of the hearing by the European Court of Justice (ECJ) over the inclusion
of US airlines into the EU ETS, environmental groups from the US and Europe have
repeated their support for the scheme on both legal and climate change grounds. Tim
Johnson of the AEF believed the scheme was “affordable for consumers, environmentally
effective and, above all, fair to industry.” The main question from the ECJ is
if the EU directive should apply to those parts of flights that take place outside
Click here to view full story…
Read more »
18.2.2011 (Wall Street Journal)
HOUSTON—Exxon Mobil Corp., the world’s largest publicly traded oil company, is struggling to find
In its closely watched annual financial report released Tuesday, the company
said that for every 100 barrels it has pumped out of the earth over the past decade,
it has replaced only 95.
Exxon now has more natural gas in reserve for future production than oil. It’s a conundrum shared by most of the other large Western oil-producing companies,
which are finding most accessible oil fields were tapped long ago, while promising
new regions are proving technologically and politically challenging.
Exxon said in the report that it more than made up for the shortfall in oil by
stocking up on natural gas, mostly through its acquisition of XTO Energy Inc.
But the shift toward gas is troubling some investors, because gas sells for less
than the equivalent amount of oil. Many observers feel the move toward gas—a trend
across the oil industry—is dictated more by shrinking access to oil fields than
by a strong desire to emphasize gas production.
“The good old days are gone and not to be repeated,” says Fadel Gheit, an analyst
with Oppenheimer and Co. Bringing additional reserves from gas “is not going to
give you the same punch” that oil would, he said.
Finding the equivalent, in either oil or natural gas, of a barrel in the earth
for every one the company produces—a 100% reserve replacement rate—has become
extraordinarily tough. Exxon boasted this was the 17th consecutive year of hitting
this mark, but analysts agree that without the XTO deal, Exxon would have fallen
far short this year.
Investors look at these reserve figures as an important gauge of future profitability
and business strength.
Exxon now has more natural gas in reserve for future production than oil. And
while the company has been very successful at finding or buying new natural gas,
it has struggled to do the same with oil. For every 100 cubic feet of gas it has
extracted , it has found or bought an additional 158.
Company spokesman Alan Jeffers says the company’s “focus is on resources and
projects that add shareholder value.” That can be accomplished by finding oil,
he says, but value can also be delivered through a corporate acquisition.
Exxon has become the largest U.S. company by market capitalization with a business
model that stresses size and integration of assets. It has traditionally found
crude oil, refined it into gasoline and other fuels and then sold these products.
But the stock market has recently favored oil companies, such as ConocoPhillips,
that are shedding assets to get smaller. Smaller oil and gas finds can have a
material impact on slimmed down companies.
The shift toward gas—and troubles with finding oil—has emerged as a theme for
the giant Western oil companies. Royal Dutch Shell PLC’s chief executive said
last month the European company will produce more gas than oil next year for the
first time in its 104-year history.
In the past few years, new technologies have unlocked vast resources of natural
gas, depressing prices in North America and raising the possibility of falling
prices in other regions also. Meanwhile, growing demand from emerging economies
has sent crude-oil prices up strongly since prices cratered in 2008 during the
worst of the recession. Natural gas prices closed today at $3.98 per million British
thermal units, down 25% from a year ago, whereas a barrel of West Texas crude
is up about 9.5% over that time, closing at $84.32 in trading on the NYMEX Tuesday.
Big oil companies are having trouble cashing in on the strong prices for crude
oil. They have limited ability to drill in many oil-prone regions, such as Russia
and part of the Middle East, due to politics. And even in promising Iraq, where
many Western companies have won contracts, much infrastructure must be rebuilt.
Exxon and others have also flocked to the oil-rich sands of Northern Alberta,
Canada, but digging out the oil across vast swathes of forest comes at relatively
high cost and generates concerns about the environmental impact.
One place where Western oil companies have found open doors is in deep-water
exploration, because state-backed oil companies in Russia, China and the Middle
East have little experience drilling these tricky wells. This has given Western
companies access to new opportunities, such as Exxon’s recent deal with Russian
oil giant OAO Rosneft to explore the Black Sea.
The hunt for oil explains why these companies are so keen to restart work in
the Gulf of Mexico, after a halt imposed by the Obama administration following
the Deepwater Horizon spill. Some companies also are seeking permission to drill
exploratory wells above the Arctic Circle. The Arctic remains one of the few unexplored
regions of the world and the region above Alaska and western Canada is believed
to be oil rich.
But deep-water projects take a long time to turn from a prospect that a geologist
has identified into a producing asset. Chevron Corp.’s chief executive said last
week that he expects to add new barrels of oil to its reserves from “several major
deep-water projects” in future years. In 2010, he warned that Chevron added only
one new barrel for every four it produced.
Given the difficulties these companies are facing, some investors have begun
to wonder if Exxon bought XTO last year to “mask the extent of their replacement
problem,” said R. Blair Thomas, chief executive of EIG Global Energy Partners,
an energy asset -management firm.
The market didn’t like Exxon’s announcement, sending the bellwether stock down
2.3% to $82.97 in 4 p.m. trading Tuesday on the New York Stock Exchange.
see also (2009)
The most recent estimate from the IEA, that advises Governments, said conventional
oil would not peak until after 2030. However an authoriative new study from the
UK Energy Research Council called this prediction “at best optimistic and at worst
implausible”. It predicts oil will begin running out before 2030 and there is
a “significant risk” peak oil will be reached before 2020. “We’re moving away
from easy and cheap oil to increasingly difficult and expensive oil.”
Era of cheap, easy oil is over, warns study
by Louise Gray, Environment Correspondent
The exact date of “peak oil” – when the amount of oil being pumped out of the
ground every day reaches its highest point before beginning an inexorable decline
– has been hotly debated for decades. Environmentalists have tended to warn oil
could run out at any moment, while oil companies insist there are plently more
oil fields yet to be discovered.
The most recent estimation from the International Energy Agency, that advises Governments around the world, said conventional oil would not
peak until after 2030.
However an authoriative new study from the Government-funded UK Energy Research Council (UKERC) called this prediction “at best optimistic and at worst implausible”.
The peer-reviewed research looked at 500 studies from around the world and took
into account the difficulty of accessing new oil fields as well as growing demand.
It predicted oil will begin running out before 2030 and there is a “significant
risk” peak oil will be reached before 2020.
“In our view, forecasts which delay a peak in conventional oil production until
after 2030 are at best optimistic and at worst implausible. And given the world’s
overwhelming dependence on oil and the time required to develop alternatives,
2030 isn’t far away,” said the report’s lead author Steve Sorrell. “The concern is that rising oil prices will encourage the rapid development
of carbon-intensive alternatives which will make it difficult or impossible to
prevent dangerous climate change.”
Robert Gross, Head of Technology and Policy Assessment at UKERC, said as soon as oil begins
to run out it will make energy more expensive, sparking a knock on effect on industry
and economies around the world. Petrol prices would rise and long distance travel
become more expensive.
“The age of easy and cheap oil is coming to an end,” he said. “It doesn’t suddenly
come to an end, obviously it’s a gradual change, but we’re moving away from easy
and cheap oil to increasingly difficult and expensive oil.”
At the moment oil is around £44 ($70) per barrel after peaking at around £92
($147) per barrel earlier in the year during the height of the economic crisis.
Dr Gross said the spectre of peak oil should encourage Governments to invest
in more energy-efficient vehicles such as electric cars, renewable energy like
wind or solar and improving energy efficiency in industry and homes.
But he said there was a risk that instead the world will start to look at even
more intensive forms of fossil fuels, therefore producing more carbon emisions
and causing “catastrophic climate change”. Alternatives include heating tar sands
to produce oil at huge cost both environmentally and financially.
“The danger is high oil prices push us into high carbon resources just as much
as they might help push us towards renewables,” he said.
“The challenge for policy makers is to make sure, on a global scale, that that
isn’t the response to more difficult and expensive oil.”
The world produces around 85 million barrels of oil every day. It is estimated
this could rise to more than 100 million barrels per day before declining.
Oil companies like BP claim billions more barrels are availabe in new oil fields
discovered in the Gulf of Mexico.
However Mr Sorrell said these new supplies are extremely difficult to access and will only delay peak oil
by a few weeks or even days.
Even if the new fields are exploited, he said the world needs to move away from
oil in order to stop global warming.
But Mr Sorrell said the UK Government had no contingency plans for oil peaking before 2020.
“If these problems are ignored and we do not make these changes ahead of time,
we are heading for trouble,” he warned.
The IEA is due to release its latest report on peak oil this November, just before the world meets in Copenhagen to decide a new deal on climate change.
The report will be a key influence on whether the rich world is willing to agree
to set targets to cut greenhouse gas emissions, while also helping poor countries
to switch to a low carbon economy.
The Department for Energy and Climate Change is currently considering the UKERC
“We are already well aware of the significant challenges for investment in future
oil production and that there is a role for Governments to play in reducing demand
for fossil fuels,” a spokesman said. “Our climate change, energy efficiency
and energy security policies outlined in the UK low carbon transition plan are
not only reducing the UK’s carbon emissions, but are consistent with the need
to reduce our use of fossil fuels.”
By Sarah Mukherjee, Environment correspondent
There is a “significant risk” that global production of conventional oil could
“peak” and decline by 2020, a report has warned.
The UK Energy Research Centre study says there is a consensus that the era of cheap oil is at an end.
But it warns that most governments, including the UK’s, exhibit little concern
about oil depletion.
The report’s authors also state that the 10 largest oil producing fields in the world are all in decline.
As this report points out, the debate about peak oil is a polarised one.
On one side, there are those who say that global supplies have already reached
their zenith, and we are unprepared for the crisis that will hit world economies
in the years to come.
On the other, there are oil companies and many energy analysts who dismiss the
notion that supplies are running out.
The report’s authors admit it is hard to tell who is right, as the world lacks a reliable gauge with which to measure oil depletion.
Problems are created by “inconsistent definitions”, it says, noting the “paucity
of reliable data, the frequent absence of third-party auditing of that data and
the corresponding uncertainty surrounding the data that is available”.
It goes on: “The difficulties are greatest where they matter most, namely the
oil reserves of Opec countries.
“But they also apply at a much more basic level, such as uncertainties over the
amount of oil produced by a given country in a given year.
“The resulting confusion both fuels the peak oil debate and creates substantial
risk in relying on any particular set of numbers.”
Part of the difficulty in estimating the amount of oil left is that those with
the reserves are often unwilling to divulge what can be commercially very sensitive information.
Countries and companies are notoriously reticent about their oil reserves.
But the report suggests the easy oil has already been found, and new reserves
will become increasingly difficult and expensive to extract, and will not make
up for the current major oil fields as they decline.
It says: “More than two-thirds of current crude oil production capacity may need
to be replaced by 2030, simply to keep production constant.
“At best, this is likely to prove extremely challenging.”
More attention urged
This report does not contain new research, but is a review of data already available.
But the authors say the risk presented by global oil depletion deserves much
more serious attention by the research and policy communities.
“Much existing research focuses upon the economic and political threats to oil
supply security and fails to either assess or to effectively integrate the risks
presented by physical depletion,” they argue.
“This has meant that the probability and consequences of different outcomes has
not been adequately assessed.”
Despite the evidence, the report notes with some surprise that the UK government rarely mentions the issue in official publications.
Read more »
A Financial Times article by Pilita Clark says :
AIRLINE FINANCING RIFT DEEPENS
Ryanair and Emirates have taken the unusual step of joining forces with eight
other airlines as a multibillion-dollar row over aircraft financing starts to
split the world’s largest airlines into two rival camps. The Irish budget airline
and Dubai’s Emirates normally shun industry alliances. But yesterday they revealed
they had teamed up with carriers such as Etihad of Abu Dhabi, Korean Air, Norwegian
and Australia’s Virgin Blue to block what they say are dangerous attempts to curb
the use of export credit agency backing for passenger jet purchases. link
Full article at
Many US and European airlines are arguing it is not fair that an informal agreement
known as the home market rule prevents them from obtaining export credit support
to buy their aircraft on what they say are the "significantly cheaper" terms available
to Ryanair, Emirates etc.
The home country rule, which dates back to the 1980s, prohibits countries where
Boeing and Airbus aircraft are built – the US, Germany, France, the UK and Spain
– from providing export credit agency backing to their own airlines to help them
The problem has become worse during the recession, because export credit support
has grown to unprecedented levels as banks and other traditional sources of aircraft
financing were less available to airlines.
BA and the other airlines in countries that build planes want the home market
rule to be scrapped. They also want export credit support levels limited to 20%
of aircraft deliveries and the price of export credit financing raised.
Aviation Alliance airlines say there would be certain airlines who simply couldn’t
finance aircraft without the help of export credit.
The issue is coming to a head now as new global rules are due to be finalised
by the end of 2010 through the Paris-based OECD (the Organisation for Economic
Co-operation and Development).
It is not clear if the home market rule will be scrapped.
Full article at
Wall Street Journal
Airlines Press for Access to Subsidies
Ten global airlines that are among the biggest beneficiaries of U.S. and European
subsidies to buy jetliners called for an easing of rules on aircraft-export guarantees
to defuse an international dispute on the issue.
The carriers, including Ireland’s Ryanair Holdings PLC, Emirates Airline and Etihad Airways from the United Arab Emirates, and
Korean Air, said at a news conference Thursday in London that airlines from all
countries should be eligible for government support in buying planes from Airbus
and Boeing Co.
Under an informal agreement between the U.S. and European governments in 1986,
airlines from the home countries of Boeing and Airbus may not receive government
export support on the companies’ planes. Airbus is a unit of European Aeronautic Defence & Space Co.
Twenty-four airlines from the home countriesâ€”the U.S., France, Germany, the U.K.
and Spainâ€”in October complained to their governments that the current arrangement
is unfair. Many carriers in the ineligible group want access to export-credit
financing, while some want it limited for all airlines from developed countries.
Export credit, which mainly consists of government guarantees to support commercial
loans for airlines to buy planes, currently underpins more than 30% of Airbus
and Boeing deliveries.
The 10 airlines, calling themselves the Aviation Alliance, are some of the biggest
buyers of airliners today. They want to ensure that export financing isn’t closed
“We care caught in the cross fire,” Ryanair Chief Financial Officer Howard Millar
said in an interview.
Talks on international rules for government support to jetliner exports are under
way at the Organization for Economic Cooperation and Development in Paris. OECD
officials declined to comment on the status of the yearlong negotiations.
Countries involved have said they want to revise existing rules by the end of
this year, although some officials have said the talks could slip into next year.
The once-arcane subject of export credit has gained more prominence since the
recent credit crisis. Before the crisis, airlines from the five home countries
were able to fund airplane purchases inexpensively through highly developed capital
markets. But since financial markets froze up in 2008, commercial financing became
more expensive than funding backed by U.S. and European government guarantees.
“Export credit financing is essential to the continued growth of the aviation
industry,” the Aviation Alliance said in a statement. “We have come together today
to call for the extension of export credits to all airlines in the U.S. and Europe,
irrespective of whether they are based in a country which manufactures aircraft.”
Other airlines in the alliance are Cargolux of Luxembourg, Norwegian, Oman Air,
Pegasus of Turkey, Virgin Blue from Australia and Wizz Air from Hungary.
The group said the changes it proposed would “protect hundreds of thousands of
jobs.” Airlines from the Airbus and Boeing home countries have said export credit
hurts them and costs airline jobs.
The home-market rule developed because the U.S. Export-Import Bank, which supports
foreign sales of American products, is forbidden from financing Boeing’s domestic
sales. To establish a level playing field between Boeing and upstart Airbus in
the 1980s, both agreed not to seek export-credit support for sales into the other’s
Mr. Millar called for an end to the home-market rule. “American carriers that
wish to buy Airbus should have access to export credit,” he said.
Industry officials say that’s unlikely to happen because Airbus could then have
a financing advantage over Boeing in the U.S. Because Airbus is based in four
countries, its home-country customers could theoretically get export support from
the other three countries.
A spokesman for Boeing said the company would need to see more details of the
group’s proposal before making a comment.
An Airbus spokeswoman said the company supports expanding access to export guarantees
“as long as the instrument remains economically workable for its original purpose,”
which includes helping “to support the stability of aircraft manufacturing.”
how export credit guarantees work is explained at
Read more »