Do you see the change of Administration in the US affecting policy in Europe? What does it mean for European competitiveness?
When we look what is happening in Europe, with the Draghi report, there is recognition that overregulation has made Europe less competitive globally. The moves in the US for lighter regulation I hope we will see mirrored in Europe.
There is a need for the EU to recognize that European industries must compete globally and the regulations that have been imposed upon European companies have made them less competitive on a global scale and that needs to be reversed. Europe’s competitive position in the world needs to be considered, not just its competitive position within the single market.
What is your view of the EU’s approach to competition regulation of airlines?
I believe consolidation is important. The European industry is very fragmented. Where consolidation has taken place in Europe, I think it is obvious that it has been positive. The creation of airline groups has enabled much faster expansion and greater consumer benefit. And it is clear that there are airlines in Europe that will require to be part of a larger group to have the ability to fulfil the ambition that they have to compete not just in Europe but globally. It is disappointing that the process of agreeing consolidation takes so long and often involves penalties that don’t create sensible commercial or consumer benefits. I don’t believe there is any consumer risk involved. And in some cases competition will disappear if consolidation isn’t allowed to happen
What do you think about moves towards net-zero CO2 and Europe’s approach to regulation in this area?
I have concerns about the SAF mandate, I do not believe that there will be enough SAF to meet the mandate, and mandating the use of something that doesn’t exist makes no sense whatsoever. We need to shift the emphasis to help promote the production of SAF and we don’t see enough efforts at European level to incentivise the production of SAF in the EU, meaning airlines have to import SAF from the US.
In terms of the cost of SAF the figures are eye-watering. $4.7 trillion or $174 billion per year on average. The airline industry cannot afford to do this, it is just impossible. For an industry that this year made a collective net profit of $30 billion, a $174 billion additional yearly cost is just impossible. So, this will ultimately have to be paid for by the consumer. We want to see measures that can be taken to reduce that cost to the consumer.
It's going to be critical that everybody plays their part to ensure that the wider aviation industry can achieve net zero in 2050, because it’s not going to be done solely by airlines paying the significant premiums that are associated with that.
Filip Cornelis (Director of Aviation DG MOVE) in his address to Wings of Change seemed to indicate that the extension to the EU-ETS beyond European borders could be back on the table. What is your view?
It frustrates me because Europe participates in the ICAO debate, agrees with what they are doing and then immediately criticises it, which I think is disgraceful. I think Europe is being somewhat naïve. It comes back to competitiveness on a global basis. If you look at aviation globally, the areas of the world where it is growing fastest is outside of Europe and the US. The best example is the domestic market in India, which is growing at 11.4% compound since 2000, and will continue to grow at that rate, because India will have massive economic benefit through the connectivity aviation will provide, and which they cannot get through rail and road. If you look at the demographics and the geography of the country, the Indian domestic market in 2023 was 1.8% of all global commercial aviation. The Chinese domestic market was 11.2% of global aviation. So, you have got two countries with similar demographics, and similar ambitions for growing their economy—Indian domestic air traffic is only going to go one way. Europe may take a view that the solution is to stop people flying, but the rest of the world is not thinking that way. The rest of the world is thinking “we want the massive socio-economic benefit that aviation has provided to Europe, and we deserve it.” And you can’t argue against that.
I think ICAO is doing a good job. Getting a global emissions agreement was a great achievement. We need to build on the agreements that have been reached at ICAO, rather than trying to undermine them. And I would hope that we would see a change in the attitude from Europe. I look forward to greater support from Europe for what ICAO has done, and less criticism of the good job that ICAO has done so far, and will continue to achieve going forward.
Do you think European regulators understand what will make a real difference to aviation sustainability?
When we have this debate it is important that it is based on facts rather than hype. The average seat factors for the airline industry in the 1990s were 67%. This year it will be 83%. Taxing flying, as some propose, won’t stop the flying. It won’t reduce CO2. The flights will still operate. They will just operate with fewer people on board. What you will see is a reversal of that trend of higher seat factors in the aviation industry. It will mean that there will be tens, perhaps hundreds of millions of people, who will not be able to access those flights that will continue to operate. So, it will have zero environmental benefit, but a massive socio-economic negative. And that’s the bit that I don’t think politicians understand. A Single European Sky would save 10% of CO2 in Europe, no cost investment required. But the 2% SAF mandate would lead to a 1.6% reduction in CO2 based on the maximum life-cycle benefit that SAF represents over kerosene, for massive financial cost. We need to base this debate very much on the facts rather than what sounds like a popular soundbite.
