Lufthansa slams EU carbon trading proposal, threatens to move hub

By Thomas Lifson

The European Union Commission has proposed legislation to include commercial aviation in its carbon trading scheme. Under such regulations airlines flying out of the EU would have to "buy" emissions rights from those who have been granted what amounts to licenses to pollute by governments enforcing caps on carbon emissions, staring in 2012.

Lufthansa chief executive Wolfgang Mayrhuber has reacted strongly to this imposition of extra costs, even threatening to move some hub operations to Zurich, Switzerland, which is not an EU member, and which is geographically close to Lufthansa's second largest hub at Munich's Franz Josef Strauss International Airport. Flight International quotes him as saying,

"Should the European Union go ahead with its plan we would have to think about relocating." [....]

Lufthansa says: "We have no concrete plans, but the idea of relocating is an indication of what could happen if the scheme is only applied to flights landing and departing from EU countries. If Lufthansa was to fly from Zurich to Hong Kong, for example, there would be no carbon trading.

Lufthansa already owns Swiss International Airlines, which it took over in 2005 and operates as a separate company. Accordingly, Lufthansa could operate freely from Zurich, as Swiss International enjoys all operating rights of a Swiss airline.

Without a Zurich hub, non-EU carriers like fast-growing Emirates would enjoy a cost advantage over Lufthansa for the portion of the journey between their hub and Hong Kong [or Sydney or anywhere in fast-growing Asia]. But because Zurich is located right in the middle of Europe, its cost advantage would be even greater than that enjoyed by Emirates, which would have to pay for carbon emissions on flights from the EU to Dubai. Lufthansa could thus benefit substantially from a hub for intercontinental flights at Zurich.

Lufthansa points out that carbon trading may well be an inefficient mechanism for limiting emissions.

"There is, however, nothing new in Lufthansa's position on emission trading. We are not against it per se, but there are so many other ways manufacturers, carriers and air traffic management could, with the help of politicians, achieve a reduction in emissions other than introducing this bureaucratic scheme."

It adds: "This scheme is not a global solution and would put European carriers at an extreme commercial disadvantage. We want to match ecological and economic sense with common sense."

Lufthansa's largest hub at Frankfurt is already near capacity, and future growth was expected to take place elsewhere, including Munich, whose current airport is only 15 years old, and which is more convenient for passengers changing planes. Munich is considered one of the best hub airports in the world in terms of passenger convenience.

Lufthansa is widely admired in the industry as a technologically and operationally excellent airline. It is unafraid to go against the political grain, for example, having become the first airline to order the Boeing 747-8I, Boeing's latest and largest version of the original jumbo jet, intended to compete with the Airbus A 380.

Hat tip: Airliners.net