Advocating Smarter Carbon Legislation

In the 2009/10 financial year, carbon emissions from TUI Travel airlines and other aviation emissions accounted for 90% of TUI Travel’s carbon footprint – a total of 5,554,711 tonnes of carbon dioxide.

We are making reductions in these emissions through ongoing aircraft fleet replacement, fuel conservation measures and the strategic venture between our German airline, TUIfly, and Air Berlin. We continue to make good progress year-on-year towards achieving our 6% absolute and relative emissions reduction target by 2013/14.

The need for smarter carbon legislation

TUI Travel has a significant interest in aviation taxation; during the course of its 2009/10 financial year, our UK airline, Thomson Airways, paid more than £100m in Air Passenger Duty (APD) to the UK Government. TUI Travel will be one of the most significant participants in the EU Emissions Trading Scheme once aviation is included from 2012. There are, at present, fundamental missed opportunities with these respective fiscal instruments at both a UK and an EU level.

Air Passenger Duty

In the 20 years or so since its introduction, APD has not created a reduction in carbon emissions from aviation. It has not taken into account the variable efficiency of the airline operators it is levied upon and no monies have been channelled into environmental initiatives in that time. While TUI Travel accepts the ‘polluter pays’ principle, APD is a blunt fiscal instrument that does nothing to address this. TUI Travel was disappointed that a Per Plane Duty (PPD) proposal was dropped, although it had been included in each of the manifestos of the Conservative and Liberal Democrat parties that then subsequently formed the UK Coalition Government in May 2010. PPD remains the most effective way of incentivising carriers to operate in a way that minimises harmful emissions, thereby assisting both the UK aviation industry and UK Government to meet their environmental and financial commitments in this area.

EU Emissions Trading Scheme (ETS)

TUI Travel supports the inclusion of aviation emissions in the EU ETS on the basis that a well-designed ETS must avoid distortions to competition, minimise administrative burdens and deliver tangible environmental gains to ensure sustainable aviation operations. However, at present this is not the case – in the absence of global agreement in this area, the EU has acted unilaterally to create its system, and latterly the project is at risk from Chinese and US carriers’ strong challenge of the proposals.

A properly designed ETS could be a cost-effective and affordable instrument for reducing aircraft emissions but a proportion of the revenue raised from the sales of emission permits should be ring-fenced by Member State governments for spending on research and development to reduce the industry’s carbon footprint – an option the EU has hitherto ignored.

Sustainable biofuels

There has been dramatic progress over the past few years in developing sustainable biofuels for aviation. Our largest airline, Thomson Airways, is leading the way and on 6 October 2011 it became the first UK airline to fly customers on sustainable biofuel (a 50/50 blend of used cooking oil and kerosene).

TUI Travel acknowledges that the UK Government and its European partners are in the process of developing a sustainable biofuels strategy. This should reflect the accelerated pace of biofuel development, and devise mechanisms to incentivise investment and build a sustainable aviation biofuel infrastructure.

For aviation biofuels to reach commercial volumes, governments need to create a legal framework that does not create competitive distortion in the global aviation arena and at the same time must not disadvantage the aviation sector against other modes of transport. Any policy mechanism must prioritise and incentivise the development of high sustainability standards for aviation biofuel, especially with regard to the feedstocks that are used to produce it.

“Whilst there are considerable social and economic benefits that arise from air travel, there are also significant adverse environmental impacts which must be managed to compensate for growth. Thomson Airways is proactive in its efforts in the sustainable development field. I have been impressed by the fact that both TUI UK’s airline and tour operator are genuinely engaged with the sustainability challenge as evidenced by their clear commitments and concrete actions.’’

Professor Callum Thomas, Centre for Air Transport and the Environment, Manchester Metropolitan University in the UK.