Regional perspective from the AAPA Martin Eran-Tasker Technical Director Association of Asia Pacific Airlines 2 nd APEC TPT-WG Aviation Emissions Taskforce Singapore September 2009

Overview Introduction Current challenges Industry trends GIAC - Regulatory patchwork Industry efforts Looking Ahead Summary

AAPA Association of Asia Pacific Airlines Regional trade association Current members include 17 major international airlines based in Asia Pacific Open to all scheduled international airlines based in Asia Pacific region Committed to promoting sustainable growth of the aviation industry serving both passenger and freight needs Permanent secretariat headquartered in Kuala Lumpur, Malaysia Representation in Washington and Brussels always open to new members

Global traffic share by operator region Data: 2008 Source: IATA, AAPA and various AAPA 18% ATA 27% AEA 19% AACO 4% ALTA 4% AFRAA 2% Others 19% PR China 7% AAPA 32% ATA 22% AEA 22% AACO 6% ALTA 2% AFRAA 1% Others 9% PR China 6% Passenger Revenue Passenger Kilometres Scheduled Systemwide Cargo Freight Tonne Kilometres Scheduled Systemwide

Asia Pacific Aviation Data: 2008 Source: Combined AAPA + non-AAPA airlines GMT+5 to GMT+12 US$ 151 billion revenue 600 million passengers 407 million domestic 193 million international 16 million tonnes of cargo 3,900 aircraft Asia Pacific overall market share: 27% of global passenger traffic 40% of global cargo traffic

Current Challenges Sharp slowdown in the global economy Slump in international trade Weak passenger demand Oil and currency volatility Higher cost of capital World GDP 2009 projected to shrink by 1%

Global airline industry trends Net loss of USD 11 billion forecast for 2009 Airline losses will vary by region and relative strength of individual airlines Weak passenger and cargo demand Trimmed route networks and capacity in response to lower demand Reduced utilization, grounded surplus aircraft, seeking deferral of new deliveries Tough times, conserve cash, strengthen balance sheet, preserving the ability to respond to any upturn Economic recovery has begun but there is so far minimal airline revenue benefit due to low yields

Future growth postponed Significant implications for investment and capacity management, throughout the value chain Prolonged downturn may mean no growth Source: IATA

Long term growth prospects still bright Source: Boeing Asia Pacific’s share of world traffic projected to grow

GIACC GIACC report recommendation; Global aspirational goals of 2% p.a.in fuel efficiency No specific obligations to States Basket of emissions reduction measures, from which States may select. GIACC failed to agree on more substantive policy measures on climate change Chicago Convention v CBDR Result encourage the proliferation of uncoordinated regulatory initiatives by individual States, leading to a patchwork of overlapping and inconsistent schemes Next Step High Level Meeting 7-9 Oct 2009

Regulatory Patchwork Economic Measures targeting aviation EU, Australia, New Zealand, USA, Japan Environmental Taxes Questionable environmental objectives - APD

Regulatory Patchwork Proposals Maldives - International Air Passenger Adaptation Levy (IAPAL),levy on passengers, cost the maritime and aviation sectors USD 10 billion per year. UK - USD100 billion fund to assist developing countries with climate change. Funding sources, suggested by UK, maritime and aviations sectors

Regulatory Patchwork Multiplicity of government response National initiatives have international consequences with the risk of overlapping and excessive levels of charges No assurance that funds raised will be used to address genuine environmental objectives No meaningful progress will be made in addressing environmental objectives. Absence of global solution results in conflicting regimes, double counting, additional cost and complexity

Industry efforts Good progress being made to manage aviation’s carbon footprint through the industry four-pillar approach On-going investment in technology, infrastructure and operational improvements are delivering 2% year-on-year gains in fuel efficiency Biofuels encouraging progress proving technical feasibility. Next challenge to reach commercial viability and scale. Economics of biofuels complex Sensitive to feedstock supply Oil price Government fiscal policies Carbon market conditions

Industry efforts Industry has recognized the benefits of proactive commitment to action, the value of establishing shared goals IATA AGM committed to 1.5% p.a. improvement in fuel efficiency to 2020 Carbon-Neutral Growth (CNG) from 2020 onwards 50% reduction in net emissions by 2050, relative to 2005 In addition 10% Usage of alternative fuels by 2017

Looking ahead Key meetings ICAO High Level Meeting of stakeholders 7-9 October COP/ 15, December th Triennial ICAO General Assembly, September 2010 To early to judge outcome of talks Governments have been making preliminary statements on initial negotiating positions Aviation will not be a major focus in the overall political negotiations, we still need to be prepared Key for aviation the reconciliation the Chicago Convention principles of non-discrimination versus Common But Differentiated Responsibilities (CBDR)

Negotiation Outcome Reaffirmation that aviation requires a global sectoral approach Reaffirmation that ICAO is the appropriate UN forum to address aviation emissions Explore amendments to the wording of Kyoto Protocol Article 2.2 Guidance on interpretation of CBDR in a way that would be consistent with the Chicago Convention principle of non-discrimination Oppose imposition of arbitrary levies or taxes on aviation

Summary Good progress is being made to manage aviation’s carbon footprint through the industry’s four-pillar strategy. We need to reaffirm the role of ICAO Aviation requires a global sectoral approach The aviation sector requires globally harmonized policies. A messy patchwork of arbitrary taxes on air travel will not save the environment. Fresh thinking and a way forward is needed if we are to reconcile the conflicting demands the Chicago Convention and CBDR Even in the current economic downturn, AAPA carriers are committed to playing a full part in efforts to address environmental challenges

Martin Eran-Tasker Technical Director Association of Asia Pacific Airlines 9/F Kompleks Antarabangsa Jalan Sultan Ismail Kuala Lumpur MALAYSIA Tel: Fax: