Seattle is the home of Boeing and workers there have good reason to smile. The company has just hauled in a mega order for 230 planes with Indonesian carrier Lion Air. Said to be worth $22.4 billion the order is the largest ever single order for Boeing’s short- and medium-haul 737 model. The airline will take delivery of 201 redesigned 737 Max planes (still under test) and 29 of Boeing’s extended range 737-900s.
The order comes in the slipstream of the International Air Transport Association’s (IATA ) 2011 aviation report confirming that Asia is driving growth and shifting aviation’s centre of gravity eastward. According to IATA, which represent 93 per cent of the world’s airlines, in 2010 about 33 per cent of passengers travelled on routes to, from or within Asia-Pacific. For North America and Europe the equivalent number was 31 per cent. By 2015 IATA’s passenger forecast anticipates that Asia-Pacific will represent 37 per cent, while traffic associated with Europe and North America will fall to 29 per cent. Over that same 2010-2015 period, total passengers worldwide are expected to rise to 3.55 billion. Of the 877 million additional passengers that will be generated, 212 million are expected to fly on routes associated with China.
It is very tempting to pose a couple of rhetorical questions as a result of the news above; is it possible that since a relatively small Indonesian airline, about one-tenth of the size of United-Continental, has had the confidence to place such a huge order with Boeing, that they have considerable confidence in the region growing as an economic powerhouse? This growth presents a huge potential for “the old Western economies” to develop trading partnerships within the region.
Also the order begs the question: “might it be that Lion Air has bought from Boeing, a US manufacturer, rather than Airbus because the EU is intent on imposing unilateral carbon trading taxes on the international aviation industry using EU airspace?” China has already threatened to cancel its orders with Airbus because of the EU ETS and has prohibited its airlines from taking part in the scheme along with India. Furthermore, forthcoming US legislation banning US airlines from participating is in the pipeline as well.
The UK and Europe do not need a trade war as the region is trying to wrest itself out of an economic downturn. With new evidence that the world’s weather is in fact in a cooling cycle there appears to be breathing space to put in place global emissions solutions rather than unilateral regional short term (tax raising) emissions trading schemes that seem likely to provoke trade wars and postpone a global approach to carbon trading schemes for airlines.
National politicians, whether EU, UK , India, all of whom have or will have high taxation on the airline industry, or indeed any other country seeking to impose taxes unilaterally on a global industry, should note the experience of other countries such as the Netherlands which tried to do so. Such countries sensibly dropped their taxes having found that their unilateral action cost their economies more than they raised in taxes and threatened to seriously impact the longer term health of their respective economies.
In the face of hostile international reactions, the EU have said that they are prepared to talk (but not to drop the tax, so what’s to talk about?). However, if they are serious about addressing aviation emissions they should suspend the EU ETS and commit to a global solution to which the international aviation industry is largely committed to anyway.
Also for the UK, Lion Air’s order gives a clear indication of the positive economic expectations for Asia. This should emphasise to the Government what UK business and the aviation industry is saying that without sufficient connectivity (landing capacity), already lacking in the UK gateway London area, the UK’s trade with Asia will be significantly hampered and the country could fall behind its European competitors that currently have sufficient runway capacity.
Lack of capacity in the London region requires a bold approach and possibly a politically unpopular one. At the very least UK Limited requires a short-term solution addressing the SE region’s capacity problems, as well as creating a long-term national transport infrastructure fit to meet the on-going challenges of the 21st century.
(Image: anggaparamita)
