Impacts Of European Union Aviation Carbon Trading On China’s Air Transport Services

With the continuous development of commodity trade, trade in air transport service has been developing quickly and sustainably and has been an important proportion of transportation and is acting a more important role in economic development. Especially during the35years since the Reform and Opening when total t-km increased quickly and continuously and the traffic capability improved significantly, the expansion of route network boost the construction of infrastructure as well as the innovation of management system. In1990, the traffic turnover of aviation transportation was2.5billion t-km and ranked16of contracting parties in International Civil Aviation Organization (ICAO hereafter). In2002, both the traffic turnover of aviation transportation and the volume of passenger transportation raked5of contracting parties of ICAO. As of2011, air-transport industry accomplished the57.744billion t-km in traffic turnover, making China the second largest nation in the field of aviation transportation, which ranked only after the United States.On Jul08,2008, the European Parliament authorized a preliminary agreement to extend its Emissions-Trading Scheme (ETS hereafter) to the airlines, starting from the very beginning of2012. More than2000airline companies around the world are involved into this agreement, including33airline companies from China mainland. From2011to2013, European Union (EU hereafter) postponed the implementation of this agreement a couple of times so as to figure out a way to set up an international frame. The unilateral action of extending ETS to airlines has been noticed worldwide right after the release; countries worldwide are taking steps to tackle the possible influences of tax on aviation.This paper is presented in the logical order of raising problem-analyzing problem-settling problem.The paper starts with an overview of ETS which includes the background of the problem proposed and specific content, following with analysis on development of air transportation and its export to EU. The following are the conclusions of this part. Both the air transportation and its trade are developing very well with the competitiveness enhanced remarkably, whereas there are defects need to be improved such as high operation cost, showing no economies of scope and economies of network and low anti-risk capability. These two chapters present a full picture of the problem proposed.In the second part, this paper uses qualitative and quantitative methods analyzing the short-term and long-term influences of implementation of involving aviation into ETS, with the conclusion that in the short term operating and management cost would be increased, margins would be compressed, the competitive landscape would be changed as China is a developing country whose air-transport started late and more susceptible to the change of operating environment and relative industries like tourist industry would be damaged as the influence of expensive air ticket price and transportation cost. In the long-term, the application of aviation ETS would promote the transformation and upgrading of airline and development of environmental air transport service.In the last part, this paper offers advice on dealing with implementation of aviation ETS in both the international and domestic dimension. In international level, this paper advises the nation to bring other countries into the effort to solve the issue through negotiation and prosecution. Considering that low carbon economy is the future of international economy, the government needs to play an active role in establishing an international frame to fill the gap in global carbon tax rule. In national level, on one hand, aircraft operators should enhance environmental consciousness and cultivate professionals in this filed and finally fly environmentally. In addition, the carbon trading market should be established as soon as possible to secure the development of environmental friendly economy.