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Last month, Malaysian low-cost carrier AirAsia X called time on its flagship services to Europe, under the pretext that the continent’s Emissions Trading Scheme (ETS) – essentially an environmental tax – had made flying to London and Paris unprofitable.
Behind the whitewashed press release, its hand was in truth forced by the short-sightedness of a business plan conceived in 2009, when oil prices stood at just $40 per barrel. With Brent crude surging to three times that level in recent months, the viability of a low-cost, long-haul product – absent of any high-yielding corporate passengers – was well and truly blown out of the water.
But while blaming the ETS was undoubtedly a face-saving exercise, AirAsia X will have many sympathisers both within the industry and beyond. Europe’s carbon trading scheme has been an unremitting source of contention for foreign governments, who say the tax violates their sovereignty and who are increasingly talking up the prospects of a trade war...
