Analyzing The Influence Of EU ETS On The Operating Strategy Of China-EU Routes

As one of fast-growing aviation market, China-EU market has maintained an over10%annual growth rate in the past five years. As Chinese airlines are still in an inferior position inChina-EU market, the upcoming EU emissions trading scheme (EU ETS) may inevitablyinfluence the competition. For Chinese airlines, there are both opportunities and challenges.According to the existing laws and regulations of EU ETS, this paper focuses on the influenceof EU ETS upon the operation strategy of China-EU routes such as emission cost assessing,aircraft type selection and etc.This paper begins with the analysis of the entire frame of EU emissions trading schemeand directives related to the aviation industry, and the features and implementation process ofall the relevant regulations, then the allocation method of emission allowances and theMonitoring and Reporting Guidelines (MRG) are discussed. After summarizing the status quoof China-EU market, the paper introduced a kind of emissions calculation method on specifictypes of flight, and it is also used to evaluate the benchmark of allowance.Finally, from the perspective of both the EU airlines and Chinese airlines, the emissioncosts of China-EU routes are evaluated; then the influence on market demand is analyzed.Given different market strategies of Chinese airlines under the influence of EU ETS, thecorresponding aircraft choice model based on the operating cost minimum was established,and the influence on aircraft selection of China-EU routes is analyzed through an example.