Penalty stands, rules UK adjudicator as Jet Airways loses second appeal over Aviation EU ETS compliance
Tue 10 Nov 2015 – An appeal by India’s Jet Airways against a civil penalty of 15,000 euros ($16,000) imposed by the UK government for failing to meet the Aviation EU Emissions Trading Scheme (EU ETS) deadline for the year 2012 has been dismissed by an adjudicator. This follows the failure of an earlier appeal in which the airline had argued that it should not have to comply with the scheme because of instructions it had received from the Indian authorities. Since that ruling in April, Jet Airways has opened an Aircraft Operator Handling Account (AOHA) and surrendered the necessary allowances to cover its intra-EEA emissions not only for 2012 but also for 2013 and 2014, so is now in compliance with EU ETS regulations. However, the adjudicator rejected the airline’s second appeal that it was prevented from complying by the due date because of its government’s instructions.
The EU ETS directive levies a mandatory penalty of €100 per tonne of CO2 emissions for which an aircraft operator fails to surrender the requisite number of allowances by the end of April of the following scheme year. In Jet’s case, it emitted 150 tonnes on flights between airports in Belgium, Cyprus, Iceland, Ireland and the Czech Republic during 2012 in respect of which 150 allowances were required to be surrendered by 30 April 2013, according to the UK Environment Agency, its EU ETS administering authority.
Citing force majeure, Jet argued that directions from the Indian government, in particular concerning a rule contained in the Indian Aircraft Rules 1937, prevented it from compliance by the deadline and was therefore beyond its control. However, David Hart QC, who was appointed by the UK Department of Energy and Climate Change to adjudicate in this and the previous appeal, said in his findings that it was “highly unlikely” the Indian government was exercising its powers under the rule when it issued the non-compliance instructions since the rule was concerned with the better regulation of flights.
“I remain therefore of the view that Jet has not demonstrated that it was legally bound under Indian law to follow these directions, however much politically it may have wished to do so,” ruled Hart.
He also contended that Jet did not have to make the intra-EEA flights, which were bound by EU law, and had not taken all due care within the meaning of the force majeure principle. In addition, Hart rejected Jet’s defence of the need to apply fair and equitable justice in this case.
“For all these reasons, I dismiss Jet’s appeal,” concluded his ruling. “The Environment Agency’s civil penalty notice of 12 May 2015 therefore stands.”
The airline has so far refused to comment on the two rulings and whether it would now pay the fine.
The outcome has implications for other airlines that have still not complied with the EU climate legislation. Air India was fined £12,377 ($19,300) in July by the UK authorities for failure to submit allowances to cover intra-EEA flights in 2012 (see article) and has also missed the 30 April 2015 deadline on the 2013 and 2014 scheme years. It has not opened an AOHA, which records details of emissions by scheme year and the allowances to cover them. No details have been released as to whether or not it has paid the fine.
Under the UK regulation that transposed the Aviation EU ETS directive into national law, the regulator has the power to detain and sell an aircraft of a UK-administered operator that has not paid a civil penalty within the period of six months beginning with the date by which it is due (paragraph 39) and/or request the European Commission to impose an EU operating ban on the operator (paragraph 40).
Two other non-EU flag carrier airlines that report to other EU administering states also remain non-compliant. Similar to Air India, Saudi Arabian Airlines has not opened an AOHA and therefore has neither reported intra-EEA flight emissions nor surrendered allowances for 2012, 2013 or 2014. The carrier was fined, and subsequently paid, €1.4 million ($1.6m) over its 2012 non-compliance, although it has still failed to additionally surrender the necessary allowances as required under the legislation.
Russia’s Aeroflot, which reports to Germany, opened an AOHA but has not recorded emissions or submitted allowances for the three-year period. However, action taken by the DEHSt, the German administering authority, remains unclear as the airline did not appear on a list published in March in which 44 named operators were fined a total of €5,363,400 ($5.9m) for 2012 non-compliance (see article).
As negotiations continue at ICAO on the development of a global market measure that may obviate the need for the Aviation EU ETS after 2020, EU member states have so far been reluctant to confront the flag carriers of influential nations involved in the international process, despite the scheme having been scaled back from its original scope to cover just flights between European airports.
According to Barry Moss, CEO of aviation risk management company Avocet, legal action is likely to be taken by DEHSt against Aeroflot through Germany’s supreme court, but the issue could take years to resolve, “which would probably suit all concerned,” he said.