Abstract
The European Commission has decided that the aviation sector will be included in the EU Emission Trading Scheme (ETS) in 2012. This has significant impacts on the business and the strategy of airlines. All of a sudden, airlines must possess emission rights in order to be able to operate their aircraft. Given the uncertainty over how exactly the EU ETS is going to be implemented in the next few years and the unexpected fluctuations in prices of fuel and the CO2 emission rights, airlines are faced with a multifaceted challenge: how to best incorporate EU ETS in the business strategy of an airline? In order to support airlines with this complex process, in this research project a strategy model with different regulatory scenarios is developed, with which the exposure of an airline to EU ETS can be calculated. The model has been piloted in an airline to determine how future airline strategy should be adopted based on the regulatory environment. It is clear from the analysis of the different scenarios, that every regulatory scenario has its own optimal strategy, ranging from increasing fuel efficiency to using alternative types of fuel.
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