Indian regulators do not do aviation companies many favours but then they are more than matched by the EU

Victoria
By Victoria September 17, 2012 16:38

Indian regulators do not do aviation companies many favours but then they are more than matched by the EU

SpiceJet shares rose 12% at close of Mumbai trading while those of Kingfisher jumped 20% on the news that foreign direct investment (FDI) limits were being raised to 49%. The rise of SpiceJet is to be expected but there are some obvious signs of optimism when it comes to Kingfisher. There are few assets of strategic value at the airline that have not already been pledged and thus any investment has to be on the health of the business alone. However it will be worth watching Kingfisher closely to see if the airline is able to move toward re-capitalization allowing it to pay short term debts and ramp up operations.
Meanwhile over in the European Union (EU) things are not much better with the future of ETS still uncertain even after five years or so of planning. Now though the EU has just woken up to the fact that crop-based biofuels will lead to increased food prices as farmers shift land over to grow fuel at a higher margin. The EU now plans to impose a limit on the use of crop-based biofuels – this alone would make ETS unworkable in its current form.
The pressure at the EU comes on the main from France which is pushing for a second look at the benefit of crop-based biofuels and is also moving to create a strategic food stock in response to recent food price rises.
So in short, airlines moving to avoid ETS penalties are now being told to look at their plans again, due to the fact that most were looking at biofuels.
Policy remains confused at the EU and airlines have little clue of how to plan for further regulation. All this while the EU has a huge food mountain and a massive waste of fuel every year through the common agricultural policy.
We are now coming to a point of no return for the preparations for full ETS implementation. The EU needs to inform and educate on their plans, airlines will be hoping that they do, but it seems we are heading towards a regulatory car crash.

Victoria
By Victoria September 17, 2012 16:38
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