 Are fuel-efficient aircraft worth investing in for non-Annex country airlines? An empirical analysis of Kenya Airways with an aircraft appraisal cost–benefit analysis modelChikage Miyoshi and Eva Ruiz Ibáñez Transport Policy, 2016, vol. 47, issue C, 41-54 Abstract: This paper aims to assess the impact of the European Union Emissions Trading Scheme (EU ETS) legislation on non-Anne country airlines by using a cost-benefit analysis (CBA), assuming those airlines are treated equally. A financial appraisal model of a case study of Kenya Airways is created to answer two key questions: (1) whether the EU ETS results in a negative impact on airlines located in developing countries or not, and (2) whether new and fuel efficient aircraft can be an effective mitigation option for those airlines and how its impacts could be different compared to other carriers in developed countries serving the same market. The results suggest that the option of keeping the current aircraft is preferred for airlines due to the additional large investment cost, while the fuel efficient aircraft option provides benefits across all stakeholder and related groups such as passengers, the workforce, and the environment. It is found that, compared to airlines in developed countries, the high investment requirement burdens carriers in developing countries to a greater extent due to the higher discount rate and exchange rate volatility. For global market based measures (MBMs), the option to support carriers in developing countries can be a possible measure to retain the equity balance among the parties involved, as it may lower barriers to implement new technology-such as new and fuel efficient aircraft-which mitigates aircraft emissions. Specifically, carbon financing through the revenue from global MBMs’ offset schemes could be used towards this objective. Keywords: EU Emission Trading Scheme; Fuel efficiency; Global market based measures; Carbon emissions; Cost benefit analysis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:trapol:v:47:y:2016:i:c:p:41-54 Ordering information: This journal article can be ordered from DOI: 10.1016/j.tranpol.2015.12.005 Access Statistics for this article Transport Policy is currently edited by Y. Hayashi More articles in Transport Policy from Elsevier |
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