Impacts of the EU’s Emission Trading System on the airline industry : a case study of Thai Airways International

Abstract

This thesis has reviewed the rules and international regulations in relation to the environment with the focus on the European Union in its effort to reduce CO2 emission by presenting issues and possible impacts on the airline industry. The aim is to study the impacts of the EU’s Emission Trading Scheme on the airline industry with specific attention on Asian airlines having flights to, from and within the EU. During the process of analysis existing, pending and possible future regulations were taken into account. Thai Airways International Co., Ltd was used as a case study. Competitive environment in the EU’s airline industry will be analyzed in terms of creating profitability, target customers, demand and other factors that will have effects on the airline’s operations of Thai Airways International. The study uses Porter’s Five-Force model, Value Chain Analysis and the SWOT Analysis to assess the situation in the EU’s airline market and the efficiency of Thai Airways International in the said market. Calculations of profit have been done to assess the changes in operating costs resulting from the scheme on the airline industry. The study has found that: 1) THAI will be able to absorb the extra cost of the regime; 2) the EU ETS seems to have minimal impact on costs and profitability for THAI when compared with other Asian airlines; 3) recommendations for THAI according to the study include reducing operating costs and practicing resource usage efficiency. The conclusion of the thesis is that the impact of the EU ETS scheme on THAI will be quite small.