8
GA
/ Vol. 5 / No.4 / APRIL 2013
Business Matters
In the 2013 budget speech Minister
of Finance Pravin Gordhan confirmed
that South Africa would be introducing
a carbon tax as early as 1 January
2015. If recent events between the
European Union and the airlines of
China, the USA and Russia are any
guide, South Africa would do well to
consider very carefully the impact of
the carbon tax on the airline industry.
The updated carbon tax policy
paper will be published in March 2013.
The policy paper will be informed
by the following framework: a rate
of R120 per ton of CO
2
equivalent,
increasing at 10% per year for the
first five years. The objective is that
a portion of the revenues generated
through the carbon tax will be
directed towards funding the energy
efficiency savings incentive.
Off-set percentages of between
5% and 10% will be provided to
certain carbon intensive and trade
exposed industries to allow them to
invest in projects falling outside of
their normal operations with the aim
of reducing their carbon tax liabilities.
When the European Union
launched the EU Emission Trading
Scheme (ETS) in 2005, it faced
a great deal of resistance from
countries such as China, India and
Russia. The Chinese Government
placed Chinese airlines in a very
difficult position by banning Chinese
airlines from participating in the
ETS. Any Chinese airline caught
paying any charges to the European
Union for carbon emissions would
be liable to severe penalties in
China. However, if Chinese airlines
failed to make such payments they
would be banned from landing in
Europe and could be grounded at
any European airport at which they
landed until such time as they paid
outstanding charges for carbon
emissions to the European Union.
The USA and Russia followed
China's example and raised their
opposition to the ETS. Most of the
criticism of the ETS stemmed from
the opinion held by China, Russia
and the USA that the ETS would
increase airfares, which would impact
negatively on consumers, but would
not have any meaningful beneficial
impact on the environment.
In response to this, the European
Union decided, in February 2013, that
the carbon tax for foreign companies
flying into the European Union
would be suspended for one year.
This decision will have no impact on
flights between the countries of the
European Union, to which the ETS
will continue to apply. The European
Union explained that this decision
was intended to allow for negotiations
taking place through the International
Civil Aviation Organisation to be
completed Much of the criticism
coming from nations outside the
European Union suggested that
carbon taxes and emissions trading
schemes impacting on the aviation
industry should rather have been
the subject of discussions within the
relevant forum of the International
Civil Aviation Organisation.
The Chinese Ministry of Foreign
Affairs stated that it welcomed the
European Union's decision, as it
allowed Chinese airlines to fly into
the European Union without paying
carbon taxes and being penalised
in China for doing so. The Ministry
added that, although it supported
the reduction of carbon emissions,
this should not be achieved by the
unilateral decisions of the European
Union but rather through negotiations
by all nations concerned.
The Arab Air Carriers
Organization echoed this view by
saying that the ETS had died and
that it was important for a global
scheme to be formulated and
implemented through the International
Civil Aviation Organisation.
In light of these experiences
and lessons learnt by the European
Union, South Africa would be wise
to carefully consider its options to
ensure that it does not trigger the
kind of backlash experienced by the
European Union. Perhaps, participating
in the ongoing negotiations at
the International Civil Aviation
Organisation would quell any such
resistance by other countries when
South Africa introduces carbon
taxes in 2015. From a domestic
point of view, South Africa should
also bear in mind that a carbon tax
could have a detrimental impact on
already struggling airline industry.·
by Fabio Miceli, an associate at Norton
Rose in South Africa
Aviation industry
may face carbon
taxes in South
Africa by 2015
After a successful 2012, National
Airways Corporation (NAC) plans
to expand their already wide range
of aviation services with a focus
on value added products. With a
diverse product and service offering,
National Airways Corporation (NAC)
has become the largest general
aviation company in Africa.
As an authorized distributor, NAC
has conducted over 14 installations
for the Blackhawk XP Performance
Upgrades. "We are extremely
pleased with NAC's growth and
performance," said Jim Allmon,
president and CEO of Blackhawk
Modifications, "In the difficult
economic environment of 2012, NAC
pulled through and upgraded three
King Air aircraft with the powerful
XP performance packages."
"The economical benefit of the
Blackhawk products position NAC
as an industry leader in the provision
of upgrade solutions," said Tertius
van Jaarsveld, NAC Executive
Director Fixed Wing Maintenance.
NAC is aiming for a larger 2013
and plans to exceed the XP upgrade
successes of 2012. "I look forward to
working more closely with NAC to
achieve these goals," said Cisca de
Lange, Blackhawk's Regional Sales
Director in Africa, "In the coming year,
Blackhawk Africa will work to expand
the market for the Blackhawk XP42A
performance upgrade for the Cessna
Caravan, especially in South Africa."
National Airways Corporation
(established in 1946) is the largest
general aviation company in Africa,
offering a full range of aviation
services and products to the fixed wing
and helicopter markets, including
aircraft sales, aircraft maintenance,
parts, value added products, charter,
internationaloperations and pilot
training.
For more information
visit, www.nac.co.za.
Blackhawk Modifications, Inc.
is the recognized aviation leader in
providing engine performance solutions
to the turboprop fleet. The company
has the largest installed fleet of STC
twin-engine turboprop engine upgrades
and is the largest buyer of new Pratt
& Whitney turboprop engines in
the world. A worldwide network of
approved dealers and service support
centers complements Blackhawk's
U.S. facilities.
For more information,
visit www.blackhawk.aero.
National Airways Corporation has big
plans for 2013
Cessna Aircraft announced earlier
this month that the first production
New Citation Sovereign rolled off
the production line in the company's
Wichita, Kan., manufacturing
facility. The New Citation Sovereign
is one of six new Cessna aircraft
expected to hit the market this year.
The aircraft was announced
at the National Business Aircraft
Association (NBAA) trade show
in Orlando five months ago.
The newest Citation will have
a range of 3,000 nm (3,452 statute
miles). It features improved cabin
cooling, Garmin G5000 avionics
with auto throttles, and a new cabin
management system. Winglets have
been added to the New Sovereign,
contributing to the increase range
and enabling a direct climb to 45,000
feet. With a newly announced five
year warranty package, the New
Sovereign offers owners even greater
value. Once again, Cessna has taken a
great aircraft and made it even better.
The Citation Sovereign has been
in service since 2004. It features one
of the longest cabins for its class, has
a typical seating configuration for
nine passengers and is well known
for being able to operate into and out
of short runways. Type certification
and entry into service for the New
Citation Sovereign is slated for the third
quarter. The New Citation Sovereign
will have a maximum cruise speed of
458 kts (527 statute miles per hour).
First New Citation Sovereign rolls out of
Cessna Assembly