Airlines Fretting Over New Fuel Laws

CHARLOTTE, N.C. -- Congress is preparing to take up climate-change legislation, and the airline industry is wary.

It's not that airlines, which will spend an estimated $54 billion on jet fuel in 2008 and are being rocked by higher fuel costs, don't want to conserve energy and reduce emissions. Rather, because they have been working for years to cut fuel consumption, now the biggest cost item for many, they won't be rewarded for their efforts as much as Johnny-come-latelies will.

Additionally, the industry fears the legislation will siphon off money that could go modernize fleets, which could result in reduced fuel use, due to the necessity to purchase emissions permits.

"We've been driven to be fuel efficient for the past 30 years," says Nancy Young, vice president for the environment of the Air Transport Association, the industry's principal trade association. "But under the legislation, a company that switches from coal to natural gas right now is able to generate credits for that, while we've already gotten all of the low-hanging fruit and don't have any alternative to jet fuel."

Most carriers have aggressive fuel-savings programs with the replacement of older aircraft as a centerpiece. Northwest(NWA Quote), for example, has spent about $6 billion on new aircraft since 2000, becoming 25% more fuel efficient and reducing carbon dioxide emissions by the same amount.

"It's a big number," said Tim McGraw, the carrier's director of corporate environmental programs. "It shows that our new airplanes are far more efficient. Since 2000, we've gone from 22 million metric tons of emissions to 15.5 million metric tons."