Cathay Pacific Airways Chief Executive Philip Chen announced today that the airline is developing a carbon offset scheme that will allow the airline to "neutralise" a percentage of its carbon emissions by investing in projects in the Pearl River Delta that will help improve the environment.

Under the proposed scheme, being developed as part of Cathay Pacific's overall environment management strategy, the airline will establish a mechanism to offset emissions associated with Cathay Pacific staff travelling on official airline business and also provide passengers with the entirely voluntary option of joining the offset programme.

Carbon-offset schemes are increasingly common in Europe and the United States, but are still in their infancy in Asia. Cathay Pacific is taking the lead as part of a programme of initiatives to improve efficiency, reduce fuel burn and contribute to environmental improvement.

Mr Chen announced the development during a keynote speech delivered at the "Greener Skies Forum 2007", being held in Hong Kong on 29-30 March to enable Asia Pacific aviation to develop an industry-wide response to the issue of carbon emissions and climate change. Cathay Pacific is the Official Airline for the forum, which has brought together key players from the region's airlines and aviation bodies.

"Cathay Pacific has seen a 20% improvement in fuel efficiency since 1998," said Mr Chen. "In addition to our internal measures to upgrade the fleet, control fuel uplift and reduce aircraft weight, we also work with industry partners to support route and air-traffic management improvements. We are now developing this programme for carbon offsetting as part of our overall environmental strategy and our commitment to the Hong Kong Clean Air Charter."

In his address, Mr Chen said the impact of carbon emissions on climate change is being brought into sharper focus, "but I can honestly say that we are a responsible industry that has done a lot of good work to minimise any adverse impact on the environment. Aviation makes a substantial contribution to social and economic progress, with an estimated 8% contribution to global gross domestic product. And, while aviation is increasingly being viewed as one of the biggest contributors of carbon emissions, that is simply not the case. The contribution the industry makes to man-made carbon dioxide emissions worldwide is estimated at 2%."

Mr Chen said the industry needs to continue the drive towards improved technology, including research into alternative fuels, while infrastructure changes are needed to address the fuel wastage created by inadequate route and air-traffic management. He added that an open system for emissions trading would help to help drive overall emissions reduction, and that the International Civil Aviation Organization (ICAO) must take the lead in this regard.

FACTS - Aviation and the Environment

• Aviation is not a major contributor of carbon emissions - Although it is a growing industry, estimated at about 5% per annum by IATA, the contribution aviation makes to man-made carbon dioxide emissions worldwide is estimated at 2%.
• Aviation is a major contributor to the global economy - It contributes 8% of global GDP and supports 29 million jobs.
• Fuel efficiency is already being driven by high costs - Fuel has become the biggest operational cost for airlines. At Cathay Pacific the net fuel cost is still over one-third of total operating costs.
• No substitute for jet kerosene - Significant steps are being made in bio-fuel development, but estimates are that the development of a non-carbon based fuel alternative for aviation is at least 30 years away.

Cathay Pacific's Initiatives

• Fuel efficiency Improvement - The airline has seen a 20% improvement in fuel efficiency per revenue tonne kilometre since 1998. This is expected to continue to improve as it brings new aircraft into the fleet, including the Boeing 777-300ER.
• Air traffic management - Encouraging improvements in the air traffic management systems in the Pearl River Delta would result in over 32,000 tonnes of fuel being saved per year by Cathay Pacific and Dragonair alone. This equates to over 100,000 tonnes of carbon dioxide, or just under 1% of our overall emissions. It also equates to 237 flights between Hong Kong and London - and that is just for the two Hong Kong home carriers.
• Air routes in the Mainland - Cathay Pacific has been working closely with IATA on improving air routes in China. The latest Yankee 1 route for flights to and from Europe helps save a conservative 500 flight hours a year for Cathay Pacific alone, equating to 5,000 tonnes of fuel and about 15,000 tonnes of CO2.

IATA member airlines support a four-point strategy to address climate change

1. We must continue the drive towards improved technology - i.e. airframe, engine improvements, and research, including alternative fuels.
2. We need better infrastructure to address the substantial fuel wastage through route and air traffic management.
3. We must resist unwise policies that will not reduce emissions. We do not support taxes, which act as a blunt economic instrument and do not do anything to improve efficiency.
4. We recognise that in terms of economic instruments, emissions trading has a role to play. This needs to be done at the global level to prevent the risk of competitive distortion.

Cathay Pacific Airways Chief Executive Philip Chen gives the keynote speech at the Greener Skies Forum 2007

Cathay Pacific Airways Chief Operating Officer Tony Tyler makes a point during the Airline Chiefs Panel Discussion at the Greener Skies Forum. Also pictured are Director-General of the Association of Asia-Pacific Airlines Andrew Herdman (left) and Singapore Airlines Chief Executive Officer Chew Choon Seng (centre).

The Cathay Pacific website can be found at www.cathaypacific.com