Another financial risk exposure in the airline industry is interest rate. Interest rate risk is important to airline companies in terms of the cost of debt finance. Higher financial leverage ratios are dominant in the aviation industry because of its capital intensive nature and high cost of equity. High earnings volatility made cost of equity increase. Equity can be less attractive due to lower price earnings ratios found in the airline industry. In the meanwhile, cost of debit is closely related to the interest rate changes. Therefore, the impact of interest rates on general business could be large consequential effect. Moreover, high interest rates result in higher cost of distress, this is especially for the airline industry. Legislation Impact One of the most difficult balancing acts that airline companies faced is the challenge of balanceing global warming and remaining competitive position in marketplace. The airline industry is responsible for 2% of the world’s man-made carbon emissions and 6% of the Uks. It has already achieved a great deal in keeping emissions down,and it is continuing to take its responsibilities seriously through industry-wide initiatives, in-depth research, roadmaps, not to mention new airframe and engine technology.In 2005,the climate impacts of aviation have finally landed on european political agenda.because the air travel is the worst climate choice of all transport modes, per passenger kilometer of aircraft emits tree times more than cars. Per tonne kilometer of freight, aircroft measured about an order of magnitude worse than lorries. the UK Climate Change Act, passed last November called into question how quickly the industry could deploy into new aircraft and fleets the technological advancements it was claiming were going to help it deliver a percentage reduction in CO2 emissions. Airline companies must act quickly to lower its own CO2 emissins to meet goverment regulation,many people argued that the climate change policies will destory the development of aviation industry. However, the study shows that climate change legislation could be designed in a sustainable way. Survival of the Easy Jet’s Low-cost Model Low-cost airline model has proven to be successful, and has been copied by the many airline company worldwide. Low-cost airline model is based on strict adherence to several major principles: point to point flight, maximization of flying hours, short-haul, use of secondary airports, no-frill, and no delay, which result in low cost, low fares and high demand and capacity utilization. ( Macario et.al.2007) Although the air transport marke>