Passengers flying to Europe face a hike in fares as airlines pass on the cost of meeting the EU emissions trading scheme.
EU scheme to hit airline passengers
Airline passengers going to Europe are likely to be hit in their pockets as carriers pass on the extra cost of complying with the EU emissions trading scheme.
The EU is requiring all airlines using its airports to purchase carbon credits to offset their contribution to air pollution.
A global row is raging between carriers and the EU about the costs arising from the controversial carbon trading scheme. Etihad Airways estimates the scheme will cost it as much as €310 million (Dh1.45bn) over the next nine years.
"It is inevitable that such a cost would have an impact on fare levels," said Linden Coppell, Etihad's head of environment. "This is why we want to ensure we have a fair global system."
Emirates Airline also expects to add the extra cost to fares, although how that is to be done has yet to be decided, said Tim Clark, the president, in comments reported by local media last week.
Emirates will spend more than €40m this year buying emission allowances, he was quoted as saying. The airline said yesterday that it was preparing a statement about the scheme.
The emissions trading scheme (ETS), launched in 2005, aims to combat climate change by making carriers pay tax on their carbon dioxide emissions. From January 1, the tax was widened to include all airlines using airports in the EU.
Regional airlines have yet to say how much the ETS will add to their fares, but the European Commission estimates the cost could lead to an increase in the range of €2 to €12 per passenger on flights to and from Europe.
The EU says the scheme is the best way to deal with aviation's contribution to global warming.
But it has sparked a hostile response from some global carriers, which say the ETS could spark a trade war. Chinese airlines are reportedly refusing to pay charges under the scheme. US carriers are also urging their government to take action.
Gulf airlines are unhappy about the extra costs they will rack up flying to one of their most important markets. They say the scheme is anti-competitive and, instead, want measures agreed on globally.
ETS officials estimate that international airlines face a €900m emissions bill this year. But weakness in demand may mean carriers are not able to fully pass on the cost, Tony Tyler, the director general of the International Air Transport Association (Iata), has warned.
The extra cost comes as many airlines face a tough year because of a slowing global economy. Iata has cut its global airline profit forecast for this year from US$4.9bn (Dh17.99bn) to $3.5bn. Middle Eastern airlines are expected to post a profit of $300m versus a previous forecast of $700m.