Fears of trade war after Chinese airlines ‘refuse’ to pay ETS
While the system was introduced this month, airlines won’t have to start paying the tax until the first quarter of 2013 giving them time to take responsive action. The China Air Transport Association says Chinese airlines will not impose surcharges on customers relating to the emissions tax. The EU legally has the option of enforcing fines of €100 for each tonne of CO2 emitted for which airlines have not surrendered a carbon allowance. The Assoc of Asia Pacific Airlines said various governments around the world opposed to the EU ETS are now evaluating what sanctions can be taken against the EU with the likelihood of a trade war ahead, which would not achieve any environmental benefit. Delta has already increased its fares to Europe by €3. Cathay said the ETS would add about $6.44 to a ticket between Hong Kong and Europe.
Fears are growing of a trade war between the European Union and other leading countries over this week’s introduction of airlines into the emissions trading scheme (ETS).
Airlines in China are already reportedly planning to refuse to pay the tax according to the China Air Transport Association.
While the system was introduced this month, airlines won’t have to start paying the tax until the first quarter of 2013 giving them time to take responsive action.
Cal Haibo, deputy secretary-general of the China Air Transport Association, was quoted in a newspaper report as saying: “China will not cooperate with the European Union on the ETS, so Chinese airlines will not impose surcharges on customers relating to the emissions tax.”
The EU legally has the option of enforcing fines of €100 for each tonne of carbon dioxide emitted for which airlines have not surrendered a carbon allowance. The EU can also ban airlines that consistently refuse to follow the law as well as confiscating aircraft, although these drastic steps are unlikely to take place.
“Our law gives all countries the choice to reduce aviation’s carbon pollution differently. If they take equivalent measures, all incoming flights from these countries can be exempt,” said Isaac Valero-Ladron, EU spokesman for climate action.
But the Association of Asia-Pacific Airlines (AAPA) added: “Recognising the EU rule is challenging the sovereignty of states, various governments around the world opposed to the EU ETS are now evaluating what sanctions can be taken against the EU with the likelihood of a trade war ahead.
“The last thing we need is a trade war. Tit-for-tat measures would only add to the burden on the airline industry and the travelling public, without achieving any environmental benefit.”
ETS was cleared to go ahead last month following a ruling by the European Court of Justice on December 21. The judgement by Europe’s highest court followed a case brought by US carriers United and American Airlines in 2009, which opposed the inclusion of foreign carriers within ETS.
Simon Buck, chief executive of BATA, has also warned that including aviation in EU’s ETS without a global agreement “could lead to a damaging trade war that is in no one’s interests”.
Lufthansa earlier this week warned that ticket prices would rise because it expected ETS to cost an extra €130 million this year as it has to buy certificates to cover its carbon dioxide emissions.
Asian airlines mull new charges to deal with EU carbon plan
Jan 4 (Reuters) –
Airlines in the Asia Pacific region may impose surcharges or increase airfares following the imposition of the European Union’s new Emissions Trading Scheme (ETS), a move that could deal another blow to an industry already facing weak demand.
The possible increases would come after Delta Air Lines in the United States, that country’s second-largest carrier, slapped a $3 surcharge each way on tickets purchased for flights between the United States and Europe.
“It is inevitable that increased costs will be passed on to the passengers. We will share the details at appropriate time,” said Carolyn Leung, a spokeswoman for Hong Kong’s Cathay Pacific Airways Ltd.
Cathay’s chief executive, John Slosar, said previously that the ETS would add about HK$50 ($6.44) to a ticket between Hong Kong and Europe.
Singapore Airlines Ltd (SIA), the world’s second-largest airline by market value, said it will try to mitigate the impact of the ETS by improving fuel efficiency and reducing its carbon emissions, which would lower the carbon charges.
“However, we are not yet ruling out any options for recovering the additional cost,” SIA’s spokesman Nicholas Ionides said in an email.
Tony Tyler, director general of the International Air Transport Association (IATA), has said the ETS would cost airlines 900 million euros ($1.15 billion)in 2012 and the industry will not generally be able to pass this on to consumers because the market is too weak.
The IATA forecast a 49 percent fall in 2012 industry-wide profit to $3.5 billion on the back of a weak global economy and stubbornly high fuel prices.