Etihad increases charges to offset emissions tax

Europe will not suspend the new emissions scheme despite causing anger from airlines and countries worldwide.

Airlines fear the controversial tax, which was introduced on 1 January, is threatening to cause a trade war.

But although Europe is prepared to be flexible, it will not scrap the scheme.

Speaking at the Aviation Leadership Summit at the Singapore Airshow, Sijm Kallas, vice president of the European Commission told the BBC: "Europe will implement its system with difficulties, with conflicts, with court cases, whatever, the system will be introduced

"We’re not trying to dominate the world. The EU has asked for years and years, there must be a world solution for carbon emission.

"We’re ready to negotiate within our framework," he said. "We are serious about negotiating and we have people who are active in finding solutions."

The EU Emission Tax Scheme means each airline is allowed to emit some carbon dioxide for free but will have to buy ‘carbon credits’ from other airlines or industries if they exceed their allowance. Airlines flying into or out of the European Union and not complying could face fines.

Chinese airlines have already been banned from joining the scheme by the State Council, see previous story, and both America and Canada have voiced their opposition.

Singapore Airlines CEO Goh Choon Phong said the scheme was opposed because an airline flying direct from Singapore to Europe pays more than an airline flying to an intermediate point and then on to Europe.

Asia Pacific Airlines said the fear was if it turns into a tit-for-tat trade war between continents, then airlines will be caught in the cross-fire.

Etihad Airways voiced its opposition, announcing it will have to increase its fuel surcharge on European flights to offset the cost of the new emissions tax.

The increase of USD$3 per passenger for flights into and out of Europe and USD$0.03 cents/kg for cargo shipments will take effect for travel from 1 March, 2012.

James Hogan, Etihad Airways president and chief executive officer said: "As an airline we are strongly opposed to the unilateral measures imposed by the European Union on our flights into and out of Europe, especially as they include areas outside European airspace.

"We have invested many millions of dollars to ensure we operate a young and highly efficient fleet but are still being penalised."

Etihad Airways said it supports the UAE government in the development of measures that will result in a tangible and quantifiable reduction of emissions.

This includes pursuing a global scheme led by the International Civil Organization (IACO) to address the issue of climate change.