The European Union’s plans to include international airlines in its emissions trading scheme (ETS) could spark a trade war, it emerged from an airline industry AGM yesterday.
China has made it clear at the IATA meeting in Singapore that it is unhappy about having to be subject to the ETS and has intimated that it could impose high taxes on European carriers or stop access to certain routes in retaliation.
But the EU refuses to back down, maintaining that all airlines should be subject to the scheme which will require any airlines flying into, out of or within Europe to pay for any emissions that go over a set cap.
Willie Walsh, chief executive of BA parent group International Airlines Group, said China could go even further and jeopardise the Chinese manufacturing operations of Airbus if the EU remains firm.
He urged the EU to delay the inclusion of all foreign airlines in the ETS and think up a compromise, saying that if the likes of China, Russia and the US were forced to pay up, there would be retribution.
He said: "It is clear that the countries are going to retaliate, whether in the form of imposing additional taxes on European airlines or restricting access to markets.
"The uncertainty will add more cost. It will add more concern in the mind of travellers that they will face disruption to services and I think there is a real risk this could happen."
Walsh then called for a "Plan B" that will charge carriers for regional and domestic flights within Europe only.
China’s main aviation body has said it stands behind airlines taking legal action against the ETS and will follow the lead of US carriers taking a case to the European court of justice next month.
