India warns EU over airline carbon tax

Threats to ban European airlines from its airspace if Brussels sanctions Indian carriers in dispute over an EUETS polluter pays plan.

"Travelling is always a two-way traffic," Ajit Singh, civil aviation minister, said in an interview. "If they can impose sanctions so can other countries."

Last week 10 Chinese and Indian airlines refused to provide the EU with carbon emissions data – the most serious revolt against Brussels’ scheme to charge carriers for their pollution. The airlines risk being banned from flying to EU countries if they refuse to comply with its carbon emissions trading scheme.

Dozens of countries, including the US and Russia, have attacked Brussels for subjecting their airlines to an EU carbon emissions trading scheme from this year – a move also questioned by industry executives.

Willie Walsh, chief executive of International Airlines Group, the parent company of British Airways, criticised the European Commission’s "arrogant approach" and said it was "time to put aside its posturing and show true leadership".

"I don’t think Europe can risk growth at a time like this," Mr Walsh added, calling it "crazy" to risk a trade war over emissions trading.

EU officials are pushing for a global deal to defuse tensions over the scheme.

A spokesman for Connie Hedegaard, the EU climate commissioner, noted that the UN’s International Civil Aviation Organisation was working towards a global solution that could come into effect before April next year, when airlines must demonstrate further compliance with the EU scheme. The EU has said it would be willing to amend its scheme if an ICAO-sponsored alternative is finalised.Mr Singh said sanctions would be counterproductive for both the EU and India at a time when the eurozone debt crisis and slowing consumer demand were strangling economic growth "[The EU] is a sovereign union, they can make laws for themselves but they cannot make laws for the whole world," he added. "If you allow this, next they will impose a carbon tax on shipping or cement."

Air India and Jet Airways – the only two Indian carriers serving Europe – are already contending with high taxes, soaring fuel prices and a domestic price war. Air India, the national carrier, has been on the verge of bankruptcy for more than a decade despite government injections worth billions of dollars.
Mr Singh said the latest bailout package, worth about Rs300bn ($5.4bn), could be the last one if the state-owned airline does not turnaround.

"Air India is in a big financial problem," Mr Singh said. "We can’t keep pouring money – it’s public money." Air India pilots have been on strike for 16 days over pay and training disputes.

Valere Tjolle
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