• Home
• News Article

Airbus and airline CEOs urge Europe to review carbon tax

Tuesday, Mar 13, 2012

Gulf News

Dubai: European planemaker Airbus along with eight industry partners yesterday called upon governments of France, Germany, Spain and the UK urging them to reconsider Europe’s plan to tax airlines for carbon emissions, proving that the issue is no longer a concern just for global airlines.

The move comes a couple of days after China suspended approval for $12 billion (Dh44.08 billion) worth of Airbus orders for 45 A330s in a retaliatory action as the EU refused to back down on its emissions trading scheme (ETS), which came into effect at the beginning of this year, charging airlines a carbon fee to fly in European airspace.

Airbus estimates that this move by China will jeopardise “more than 1,000 Airbus jobs in Europe” and at least another 1,000 in the supply chain.

In joint letters Airbus, airberlin, Air France, British Airways, Iberia, Lufthansa, MTU Aero Engines, Safran and Virgin Atlantic have called upon Prime Ministers David Cameron (UK), Francois Fillon (France), Angela Merkel (Germany) and Mariano Rajoy (Spain) to take action and stop an escalating trade conflict with China and other countries opposing the ETS, Airbus said in a statement.

Global solution needed

“We have always believed that only a global solution would be adequate to resolve the problem of global aviation emissions. This solution can only be found in the International Civil Aviation Organisation, which has recently appointed a high level dedicated group to propose a global framework for international aviation emissions by the end of this year,” the CEOs claimed in their letter, urging the prime ministers to use their influence in the ICAO Council to find an acceptable solution in the shortest possible time.

The extra fee is expected to punch a $1 billion hole (on current allowance prices) in global airlines’ pockets, according to estimates of global aviation body the International Air Transport Association. It is already translating into extra expense for Europe-bound passengers as airlines have started to pass on the extra costs to customers.

Brain Pearce, IATA’s chief economist, recently told Gulf News that the costs could go up to $4 billion in the future. “At the moment, allowance prices are extremely low, but they won’t remain low forever,” he said.

China is among 27 countries that have said they will consider retaliatory steps following the EU’s extension of its carbon market to aviation.

Counter measures

In many of the countries opposed to ETS, countermeasures and restrictions on European airlines are in preparation, including special taxes and traffic rights limitations.

Airbus stated that the nine industry chiefs fully expect the list of suspensions, cancellations and punitive actions “to grow” as other important markets continue to oppose ETS, and that they see the situation as becoming intolerable for the European aviation industry. “A situation that Europe can ill-afford in the current economic climate,” Airbus said in the statement. “The aim must be to find a compromise solution and to have these punitive trade measures stopped before it is too late.”

By Shweta Jain, Senior Reporter

© Gulf News 2012. All rights reserved.

---

© Copyright Zawya. All Rights Reserved.

---