China’s airlines won’t pay any charges under the European Union’s new carbon trading scheme, while other Asian airlines, including Cathay Pacific, say they may impose surcharges or increase airfares to offset the fee, according to Reuters.
"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," Cai Haibo, deputy secretary-general of the China Air Transport Association, told Reuters. The association represents China’s top four airlines: Air China Ltd, China Southern Airlines, China Eastern Airlines and Hainan Airlines.
The air cargo industry, particularly Asian carriers, face weak demand and overcapacity in 2012, mirroring a similar environment seen last year. CATA estimates the EU carbon rule will cost Chinese airlines $123 million this year and more than triple by 2020, according to Reuters.
Europe’s highest court last month upheld the EU’s right to make international airlines pay for carbon emission after U.S. airlines argued the rule infringes on the sovereignty of other nations and flouts international aviation pacts. Airlines must now buy permits for carbon produced during entire flights, including over non-EU airspace, that land or take off from airports in the 27-nation EU.
Lufthansa, which warned customers on Monday that it pay pass on fees to them, is calling on EU regulators to postpone the implementation of the rule, arguing the rule would hurt trade as Europe edges back into a recession.