Air travel to get greener as tickets to get pricier

RIA Novosti/Aleksey Kudenko
The EU wants airlines to pay for exceeding their carbon allowances. The tax coupled with high fuel costs affecting air carriers profits, would risk finally hitting passengers in the wallet.

The world's air carriers are meeting in Beijing for the International Air Transport Association (IATA) annual conference, with talks likely to be focused on the highly opposed carbon tax, the European debt crisis and high oil prices.

The airline heads are likely to try to find an alternative to the European Union's Emissions Trading Scheme, which is highly opposed by many countries, including Russia, China, India and the US as violating international law. 

According to the controversial scheme, airlines flying to, from or within the European Union are required to monitor CO2 emissions for the entire journey and, if necessary, pay for exceeding their carbon allowance.

The carbon tax imposed on airlines by the European Union took effect early this year, but carriers will begin receiving bills only in 2013 after this year's carbon emissions have been assessed.

The EU has said the tax will help it achieve the goal of cutting carbon emissions by 20 per cent by 2020 and has insisted it will not back down on the plan.

US Transportation Secretary Ray LaHood on Wednesday called on the European Union to abandon the carbon tax on airlines, saying the policy aimed at combating global warming was “lousy.”
“We think this is a lousy policy, a lousy law that they passed. We strongly urge the EU to cease application” of the law “in order to help accelerate our effort to forge a global solution,” LaHood told a Senate committee on commerce and transportation.

Last month, 10 Chinese and Indian airlines refused to provide the EU with carbon emissions data. India has threatened to ban European airlines from its airspace following a dispute over an EU plan to charge carriers for pollution.

“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.”

The health of the European economy is also likely to top the meeting’s agenda amid fears of the worsening of the debt crisis in the region despite figures showing a 5.6 per cent on year growth in European passenger traffic in April.

High oil prices are hitting carriers hard. Fuel costs which have more than doubled now constitute roughly one third of companies' expenses.
Tony Tyler, director general of IATA says the most recent forecast projected the cumulative net profit in the sector to have fallen this year to $3 billion (2.4 billion euro), or a margin of only 0.5%.

“Those forecasts, made in March, were based on a barrel of Brent Crude Oil at $115, but the price rose to an average of $118 over the past five months”, says Tyler. In 2010, the total net profit of airlines reached $15.8 billion, before plunging to $7.9 billion in 2011.